Nokia's decision this week to take control of software maker Symbian represents a high-stakes gamble in its battle with Microsoft for dominance in the burgeoning smartphone market, according to analysts.
Nokia's move - paying £135.7 million sterling (€200 million) to Psion to nearly double its stake in Symbian to 63.3 per cent - is seen as necessary to boost the development of Symbian's operating systems. But it could antagonise operators and rival handset makers.
"The big advantage of Symbian in the past was that it was owned by multiple companies and was setting the standard against Microsoft," said Mr Torsten Frankenberger of consultancy Droege.
"But now it is linked to one company with a big market share, from the perception of the operators, this is too much power and they won't like it."
Mr Ben Wood, an analyst at Gartner, said handset makers might take a more charitable view, in spite of them becoming more dependent on a rival for a key component of their phones.
"Nokia has been Symbian's biggest shareholder and customer for some time now and licensees such as Samsung, Siemens, Panasonic and Sendo have already decided to base [their graphical user interface\] on Nokia's Series 60 interface anyway," he said.
SonyEricsson will be more concerned. Its interface is the Symbian-developed UIQ and the company would have noted assurances from Nokia that Symbian would continue to support this.
Nokia's move is believed to have been prompted by Microsoft's advances in the smartphone market - it has persuaded Motorola and Samsung to make handsets that will use its operating system.
"Smartphones are a key part of Nokia's strategy and it was in a position where Symbian was not necessarily able to deliver... the technology in the time it needed. It was left with little option but to invest more in Symbian," Mr Wood said.
Symbian is dominant in the smartphone market, where up to seven million handsets carried its operating system last year compared with an estimated 200,000 for Microsoft.
Mr Richard Windsor, Nomura telecoms equipment analyst, said it would make sense financially for Nokia to absorb Symbian entirely. It would mean the $100 million (€80 million) it was paying out to run Symbian along with about $350 million in earnings would come on to its own balance sheet.
But it might drive those concerned about Symbian's independence towards Microsoft or Linux.
The Symbian operating system, which has more than 95 per cent of the smartphone market, is seen as having an Achilles' heel in the enterprise space where personal digital assistants (PDAs) and other companies still hold sway.
"There are groups of users that derive real benefit from PDAs, and support on the Microsoft platform in terms of integration with back-end systems is superior due to the legacy it has there in computers," says Mr Brian Gammage, vice-president for client platforms research at Gartner.
Microsoft has been touting figures by the Canalys research firm suggesting HP PDAs running its Windows mobile software had 33 per cent of the European market in the fourth quarter. However, Microsoft's emphasis on its PDA success is understandable, given that it has made little headway against Symbian in the smartphone market.
