Nokia buys feature phone OS start-up

Nokia confirmed Monday that it has acquired Norwegian start-up operating system (OS) developer Smarterphone for an undisclosed fee. The Finnish firm told Telecoms.com that the acquisition forms part of its strategy to “bring apps to the next billion people”.

Smarterphone develops Linux-based feature phone operating systems with more advanced features to Nokia’s basic handsets. Its latest offering, the Smarterphone 3.0 OS, has been developed for QWERTY-keypad phones, and offers native social media apps, wifi and 3G connectivity and a web browser. It also allows the user to upload and watch pictures and video content to the web, and can run on cheap and basic hardware – with no need for multi-core chipsets, although it has no app store.

While Nokia has historically struggled in the smartphone space, due to the domination of Apple’s iPhones and Google Android handsets, it has been a leader in the feature phone segment for many years through its cultivation of the Symbian operating system in it’s many guises (S30 and S40 for example). Although the firm is aiming to make an impact on the smartphone market with its Lumia handsets, which run on Microsoft’s Windows Phone 7 operating system, it is not neglecting the feature phone market and aims to maintain its leading position with this acquisition. Development of Symbian was farmed out to Accenture last year.

The firm still sees plenty of opportunity in the feature phone segment, as more than three billion people still do not have a mobile phone, and of those who do, the vast majority have SMS but no web browser.

Nick Dillon, analyst at Ovum, believes that although there is an immediate opportunity in the feature phone space, the acquisition will actually be vital to Nokia in the long run, as more and more people continue to move from using feature phones to smartphones.

“If you look at it from a purely financial sense, the margins are much less on feature phones and it’s a much less lucrative market than smartphones. But I think Nokia is thinking is that the feature phone market alone is not going to sustain it, but it provides a route to smartphone sales, if Nokia can get users in at the lower level with feature phones and then upgrade them as they become more mature phone users,” he said.

“It has such a stronghold in the feature phone market that it would be silly to throw away the opportunity of making the most of the upgrade path that it can offer.”

With the purchase, Nokia has acquired Smarterphone’s technology and also its team of 15 staff. Investors that backed the deal include venture firm Ferd Capital, and Haavard Nord, founder of Norwegian mobile software firm Trolltech, which Nokia acquired in 2008.