Digia Aims at Wider Range of Customers as Nokia’s Symbian Fades

Digia Oyj, a Finnish software maker supplying a range of industries, is retooling applications to sell to a wider customer base as Nokia Oyj abandons the Symbian smartphone platform, its chief executive officer said.

Digia has fallen 26 percent in Helsinki trading since Feb. 11 when Nokia said it would reduce outsourcing and adopt Microsoft Corp. (MSFT)’s Windows Phone 7 as its primary smartphone platform over the next two years, replacing Symbian and the newer MeeGo. Digia has produced pieces of Symbian software and services for Nokia, the world’s biggest maker of mobile phones, since shortly after the smaller company was founded in 1997.

“Symbian is gradually going to go down and that’s the end of the story,” Juha Varelius, CEO of Helsinki, Finland-based Digia, said in an interview. “I don’t think MeeGo is dead. I believe there will be MeeGo devices launched by operators and some other phone manufacturers and they’ll be the customers.”

Nokia will bring out a device this year on MeeGo, a high- end operating system, to gauge market reaction, Chief Executive Officer Stephen Elop said in February. Intel Corp., which jointly developed MeeGo with Nokia, has said it will continue working on the system, which can be adapted to run in tablet computers, set-top boxes, automotive electronics and other products.

Digia, which bought part of Nokia Oyj (NOK1V)’s Qt developer tools business, plans to expand in corporate and Linux-based software as Nokia cuts its mobile software development in Finland, Varelius said. Digia is retooling software to sell to a wider customer base through Internet distribution, he said.

Windows Phones

The company merged with SysOpen Oyj in 2005 and principally sells applications in Finland and Sweden to customers including Finnair Oyj and Handelsbanken.

“Our effort is going toward having a scalable, productized business that is international,” Varelius said. “We started already before Nokia’s recent announcements.”

Digia also expects to get work related to Nokia Windows Phones either directly or through third parties, Varelius said.

Mobile software accounted for 42 percent of Digia’s sales last year, compared with 51 percent in 2006. Billings for mobile systems based on Linux software, including MeeGo, Android and iPhone, have outpaced Symbian, according to Varelius.

“Mobile is still a market where huge investments are taking place,” he said in the March 31 interview. “We know iPhone, Android, Microsoft are going to be there. MeeGo is a bit of a question mark.” He declined to estimate the effect of Nokia’s decision on revenue or profitability.

Russia and China

Digia has started to deliver corporate software, including customized versions of the Microsoft Dynamics AX resource planning program, to customers in Russia, where it already has software developers to take advantage of lower labor costs. Digia is also expanding from software development to delivery in China. The company is also starting to provide software as services over the Internet, including a fleet management system called Oiko.fi.

Qt tools are used by about 3,500 companies from Samsung to the European Space Agency to develop software for multiple platforms. Digia paid an undisclosed sum to acquire those customers and the right to future commercial customers from Nokia. It already had as many as 300 of its 1,600 employees working with Qt.

Nokia will continue developing Qt for mobile systems and distributing it under an open software license.

Digia’s sales grew 8.7 percent to 131 million euros last year while net income was 11.5 million euros. Digia posted a loss of 13.7 million euros in 2009 after writing down 23.8 million euros of goodwill in the fourth quarter, citing increasing competition in mobile engineering, particularly from low-cost countries.

Digia dropped 1.2 percent to 4.22 euros at 12:37 p.m. today, giving it a market value of about 88 million euros.

To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong in Berlin at kwong11@bloomberg.net

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