Symbian: So Much For This Microsoft Rival

Its dream of dominating smart phones falters

The idea was to block Microsoft Corp. from dominating the cellular phone market, and Juha Christensen had a plan. The Dane, an executive at British computer maker Psion PLC, suggested uniting the world's biggest phone makers in a joint venture. Together, he said, Nokia, Ericsson, and Motorola could build Psion's operating system into the standard for phones--and defend the industry from the Redmond (Wash.) titan. The result, unveiled two years ago, was London-based Symbian Ltd. Christensen became the company's executive vice-president and most vocal proponent. Yet in late March, he left the company to accept a job at none other than Microsoft.

That was just the beginning. Symbian is contesting Christensen's departure and has threatened legal action to keep him from joining Microsoft's wireless division in Sweden. Yet the joint venture has continued to lose engineers. Symbian maintains that the attrition is normal for the high-tech industry. But it acknowledges that nearly the entire engineering team for Wireless Access Protocol (WAP), a standard for the mobile Internet, has departed in the last month.

SIDE DEALS. With the turbulence at Symbian, it's becoming clear that Christensen's vision of a sturdy European company dominating the exploding market for smart phones and handheld computers is fading fast. The problem is that the Symbian partners want to handle much of the most exciting development work themselves. This leaves Symbian engineers facing duller work--and diminished chances of a stock-offering bonanza in the offing.

What's more, the phone makers are busy spinning deals with Symbian's American competitors. "No company can afford to rely on only one software platform," says a senior executive at Philips Electronics. This means that while Symbian may yet develop into a force in the mobile Internet, it's likely to be one in a crowd.

Cracks in the Symbian team began to appear in October, when Nokia Corp. signed a joint venture with Palm Inc., a key competitor. The Finnish company maintained that it would stick with the Symbian platform but wanted to create a phone with Palm's easy-to-use screen interface. Two months later, Ericsson announced a joint venture with Microsoft. Like Nokia, the phone maker vowed allegiance to Symbian's operating system, but planned to put a Microsoft Web browser into its phones.

The trouble for Symbian, say sources close to the company, is that the partners wanted to control key pieces of the operating system. This appeared to undermine Symbian's independence, giving engineers the impression that they were working as contractors for the phone giants. Nokia and Ericsson, for example, were developing WAP on their own and wanted Symbian to incorporate their offerings instead of developing its own. That discouraged Symbian engineers, leading to an exodus into the booming market for WAP applications.

No one can say when Christensen will log in for the first time at his former arch-enemy. Symbian, says a spokesman, still considers him an executive on leave. With legal action pending, both Christensen and Microsoft declined to comment. Symbian Chief Executive Officer Colly Myers, while declining comment on his former executive, notes that Symbian has grown in 20 months from 150 to 560 employees and contractors. Given strong growth in mobile computers, he says, "there are bound to be personnel changes as new opportunities are created."

Despite problems, Symbian does have promising products coming onto the market. In late February, Ericsson unveiled a prototype of a handheld computer-phone with a color touch-screen and fast Web-page downloads built on Symbian's Quartz operating system. This demonstrates that Symbian is leading Microsoft, which has yet to release its Windows CE on a mobile phone. Unlike Microsoft's new batch of handheld computers, the Ericsson phone will permit users to Web-surf and chat simultaneously.

Such futuristic devices embody the sparkling dream of Juha Christensen. With the market for smart phones and palm computers expected to reach 1 billion consumers in three years, there should be growth aplenty to sustain Symbian. But Europe's champ will have to score with winning products. Its anti-Microsoft defense, as Christensen's defection shows, is crumbling.

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