Cell Phones: Don't Count Linux Out

It's catching on slower than expected, but more companies are signing up

In February, 2003, electronics giant Motorola Inc. (MOT ) stunned the mobile-phone business with a bold change of course. During the industry's annual shindig in Cannes, the Schaumberg (Ill.) company announced the world's first handset built around the Linux operating system and unveiled plans to use the populist software in consumer phones from then on. Pundits saw this as a slap at Symbian Ltd., the London software consortium Motorola co-founded five years earlier with Nokia Corp. (NOK ) and Ericsson to develop software for feature-rich smart phones. It was also a major lift for Linux, the grassroots operating system that until then was used mainly on servers.

So far, Linux phones haven't lived up to the hype. Motorola has delivered two handsets, both in China, with two more on the way. But only 1.1 million Linux-based phones are expected to ship this year, vs. 14 million using Symbian system, estimates researcher Strategy Analytics in London. Downsizing Linux to fit into mobile phones took longer than predicted, and the software has a ways to go before it equals the sophistication of Symbian's package or the mobile phone version of Microsoft Windows. Motorola nevertheless remains a believer, says Scott Durchslag, general manager of Motorola's personal communications sector for Southeast Asia. "Linux is more flexible and opens you up to the innovation of developers around the world," he says.

Indeed, behind the scenes, Linux is picking up steam, especially in Asia. Korean giant Samsung Group is selling a Linux-based phone called the SCH-i519 in China and has other models on the way. Chinese telecom equipment maker Datang said in July that it will use Linux to power upcoming phones for third-generation (3G) networks. And Sunnyvale (Calif.)-based MontaVista Software Inc., which supplies the version of Linux used in most phones, says it has won 10 contracts for handsets using Linux, including several from European makers. "Every single mobile-phone maker is looking at Linux," says Stéphane Deruelle, MontaVista's director for Southern Europe.

What's the attraction? For one thing, nobody owns Linux: It's available in the form of "open" source code that phone makers can modify to suit their needs. Plus, millions of programmers around the world write Linux software. One misconception: Linux isn't necessarily free. While phone makers could use no-cost versions of Linux, most license packaged offerings from companies like MontaVista. Even so, Linux costs less than the $5 to $7 per handset vendors pay for Symbian or Microsoft software.

Top-of-the-line smart phones that can replace a laptop PC and connect to corporate data systems will likely still use Symbian or Windows. But thanks to its lower cost, Linux could become the de facto standard for less-sophisticated "feature" phones that add cameras, games, and music -- a market that analyst Richard Windsor of Nomura Securities International Inc. (NMR ) in London pegs at 145 million units this year. That's one reason Redwood City (Calif.)-based Openwave Systems Inc., the leading supplier of Web browsers for mobile phones, has recently hitched its wagon to Linux.


Linux phones, though, tend to gobble up more power than others. A lack of standards could brake development of independent software. Meanwhile, Symbian CEO David Levin says 30 more Symbian-based handsets are in development by phone makers, adding to the 20 already on the market. "Our biggest advantage is the relationships we have with the world's top phone makers," he says. Still, Linux keeps scoring endorsements. Last December pace-setting Japanese wireless operator NTT DoCoMo (NTT ) declared that all its future 3G phones would use either Symbian or Linux: NEC Corp. is working on a Linux model. Shut out of the race was Microsoft (the company declined to comment). "Where DoCoMo leads, the other wireless carriers tend to follow," says Seamus McAteer, a senior analyst with San Francisco-based Zelos Group Inc.

To be sure, some other major phone makers are holding back; Nokia and Sony Ericsson Mobile Communications remain firmly committed to using Symbian. Unlike Linux, "It was designed from the first line of code for smart connected devices," says Timo Poikolainen, vice-president of marketing at Nokia Technology Platforms. But it's clear Linux isn't going away. The battle could get mighty hot in a few years' time.

By Andy Reinhardt in Paris, with Bruce Einhorn in Hong Kong and Moon Ihlwan in Seoul

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