Telco Cloud Deployment Tracker: 5G standalone and RAN

Telco cloud 2.0, fuelled by 5G standalone and RAN, is on the starting grid

This report accompanies the latest release and update of STL Partners ‘Telco Cloud Deployment Tracker’ database. This contains data on deployments of VNFs (Virtual Network Functions), CNFs (cloud-native network functions) and SDN (Software Defined Networking) in the networks of the leading telcos worldwide. It builds on an extensive body of analysis by STL Partners over the past nine years on NFV and SDN strategies, technology and market developments.

Access our Telco Cloud Tracker here

Download the additional file for the full dataset of Telco Cloud deployments

Scope and content of the Tracker

The data in the latest update of our interactive tool and database covers the period up to September 2021, although reference is made in the report to events and deployments after that date. The data is drawn predominantly from public-domain information contained in news releases from operators and vendors, along with reputable industry media.

We apply the term ‘deployment’ to refer to the total set of VNFs, CNFs or SDN technology, and their associated management software and infrastructure, deployed at an operator – or at one or more of an operator’s opcos or natcos – in order to achieve a defined objective or support particular services (in the spreadsheet, we designate these as the ‘primary purpose’ of the deployment). For example, this could be:

  • to deploy a 5G standalone core
  • to launch a software-defined WAN (SD-WAN) service
  • or to construct a ‘telco cloud’ or NFV infrastructure (NFVi): a cloud infrastructure platform on which virtualised network services can be introduced and operated.

The Tracker is provided as an interactive tool containing line-by-line analysis of over 900 individual deployments of VNFs, CNFs or SDN technology, which can be used to drill down by:

  • Region where deployed
  • Operator
  • Technology vendor
  • Primary purpose
  • Category of NFV/SDN technology deployed
  • …and more filters

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5G standalone (SA) will hit an inflection point in 2022

5G standalone (SA) core is beginning to take off, with 19 deployments so far expected to be completed in 2022. The eventual total will be higher still, as will that of NSA core, as NSA 5G networks continue to be launched. As non-standalone (NSA) cores are replaced by SA, this will result in another massive wave of core deployments – probably from 2023/4 onwards.

Standalone 5G vs non-standalone 5G core deployments

STL-5G-standalone-core-cloud-tracker-2021

Source: STL Partners

 

Previous telco cloud tracker releases

Each new release of the tracker is global, but is accompanied by an analytical report which focusses on trends in given regions from time to time:

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NFV Deployment Tracker: Global review and update

Welcome to The NFV Deployment Tracker!

This report is the fourth analytical report in the ‘NFV Deployment Tracker’ series and is intended as an accompaniment to the third update of the Tracker Excel spreadsheet (to the end of June 2018).

The update extends the coverage of the Tracker worldwide: adding a comprehensive set of data on live, commercial deployments of NFV and SDN in the African, Latin American and Middle East markets to the existing data set on Asia-Pacific, Europe and North America. In addition, the spreadsheet contains updated and expanded data on deployments in the latter regions.

The expansion of the Tracker’s coverage worldwide presents an opportunity to gain an overview of global SDN and NFV development and deployment trends, and to assess the prospects for the technologies, and the services based on them, going forward.

Previous editions and other NFV / SDN research

Scope of information provided by the Tracker

The data in the NFV Deployment Tracker is sourced primarily from public-domain information such as telco and vendor press releases and reliable press reports regarding successfully completed deployments and the launch of live, commercial services based on virtualised network functions (VNFs) or SDN. We have also obtained some confidential information direct from operators, which we are unable to present in the detailed break-down of deployments by operator. However, this information has been added to an aggregated data set, which is also provided in the spreadsheet.

The data is therefore limited to verified deployments: production implementations of NFV and SDN powering live services, where we can be confident that the data on the VNFs and IT components involved is accurate and – as far as possible – up to date. We also include some information on deployments planned to be completed by the end of 2017 or by a date as yet unknown, where the information is in the public domain, and where the size and scope of the deployments merit their inclusion.

Contents:

  • Executive Summary
  • The volume and pace of SDN / NFV deployments continues to grow…
  • …but some fundamental challenges remain
  • The focus of deployments varies region by region
  • Operator trends
  • Vendor trends
  • Conclusion
  • Introduction
  • Welcome to the third update of the ‘NFV Deployment Tracker’
  • Scope, definitions and importance of the data
  • Analysis of the global data set
  • Constant growth – but SDN / NFV deployment is far from universal
  • Asia-Pacific ahead on number of deployments despite a slowdown in 2018
  • SD-WAN, SDN, core network functions and orchestration have driven the growth in 2018
  • Operator trends: Leading players rack up the deployments, leaving others lagging far behind
  • Vendor trends: a few major players dominate the scene – but telcos continue to look for alternatives
  • Conclusion 

Figures:

  • Figure 1: Growth in the number of SDN / NFV deployments per year, 2012 to June 2018
  • Figure 2: Breakdown of total deployments by region, 2012 to June 2018
  • Figure 3: Deployments by region, 2014 to 2018
  • Figure 4: Global deployments by higher-level category, 2014 to 2018
  • Figure 5: Deployments in Europe by leading category, 2014 to 2018
  • Figure 6: Asia-Pacific deployments by higher-level category, 2014 to 2018
  • Figure 7: Deployments in North America by leading categories, 2014 to 2018
  • Figure 8: Global deployments of leading VNFs and functional components, 2014 to 2018
  • Figure 9: Total deployments of leading VNFs and functional components, Middle East
  • Figure 10: Leading VNFs and functional components, Latin America
  • 1Figure 11: Leading operators by number of deployments, global
  • Figure 12:  Leading vendors by number of deployments, global
  • Figure 13: Leading vendors by deployment category 25

NFV Deployment Tracker: Asia takes the lead

Introduction

Welcome to the second update of the ‘NFV Deployment Tracker’

This report is the third analytical report in the ‘NFV Deployment Tracker’ series and is intended as an accompaniment to the second update of the Tracker Excel spreadsheet (dated March 2018).

The update provides a comprehensive set of data on live, commercial deployments of NFV and SDN in the Asia-Pacific market. Under ‘Asia-Pacific’, we include all of the countries of Central, Southern and South-East Asia, along with Oceania. In addition to the new set of data for Asia-Pacific, the spreadsheet contains updated and revised data on deployments in the European and North American regions.

In June 2018, the data set and analysis will be extended to all other regions worldwide, with the aim of providing the industry’s most comprehensive, authoritative source of information on live deployments of NFV and SDN.

Scope, definitions and importance of the data

Detailed explanation of the scope of the information provided in the Tracker, definitions of terms (including how we define a live ‘deployment’ and definitions of frequently used NFV / SDN acronyms) and an account of why we think it is important to track the progress of NFV / SDN are provided in the first analytical report of the series – so we will not repeat them here.

Analysis of the Asia-Pacific data set

Overall data and trends: Asia-Pacific is the largest global market for NFV

We have gathered data on 102 live, commercial deployments of NFV and SDN in Asia-Pacific between 2012 and 2018. These were completed by 33 telcos, including all of the major operators in China, Japan, South Korea and Australia. Deployments have been more limited in India: seven in total, including two global implementations by Tata Communications. Altogether, the data includes information on 203 known Virtual Network Functions (VNFs), functional sub-components and supporting infrastructure elements that have formed part of these deployments.

This means that Asia-Pacific is the largest market for NFV and SDN, measured purely in terms of number of deployments. The Asia-Pacific totals outstrip the updated numbers for both Europe (89 deployments and 182 VNFs / functional components) and North America (62 deployments and 126 VNFs / functional components). The number of operators that have completed deployments is also higher than that in Europe or North America.

Contents:

  • Executive Summary
  • Asia-Pacific is the leading global SDN / NFV market
  • Introduction
  • Welcome to the second update of the ‘NFV Deployment Tracker’
  • Scope, definitions and importance of the data
  • Analysis of the Asia-Pacific data set
  • Overall data and trends: Asia-Pacific is the largest global market for NFV
  • SDN, SD-WAN and core network functions have driven the growth
  • Operator trends: Innovators lead the way, closely followed by the Chinese giants
  • Vendor trends: SD-WAN and vCPE vendors lead the way
  • Conclusion

Figures:

  • Figure 1: Total NFV and SDN deployments in Asia-Pacific, 2012 to 2018
  • Figure 2: Asia-Pacific deployments by higher-level category, 2014 to 2018
  • Figure 3: European deployments by higher-level category, 2014 to 2018
  • Figure 4: North American deployments by higher-level category, 2014 to 2018
  • Figure 5: Leading VNFs and functional components deployed in Asia-Pacific
  • Figure 6: Leading Asia-Pacific operators by number of NFV / SDN deployments
  • Figure 7: Leading vendors by number of deployments

NFV Deployment Tracker – North America: SD-WAN tail wags NFV dog

Introduction

Welcome to the first update of the ‘NFV Deployment Tracker’

This report is the second analytical report in the ‘NFV Deployment Tracker’ series and is intended as an accompaniment to the first update of the Tracker Excel spreadsheet (to December 2017).

The update provides a comprehensive set of data on live, commercial deployments of NFV and SDN in the North American market (including the US, Canada and the Caribbean). In addition, the spreadsheet contains updated and revised data on deployments in the European region.

In March 2018, the data set and analysis will be extended to all other regions worldwide, with the aim of providing the industry’s most comprehensive, authoritative source of information on live deployments of NFV and SDN.

Scope, definitions and importance of the data

Detailed explanation of the scope of the information provided in the Tracker, definitions of terms (including how we define a live ‘deployment’ and definitions of frequently used NFV / SDN acronyms) and an account of why we think it is important to track the progress of NFV / SDN are provided in the first analytical report of the series – NFV Deployment Tracker: Europe (September 2017).

Contents:

  • Executive Summary
  • Conclusion: strong growth in 2018 will be delivered by the continuing rise of SD-WAN and new consumer use cases
  • Introduction
  • Welcome to the first update of the ‘NFV Deployment Tracker’
  • Scope, definitions and importance of the data
  • Analysis of the North American data set
  • Overall data and trends
  • ‘Service-led Innovation’ has driven the deployments
  • ‘Technology Evolution’ deployments are less in evidence
  • Operator trends: AT&T and Verizon dispute first place, while other players focus on differentiated offers
  • Vendor trends: SD-WAN and vCPE vendors lead the way
  • Conclusion: A dynamic enterprise market – but consumer use cases still outstanding

Figures:

  • Figure 1: Total NFV and SDN deployments in North America, 2011 to 2017
  • Figure 2: North American deployments by higher-level category, 2014 to 2017
  • Figure 3: European deployments by higher-level category, 2014 to 2017
  • Figure 4: Leading North American operators by number of NFV / SDN deployments
  • Figure 5: Leading vendors by number of deployments (North America)

NFV Deployment Tracker: Europe (September 2017)

This report is discussed in our free webinar recording: Keeping NFV on track – Assessing operator strategies and progress

Introduction

Welcome to The NFV Deployment Tracker!

This report is the first of a new series of statistical and analytical reports tracking the progress of NFV and SDN: ‘The NFV Deployment Tracker’. The ‘Tracker’ builds on an extensive body of analysis by STL Partners over the past two years on NFV and SDN strategies, technology and market developments.

This service will be updated on a quarterly basis and will provide a steadily growing database on live deployments of NFV and SDN by telcos worldwide. The data is presented in an Excel spreadsheet, accompanied by an analytical report presenting the key statistics and trends observed during the quarter.

At launch, the Tracker provides data on the European market; December’s update will also include comprehensive data from the North American market; and in March 2018, we will extend the coverage to Asia and the Rest of the World – while up-to-date information on the markets already included will be added on a continuous basis.

Scope of information provided by the Tracker

The data in the NFV Deployment Tracker is sourced primarily from public-domain information such as telco and vendor press releases and reliable press reports regarding successfully completed deployments and the launch of live, commercial services based on virtualised network functions (VNFs) or SDN. We have also obtained some confidential information direct from operators, which we are unable to present in the detailed break-down of deployments by operator. However, this information has been added to an aggregated data set, which is also provided in the spreadsheet.

The data is therefore limited to verified deployments: production implementations of NFV and SDN powering live services, where we can be confident that the data on the VNFs and IT components involved is accurate and – as far as possible – up to date. We also include some information on deployments planned to be completed by the end of 2017 or by a date as yet unknown, where the information is in the public domain, and where the size and scope of the deployments merit their inclusion.

In terms of size, the research has focused on Tier-One carriers, including the incumbent or former incumbent operators of every European state, along with leading competitive operators in major markets, Pan-European players and the leading cablecos. We have not included smaller local and regional players, Tier-Three providers and all but the largest Tier-Two carriers. We include all deployments within Europe, even if the parent company involved is headquartered outside of Europe (e.g. US-based Liberty Global, which owns cable assets across Europe). But we do not include deployments at non-European subsidiaries of Europe-based operator groups.

We have also not included activity around proofs of concept (PoCs), live tests or demonstrations of NFV and SDN. This is partly because a lot of this work never comes to fruition in terms of commercial deployments – at least not in quite the same combination of elements as the pre-commercial tests – and partly because the aim of the Tracker is to provide a reliable, comprehensive source of information on actual, commercial implementations of NFV and SDN, from which vendor and telco hype about the technologies has been eliminated.

Contents:

  • Executive Summary: NFV still on the roadmap, but horizons of deployment stretch out
  • Welcome to the NFV Deployment Tracker
  • Scope and importance of the Tracker
  • European data: Steady but unspectacular growth in deployments
  • Conclusion: NFV still squarely on the roadmap, but navigating the landscape is taking longer than scheduled
  • Introduction
  • Welcome to The NFV Deployment Tracker!
  • Scope of information provided by the Tracker
  • Definitions
  • What counts as a deployment?
  • Why is this information important?
  • Analysis of the initial European data set
  • Overall data and trends
  • Winners, losers and low-hanging fruit
  • Vendor trends
  • Operator trends
  • Conclusion
  • NFV is still very much on the roadmap, but the horizon of deployment is stretching out further than anticipated

Figures:

  • Figure 1: Definition of main abbreviations used in this report
  • Figure 2: Total NFV and SDN deployments in Europe, 2009 to 2017
  • Figure 3: Deployments from 2009 to 2017 broken down by higher-level categories
  • Figure 4: Deployments by leading network function and infrastructure category, 2014 to 2017
  • Figure 5: Number of deployments by lead vendor
  • Figure 6: Leading operators in terms of number of deployments

Vendors vs. telcos? New plays in enterprise managed services

Digital transformation is reshaping vendors’ and telcos’ offer to enterprises

What does ‘digital transformation’ mean?

The enterprise market for telecoms vendors and operators is being radically reshaped by digital transformation. This transformation is taking place across all industry verticals, not just the telecoms sector, whose digital transformation – desirable or actual – STL Partners has forensically mapped out for several years now.

The term ‘digital transformation’ is so familiar that it breeds contempt in some quarters. Consequently, it is worth taking a while to refresh our thinking on what ‘digital transformation’ actually means. This will in turn help explain how the digital needs and practices of enterprises are impacting on vendors and telcos alike.

The digitisation of enterprises across all sectors can be described as part of a more general social, economic and technological evolution toward ever more far-reaching use of software-, computing- and IP-based modes of: interacting with customers and suppliers; communicating; networking; collaborating; distributing and accessing media content; producing, marketing and selling goods and services; consuming and purchasing those goods and services; and managing money flows across the economy. Indeed, one definition of the term ‘digital’ in this more general sense could simply be ‘software-, computing- and IP-driven or -enabled’.

For the telecoms industry, the digitisation of society and technology in this sense has meant, among other things, the decline of voice (fixed and mobile) as the primary communications service, although it is still the single largest contributor to turnover for many telcos. Voice mediates an ‘analogue’ economy and way of working in the sense that the voice is a form of ‘physical’ communication between two or more persons. In addition, the activity and means of communication (i.e. the actual telephone conversation to discuss project issues) is a separate process and work task from other work tasks, in different physical locations, that it helps to co-ordinate. By contrast, in an online collaboration session, the communications activity and the work activity are combined in a shared virtual space: the digital service allows for greater integration and synchronisation of tasks previously carried out by physical means, in separate locations, and in a less inherently co-ordinated manner.

Similarly, data in the ATM and Frame Relay era was mainly a means to transport a certain volume of information or files from one work place to another, without joining those work places together as one: the work places remained separate, both physically and in terms of the processes and work activities associated with them. The traditional telecoms network itself reflected the physical economy and processes that it enabled: comprising massive hardware and equipment stacks responsible for shifting huge volumes of voice signals and data packets (so called on the analogy of postal packets) from one physical location to another.

By contrast, with the advent of the digital (software-, computing- and IP-enabled) society and economy, the value carried by communications infrastructure has increasingly shifted from voice and data (as ‘physical’ signals and packets) to that of new modes of always-on, virtual interconnectedness and interactivity that tend towards the goal of eliminating or transcending the physical separation and discontinuity of people, work processes and things.

Examples of this digital transformation of communications, and associated experiences of work and life, could include:

  • As stated above, simple voice communications, in both business and personal life, have been increasingly superseded by ‘real-time’ or near-real-time, one-to-one or one-to-many exchange and sharing of text and audio-visual content across modes of communication such as instant messaging, unified communications (UC), social media (including increasingly in the work place) or collaborative applications enabling simultaneous, multi-party reviewing and editing of documents and files
  • Similarly, location-to-location file transfers in support of discrete, geographically separated business processes are being replaced by centralised storage and processing of, and access to, enterprise data and applications in the cloud
  • These trends mean that, in theory, people can collaborate and ‘meet’ with each other from any location in the world, and the digital service constitutes the virtual activity and medium through which that collaboration takes place
  • Similarly, with the Internet of Things (IoT), physical objects, devices, processes and phenomena generate data that can be transmitted and analysed in ‘real time’, triggering rapid responses and actions directed towards those physical objects and processes based on application logic and machine learning – resulting in more efficient, integrated processes and physical events meeting the needs of businesses and people. In other words, the IoT effectively involves digitising the physical world: disparate physical processes, and the action of diverse physical things and devices, are brought together by software logic and computing around human goals and needs.

‘Virtualisation’ effectively means ‘digital optimisation’

In addition to the cloud and IoT, one of the main effects of enterprise digital transformation on the communications infrastructure has of course been Network Functions Virtualisation (NFV) and SoftwareDefined Networking (SDN). NFV – the replacement of network functionality previously associated with dedicated hardware appliances by software running on standard compute devices – could also simply be described as the digitisation of telecoms infrastructure: the transformation of networks into software-, computing- and IP-driven (digital) systems that are capable of supporting the functionality underpinning the virtual / digital economy.

This functionality includes things like ultrafast, reliable, scalable and secure routing, processing, analysis and storage of massive but also highly variable data flows across network domains and on a global scale – supporting business processes ranging from ‘mere’ communications and collaboration to co-ordination and management of large-scale critical services, multi-national enterprises, government functions, and complex industrial processes. And meanwhile, the physical, Layer-1 elements of the network have also to become lightning-fast to deliver the massive, ‘real-time’ data flows on which the digital systems and services depend.

Virtualisation creates opportunities for vendors to act like Internet players, OTT service providers and telcos

Virtualisation frees vendors from ‘operator lock-in’

Virtualisation has generally been touted as a necessary means for telcos to adapt their networks to support the digital service demands of their customers and, in the enterprise market, to support those customers’ own digital transformations. It has also been advocated as a means for telcos to free themselves from so-called ‘vendor lock-in’: dependency on their network hardware suppliers for maintenance and upgrades to equipment capacity or functionality to support service growth or new product development.

From the other side of the coin, virtualisation could also be seen as a means for vendors to free themselves from ‘operator lock-in’: a dependency on telcos as the primary market for their networking equipment and technology. That is to say, the same dynamic of social and enterprise digitisation, discussed above, has driven vendors to virtualise their own product and service offerings, and to move away from the old business model, which could be described as follows:

▪ telcos and their implementation partners purchase hardware from the vendor
▪ deploy it at the enterprise customer
▪ and then own the business relationship with the enterprise and hold the responsibility for managing the services

By contrast, once the service-enabling technology is based on software and standard compute hardware, this creates opportunities for vendors to market their technology direct to enterprise customers, with which they can in theory take over the supplier-customer relationship.

Of course, many enterprises have continued to own and operate their own private networks and networking equipment, generally supplied to them by vendors. Therefore, vendors marketing their products and services direct to enterprises is not a radical innovation in itself. However, the digitisation / virtualisation of networking technology and of enterprise networks is creating a new competitive dynamic placing vendors in a position to ‘win back’ direct relationships to enterprise customers that they have been serving through the mediation of telcos.

Virtualisation changes the competitive dynamic

Virtualisation changes the competitive dynamic

Contents:

  • Executive Summary: Digital transformation is changing the rules of the game
  • Digital transformation is reshaping vendors’ and telcos’ offer to enterprises
  • What does ‘digital transformation’ mean?
  • ‘Virtualisation’ effectively means ‘digital optimisation’
  • Virtualisation creates opportunities for vendors to act like Internet players, OTT service providers and telcos
  • Vendors and telcos: the business models are changing
  • New vendor plays in enterprise networking: four vendor business models
  • Vendor plays: Nokia, Ericsson, Cisco and IBM
  • Ericsson: changing the bet from telcos to enterprises – and back again?
  • Cisco: Betting on enterprises – while operators need to speed up
  • IBM: Transformation involves not just doing different things but doing things differently
  • Conclusion: Vendors as ‘co-Operators’, ‘co-opetors’ or ‘co-opters’ – but can telcos still set the agenda?
  • How should telcos play it? Four recommendations

Figures:

  • Figure 1: Virtualisation changes the competitive dynamic
  • Figure 2: The telco as primary channel for vendors
  • Figure 3: New direct-to-enterprise opportunities for vendors
  • Figure 4: Vendors as both technology supplier and OTT / operator-type managed services provider
  • Figure 5: Vendors as digital service creators, with telcos as connectivity providers and digital service enablers
  • Figure 6: Vendors as digital service enablers, with telcos as digital service creators / providers
  • Figure 7: Vendor manages communications / networking as part of overall digital transformation focus
  • Figure 8: Nokia as technology supplier and ‘operator-type’ managed services provider
  • Figure 9: Nokia’s cloud-native core network blueprint
  • Figure 10: Nokia WING value chain
  • Figure 11: Ericsson’s model for telcos’ roles in the IoT ecosystem
  • Figure 12: Ericsson generates the value whether operators provide connectivity only or also market the service
  • Figure 13: IBM’s model for telcos as digital service enablers or providers – or both

Full Article: Nokia and Symbian – Missing an Opportunity?

The recent purchase of Symbian by Nokia highlights the tensions around running a consortium-owned platform business. Obviously, Nokia believes that making the software royalty-free and open source is the key to future mass adoption. While Nokia is busy buying Symbian, the competition has moved on and offers a lot more than purely handset features. The team at Telco 2.0 disagree and believe the creation of the Symbian Foundation will cure none of the governance or product issues going forward. Additionally, Symbian isn’t strong in the really important bits of the mobile jigsaw that generates the real value to any of the end-consumer, developer or mobile operator.

In this article, we look at the operating performance of Symbian. In a second we examine the “openness? of Symbian going forward, since “open? remains such a talisman of business model success.

Background

Symbian’s core product is a piece of software code that the user doesn’t interact with directly — it’s low-level operating system code to deal with key presses, screen display, and controlling the radio. Unlike Windows (but rather like Unix) there are three competing user interfaces built on this common foundation: Nokia’s Series 60 (S60), Sony Ericsson’s UIQ, and DoCoMo’s MOAP. Smartphones haven’t taken the world by storm yet, but Symbian is the dominant smartphone platform, and thus is well positioned to trickle down to lower-end handsets over time. What might be relevant to 100m handsets this year could be a billion handsets in two or three years from now. As we saw on the PC with Windows, the character of the handset operating system is critical to who makes money out of the mobile ecosystem.

The “what? of the deal is simple enough — Nokia spent a sum of money equivalent to two years’ licence fees buying out the other shareholders in Symbian, before staving off general horror from other vendors by promising to convert the firm into an open-source foundation like the ones behind Mozilla, Apache and many other open-source projects. The “how? is pretty simple, too. Nokia is going to chip in its proprietary S60, and assign the S60 developers to work on Symbian Foundation projects.

Shareholding Structure

The generic problem with consortium is typically not all members are equal and almost certainly have different objectives. This has always been the case with Symbian.

It is worth examining the final shareholder structure which has been stable since July 2004: Nokia – 47.9%, Ericsson – 15.6%, SonyEricsson – 13.1%, Panasonic – 10.5%, Siemens – 8.4% and Samsung – 4.5%. At the bottom of the article we have listed the key corporate events in Symbian history and the changes in shareholding.

It is interesting to note that: Siemens is out of the handset business, Panasonic doesn’t produce Symbian handsets (it uses LiMo), Ericsson only produces handsets indirectly through SonyEricsson, and Samsung is notably permissive towards handset operating systems.

SonyEricsson has been committed towards Symbian at the top end of its range, although recently is adding Windows Mobile for its Xperia range targeted at corporates.

Nokia seems almost committed though has recently purchased Trolltech — a notable fan of Linux and developer of Qt.

The tensions within the shareholders seem obvious: Siemens was probably in the consortium for pure financial return, whereas for Nokia it was a key component of industrial strategy and cost base for its high-end products. The other shareholders were somewhere in between those extremes. The added variable was that Samsung, Nokia’s strongest competitor, seemed hardly committed to the product.

It is easy to produce a hypotheses that the software roadmap and licence pricing for Symbian was difficult to agree and that was before the user interface angle (see below).

Ongoing Business Model

Going forward, Nokia has solved the argument of licence pricing — it is free. Whether this passed to consumers in the form of lower handset prices is open to debate. After all, Nokia somehow has to recover the cost of an additional 1,000 personnel on its payroll. For SonyEricsson with its recent profit warning, any improvement in margin will be appreciated, but this doesn’t necessarily mean a reduction in pricing.

It also seems obvious that Nokia will also control the software roadmap going forward: it seems to us that handset operators using Symbian will be faced with three options: free-ride on Nokia; pick and choose components and differentiate with self-build components; or pick another OS.

We think that given the chosen licence (Eclipse — described in more detail in next article), plus the history of Symbian user-interfaces, and the dominance of Nokia, all point towards other handset operators producing their own flavours of Symbian going forward.

Competition

Nokia may have bought Symbian, even without competitive pressures, purely to reduce its own royalties. However, the competitive environment adds an additional dimension to the decision.

RIM and Microsoft are extremely strong in the corporate space and both share two features that Symbian are currently extremely weak in — they both excel in synchronizing with messaging and calendaring services.

Apple has also raised the bar in usability. This is something where Symbian has stayed clear, but is certainly not one of the strengths of S60, the Nokia front end. The wife of one of our team — tech-savvy, tri-lingual, with a PhD in molecular biology — couldn’t work out how to change the ringtone, and not for lack of trying. What do you mean it’s not under ‘settings’? Some unkind tongues have even speculated that the S60 user interface was inspired by an Enigma Machine stolen to order by Nokia executives.

Qualcomm is rarely mentioned when phone operating systems are talked about, and that is because they take a completely different approach. Qualcomm’s BREW would be better classified as a content delivery system, and it is gaining traction in Europe. Two really innovative handsets of last year, the O2 Coccoon and the 3-Skypephone, were both based upon Qualcomm software. Qualcomm’s differentiator is that it is not a consumer brand and develops solutions in partnership with operators.

The RIM, Microsoft, Apple and Qualcomm solutions share one thing in common: they incorporate network elements which deliver services.

Nokia is of course moving into back-end solutions through its embryonic Ovi services. And this may be the major point about Symbian: it is only one, albeit important piece of the jigsaw. Meanwhile, as we’ve written before, Ovi remains obsessed around information and entertainment services, neglecting the network side of the core voice and messaging service. Contrast with Apple’s first advance with Visual Voicemail.

As James Balsillie, CEO of RIM, said this week “The sector is shifting rapidly. The middle part is hollowing — there are cheap, cheap, cheap phones and then it is smartphones to a connected platform.��?

Key Symbian Dates.

June 1998 – Launch with Psion owning 40%, Nokia 30% & Ericsson 30%.
Oct 1998 – Motorola Joins Consortium

Jan 1999 – Symbian acquires Ronneby Labs from Ericsson and with it the original UIQ team & codebase.

Mar 1999 – DoCoMo partnership

May 1999 – Panasonic joins Consortium. Equity Stakes now: Psion – 28%, Nokia / Ericsson / Motorola – 21%, Panasonic – 9%.

Jan 2002 – Funding Round of £20.75m. SonyEricsson tales up Ericsson Rights.

Jun 2002 – Siemens Joins Consortium with £14.25m for 5%. Implied Value £285m

Feb 2003 – Samsung Joins Consortium with £17m for 5%. Implied Value £340m.

Aug 2003 – Five Years Anniversary. Original Consortium Members can now sell. Motorola sells stake for £57m to Nokia & Psion. Implied Value £300m.

Feb 2004 – Original Founder Founder Psion decides to sell out. Announces to Sell 31.7% for £135.5m with part of payment dependant of future royalties. Implied Value £427m. Nokia would have > 50% control. David Potter of Psion says total investment in Symbian was £35m to-date, so £135.5m represents a good return.

July 2004 – Preemption of Psion Stake by Panasonic, SonyEricsson & Siemens. Additional Rights issue of £50m taken up by Panasonic, SonyEricsson, Siemens & Nokia. New Shareholding structure: Nokia – 47.9%, Ericsson – 15.6%, SonyEricsson – 13.1%, Panasonic – 10.5%, Siemens – 8.4% and Samsung – 4.5%.

Agree to rise cost base to c. £100m/per annum and headcount of c. 1,200.

Feb 2007 – Agree to sell UIQ to SonyEricsson for £7.1m.

June 2008 – Nokia buys rest of Symbian with Implied Value of €850m (£673m) with approx. payout of – Ericsson – £105m, SonyEricsson – £88.2m, Panasonic – £70.7m, Siemens of £56.5m and Samsung £30.3m. Note, Symbian had net cash of €182m. The price quoted by Nokia of €262m is the net price paid by Nokia to buy out the consortium not the value of the company.