The new head of Nokia Corp. (NYSE: NOK) said that the world’s largest handset maker will launch its first product using a new operating system the company developed with Intel Corp. (NASDAQ: INTC) by the end of 2010. The OS, called MeeGo, will make its first appearance on Nokia’s new N8 phone, which is scheduled to launch in the third quarter with an upgraded Symbian3 operating system.
The Finnish company hopes to climb back into a smartphone leadership position and challenge Apple Inc. (NASDAQ: AAPL) and its iPhone for dominance. Two weeks ago Nokia lowered its guidance for the current quarter citing intense competition in the high-end of the smartphone market, the company’s own shift to lower-margin devices, and the declining euro. Nokia faces stiff competition from the Android operating system from Google Inc. (NASDAQ:GOOG) and Research in Motion Ltd. (NASDAQ: RIMM), as well as potentially fierce competition from Hewlett-Packard Co. (NYSE: HPQ), which today completed its acquisition of Palm Inc.
The MeeGo OS is based on the Linux operating system, as is Android and Palm’s webOS. Nokia phones have all used the Symbian OS to date, but it appears that the company is giving up on that operating system, at least for its high-end phones. Symbian3 is just an interim upgrade until the company kicks out Symbian4, not expected to happen until next year, if ever.
Nokia bought Symbian in 2008 and put the OS in the public domain, hoping that an army of developers would breathe new life into the venerable OS. That hasn’t happened, and some analysts believe the company ought to bring Symbian back into the corporate fold. Again, that doesn’t seem likely now.
The shift from Symbian to MeeGo makes sense from Nokia’s point of view because the MeeGo OS is derived from a full-blown PC operating system which already includes more available features than an OS, like Symbian, developed for a phone handset. The company also sees its future in selling large numbers of high-end smartphones, not competing for the low-end feature phone market.
Whether Nokia’s decision pans out will not be known for a few quarters. Until then, Nokia will suffer some pain on the bottom line.
But investors today seem to welcome the news of the switch to MeeGo. Nokia shares are up more than 2%.