Symbian makes a profit

Smartphone pioneer is succeeding in balancing revenues against market share, in the face of the threat from Microsoft and Linux

Smartphone operating system leader Symbian has recorded a strong performance in its latest financial results, released on Wednesday, and has predicted higher growth in future.

Around 12.3 million Symbian phones were shipped in the second quarter of 2006, which is 58 percent more than the previous quarter, and gives the company an estimated 70 percent of the fast-growing smartphone market.

But the company will have to work hard to fend off Microsoft and Linux, which some predict will eclipse it. Symbian's job now is to balance the revenues it brings in against its efforts to keep shipping more phones than the competition, through partners such as Nokia and Sony Ericsson.

In the second quarter, Symbian shifted the balance towards money by imposing higher royalties. Royalty revenues grew by 74 percent to £37.9m. This led to slower growth rates. The company has predicted that its shipments will keep growing at 75 percent a quarter, so 58 percent growth was actually a slowdown. The company predicts that growth will increase this quarter, thanks to lower royalties introduced in July to push the OS into cheaper phones.

 "You're right to assume we're in the black," chief executive Nigel Clifford told Reuters. "Our cost base is largely fixed, so we're fixated on growing the volumes."

Although some had predicted that 3G might be Symbian's downfall, Clifford believes Symbian is taking a lead: "In Q2 2006, 92 percent of the worldwide 3G smartphone market was powered by Symbian OS," he said in a statement released by Symbian.

Of the 23 Symbian phones introduced in the second quarter of this year, 15 were designed for 3G W-CDMA networks. Symbian phones are spreading to consumer activities in a new "smartphone lifestyle", said Clifford, pointing to the sport-oriented Nokia 5500 Symbian phone that includes a pedometer for joggers, and the Sky by mobile service that allows more sedentary people to programme their Sky+ video recorder remotely.

Handset makers Nokia, Ericsson and Sony Ericsson own 76.6 percent of Symbian, with Panasonic, Samsung and Siemens also holding a stake in the company.

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