Nokia may acquire Psion

The move would allow the Finnish mobile phone giant to exert greater control over the Symbian smartphone operating system, raising questions over the software's direction

The future of Symbian as a mobile operating system provider backed widely across the industry has once again been questioned following a weekend report that Nokia is considering acquiring fellow stakeholder Psion.

Last month there were claims from the man at the helm of developing rival Palm OS that Nokia is getting too powerful within Symbian, while others have been equally unkind about Motorola's divestment from the venture. Its stake was subsequently bought by Nokia and Psion.

On Sunday, however, the UK's The Business weekly newspaper reported that Nokia is considering snapping up Psion, citing "an industry source with knowledge of Nokia's plans". The assumption is that a bid will value Psion, which is now more of a provider of messaging software and industrial devices, at over £400m.

Shares in Psion were up almost 10 per cent by midday on Monday at £82.65, close to a new 52-week high.

Some critics and rivals have long contended that Nokia already has too much influence within Symbian, something that Symbian itself and other stakeholders such as Sony Ericsson deny.

However, Nokia's fiercest competitor in the smartphone market over the long term is likely to be Microsoft and there are those who believe the Finnish giant must control the mobile OS to remain strong.

According to analyst house IDC, in 2003 about 1.8 million phones that use Microsoft's operating system are expected to have shipped compared with 8.3 million Symbian units. By 2007, about 16.5 million units with Microsoft's software are projected to ship worldwide compared with 49.2 million based on Symbian.

While there is speculation that Symbian could follow Google as one of the hot flotations of 2004, others see a trade sale as likely. One venture capitalist recently said: "My prediction is that Nokia buys them in the next 18 months."

The Symbian OS is based on the EPOC OS developed by Psion through the 1990s, which powered some its once-popular handheld computers. Psion initially formed Symbian with founder members Ericsson, Motorola and Nokia. Other members now include Matsushita, Samsung and Siemens, leading Microsoft chairman Bill Gates to at one stage call the venture the software behemoth's biggest threat.

Nokia and Psion declined to comment on the rumour. Symbian could not be contacted at the time of writing.

In related news, Juha Christensen, an executive in Microsoft's mobile device software group and one-time higher-up at Symbian, announced plans to leave Microsoft later this year.