Open Source Strategy – The Case of Nokia

Abstract: The commercial mobile phone industry is a relatively new one. Starting out in the 1980s, it has proliferated in both numbers and in terms of technology. The last decade saw a sharp increase in both the number of subscribers and the amount of services which was offered by mobile devices. In order to keep up with this fast evolution of the industry, phones have started to get much more complicated and ‘smarter’ due to the software which is used to run these phones. Multi touch screen menus, High Definition video playback, multi megapixel cameras and a plethora of connectivity options are just some of the features a consumer takes for granted in his/her new mobile device. In order to provide these services to the user the software inside the phone has gotten complex to the scale of becoming its own Operating System much akin to the Operating Systems used on personal computers. These mobile operating systems contain millions of lines of software code and cost a lot of money to maintain and develop. Moreover having a popular operating system benefits the organization as it draws in many developers who can write applications which run on this operating system and also develop services which are specific to the operating systems. Having these services generate revenue for the network operators who get to bill the consumers for using the services or for the data which has been transferred to and from these mobile phones via the operator’s network. Nokia’s dominant market share in the smartphone market entails that it holds a near 40% share with its smartphone operating systems. Gradually the company has been moving towards opening up its previously proprietary operating systems to the public in the form of Open Source Software, where everyone is able to view, share, distribute and contribute to the software code. This strategy change has been taking place over the last couple of years and continues under an overall change of direction and focus which is taking place in the company. This thesis work relates as to what exactly is the current placement of Nokia in the economic and mobile devices market and how the company has been adapting to the challenges it has been facing at the hands of both old and new rivals who have been coming with innovative ideas in order to topple over Nokia from its throne of being the biggest mobile phone maker in the world. The thesis first looks at exactly what is Open Source Software. From there it gradually moves to do comparisons between closed and Open Source Software in order to give the reader an idea as to what are the pros and cons of each. In the second half of the thesis a snapshot of the current market situation and competitors is given in order to understand the environment in which Nokia has been working and developing its strategy in. Later on the thesis goes in depth about the decisions, their triggers and their implications with regards to Nokia and the use of Open Source Software as a strategy in this changing environment.