In 2001, four Motorola (MOT) engineers in Beijing faced a daunting challenge. They were developing a mobile phone with a touch screen and a stylus that would let users update calendars and write messages. But it also needed to recognize Chinese characters -- a task that existing software on similar handsets couldn't handle.
They proposed what was at the time a far-fetched solution: Linux, a free operating system that is developed and updated by millions of developers worldwide via the Internet. Companies were beginning to use Linux in servers and PCs, but no one was putting it on cell phones.
It took about six months for the team to slice and dice the software in such a way that it could run on a phone's limited hardware, but it worked. With that, the open-source movement, already changing the way companies develop software for computers, took root in cell phones (see BW Online, 10/3/05, "Torvalds' Baby Comes of Age").
LINUX GETS SMARTER. Since then, Motorola has sold more than 3 million Linux phones in Asia. It's now starting to ship three models globally, with another scheduled to debut in 2006. The world's No. 2 cell-phone maker plans to refashion the majority of its handsets around Linux over time, says Greg Besio, Motorola's head of mobile-device software.
It's not hard to see the appeal of Linux for cell-phone makers (see BW Online, 9/6/04, "Cell Phones: Don't Count Linux Out"). It's cheap, malleable, and supported by millions of programmers the world over. Panasonic (MC) and NEC (NEC) earlier this year started shipping Linux-based phones through Japan's pioneering telecom giant NTT DoCoMo. And other big phone makers, such as Samsung, are dabbling (see BW Online, 11/8/05, "Dialing Up Linux").
So far, Linux is mainly running so-called smart phones, high-end handsets that retail for $300 or more. The percentage of smart phones with Linux has leapt to 26% in the second quarter of 2005, from just 6% the year before, according to researcher Gartner. Smart phones are a tiny -- but important -- slice of the phone business, accounting for about 6% of phone units sold every year.
UNIFORM WISH. Smart phones make up 14%, however, of the $300 billion in mobile phones produced annually. They're also an indicator of where mass-market handsets are headed. Gains for Linux are a potential bane for Symbian, a software consortium that dominates the smart-phone market, with a 65% share. The rising popularity of Linux on cell phones could also stymie efforts by Microsoft (MSFT) to widen its share, currently less than 5%.
"Our goal is to drive [Linux] to as many phones as possible," Motorola's Besio says. That conclusion was reached after a series of strategy sessions earlier this year, when company executives drew up a short list of the features they wanted in an operating system. While Microsoft and Symbian each met a few, only Linux covered them all, Besio says.
High on Motorola's wish list: running most, if not all, phones on a single, easy-to-maintain operating system. Currently, there's little uniformity in software for cell phones. Most of it is built in-house and varies from model to model, even within the same handset maker. That means applications, such as messaging or games, have to be rewritten for each phone, tying up developers and limiting innovation.
MOBILE LINUX INITIATIVE. And, as features like cameras and media players become more commonplace, handset makers are realizing their cobbled-together operating systems just aren't up to the challenge. Motorola maintains a staff of 2,500 engineers, about 4% of its workforce, to support the various programs running on its phones. Nokia (NOK), the biggest mobile-phone maker, spends more than 60% of its $4.2 billion annual research and development budget on software.
Another Linux advantage: It reduces costs, since there's no royalty on the operating system. There's also a large base of third-party developers who can create games and other applications based on Linux. Finally, Motorola was drawn to the prospect that it will be able to influence the development of the Linux mobile platform. Motorola is a key player in the Open Source Development Labs' new Mobile Linux Initiative, a consortium aimed at making Linux the predominant operating system on phones.
"The open-source community is allowing us to take some thought leadership to influence the road map," Besio says. "That doesn't happen with Microsoft." He declines to state exactly what percentage of Motorola phones will eventually run on Linux. According to Gartner, the company has indicated that percentage could get as high as 80%.
A FLEXIBLE BEAST. Even Nokia, which owns almost 50% of Symbian, leaves open the door to working with Linux, says Jorma Ollila, the top cell-phone maker's CEO. "We will put all our weight" behind Symbian for smart phones, he says. "But at the same time, we are working with the open-source and Linux community, so that we have the readiness to use Linux more in the future if we decide to." Nokia has already announced a Linux mobile device, the palm-sized 770 Internet Tablet, with a bright, landscape-oriented screen and Bluetooth and Wi-Fi technology, which enables high-speed wireless Internet access.
However strong the Linux draw may be, Symbian and Microsoft still have certain technological advantages. Both take little configuration and are virtually identical from one phone to the next. That means third-party developers can create off-the-shelf software programs for either. For instance, more than 4,100 applications are now available for devices running Symbian. Not so with Linux.
The software, which is constantly tweaked and expanded by the Linux community, can be a pretty flexible beast -- running everything from wristwatches to mainframes. The downside: There's no set Linux standard for phones, and it requires a lot of in-house configuration. Critics say that's hardly the vision of one operating system for all handsets.
CONSISTENCY COUNTS. "It's like Swiss cheese," says Jerry Panagrossi, vice president of Symbian's U.S. operations. Handset makers "are forced to apply resources to make up or fill in the gaps. You end up with proprietary extensions that are incompatible with one another."
Microsoft isn't standing by as Linux attracts adherents. Windows Mobile 5.0, which is out now, is a big improvement over version 4. The next version is expected to be even better, analysts say. Microsoft currently may have a small percentage of the market, but it has something neither the Linux nor Symbian operating systems have: a dedicated sales force of 20,000 calling on businesses. Right now, cell phones are largely a consumer market, but as they become more like small computers, companies will increasingly buy them in bulk for employees.
And IT departments want consistency. They know Microsoft, and the company is making it easy to port over existing applications on the desktop, like Outlook, and synch them together.
MICROSOFT MOBILITY. "Linux is interesting, but the challenge is [consistency]," says John Starkweather, Microsoft group product manager for mobile and embedded devices. "We're building devices where you have consistency. If applications aren't important, fine. Go ahead and use it. But you might as well be using any proprietary software."
It's a compelling argument. Microsoft says it works with more than 40 handset makers now, though most are minor players. Even Motorola carries several Microsoft phones targeted at the business market; those are unlikely to go away. And Bill Weinberg of the Open Source Development Labs (OSDL) admits that Microsoft is currently the easiest of the three to put on a phone, requiring little customization.
But handset makers have big concerns about Microsoft dominating the mobile operating system the way it did with PCs. While most Linux-based phone users never know they're using Linux, Microsoft phones require at least some Microsoft branding. That can eclipse the lesser-known brands of carriers or handset makers. Even operators have some reluctance to sign on for Windows-based handsets, amid concern that Microsoft could direct wireless Web traffic past operator portals to its own MSN service.
STANDARD HURDLES. That's where OSDL comes in -- and not a moment too soon. The nonprofit that supports Linux initiatives formed the Mobile Linux Initiative on Oct. 18, and recently held its first meeting in Beijing. There's plenty of disagreement on what the consortium's first focus should be, but the overall aim is to come up with a standard Linux operating system that can run on a broad array of phones by the end of 2006. That means a lot of technical problems -- such as sucking up too much battery power -- need to be solved.
OSDL has no small battle on its hands. It will have to mobilize a disjointed base of supporters, developers, and evangelists to solve technical glitches and come up with some kind of standard -- a task Weinberg equates to "pushing on a rope" at times. Still, after less than half a decade, it's clear Linux has a shot at becoming a bigger operating system on phones than on PCs; and pressure on Symbian and Microsoft won't let up anytime soon.
As for that Motorola team in Beijing -- their unconventional solution is looking smarter with every Linux-based phone sold.
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Lacy is a reporter for BusinessWeek Online in the Silicon Valley bureau
with Andy Reinhardt in Paris
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