UPDATE 4-Nokia plans one Linux phone next year -source

Mon Nov 30, 2009 12:55pm EST

Related Topics

* Analysts had expected several Linux models

* Symbian stays smartphone platform

* Executive says no plans to sell manufacturing plants

* Nokia shares close 1.1 percent lower

(Adds Nokia comments, updates shares)

By Tarmo Virki, European technology correspondent

HELSINKI, Nov 30 (Reuters) - Nokia (NOK1V.HE) plans to install Linux software on just one new smartphone next year, a source told Reuters on Monday, dampening prospects of a quick makeover of the Finnish group's struggling product line-up.

The Finnish firm has started to invest more in Internet services in recent years, seeking to counter falling handset prices and increased competition in smartphones from the likes of Apple and Blackberry-maker RIM RIM.TO.

The Linux Maemo operating system is seen as key for Nokia in its rivalry with Apple Inc's (AAPL.O) iPhone, and many analysts and industry players have been expecting the firm to roll out numerous Linux models already next year.

"This is not necessarily worrying, but they need a hit product. It has to be a winning one and Nokia needs to continue to work on Symbian in the meantime," said Gartner analyst Carolina Milanesi.

Nokia started to sell its first Linux phone, the top-of-the-range N900 model, this month.

"The potential of Linux computer operating system is in the high-end, and we have not yet fully harnessed that," Ari Jaaksi, head of Maemo at Nokia, told Reuters.

Nokia has used open source Linux Maemo since 2005 in its niche range of Internet tablets - sleek phone-like devices without connection to mobile networks.

"The key lesson we have had - almost everyone asked for a phone: ain't there a cellular connection?," Jaaksi said.

The Maemo operating system will be updated in 2010, with full integration of Qt technology, which enables software developers to create one application for different operating systems, iPhone-like capacitive touchscreen support and a tighter integration of Nokia's services.

'FULLY COMMITTED' TO SYMBIAN

"Launching just one Maemo model in the whole of 2010 need not be a problem if Nokia can develop an iPhone killer with standout design and superior usability," said analyst Neil Mawston from Strategy Analytics.

"The Symbian operating system will receive some upgrades over the next 6 to 18 months, so Nokia could well choose to focus on that critical task," he said.

The plan for one Linux phone also dampens rumours the firm would replace the Symbian operating system in its line-up.

"We remain firmly committed to Symbian as our smartphone platform of choice," said another Nokia spokesman, adding the company does not comment on future product plans.

Nokia will hold its capital markets day on Wednesday, an event at which the firm traditionally has outlined or updated its strategy for the coming one-to-two years. [ID:nGEE5AL0B2]

Nokia's closest rival Samsung Electronics (005930.KS) gave an upbeat forecast for 2009 mobile phone sales on Monday due to sharp growth in touchscreen models, but analysts warned surging volumes may not guarantee higher margins. [ID:nSEO35846]

NO PLANS TO CLOSE PLANTS

Nokia marketing head Anssi Vanjoki said the world's biggest handset maker had no plans to sell its manufacturing plants, dismissing speculation sparked by his interview in the run-up to the company's strategy update on Wednesday.

"Our logistics and manufacturing are an important competitive advantage, and a core part of Nokia's business ... We have no plans to change this business model," Vanjoki said on Monday in a statement.

German magazine Wirtschaftswoche quoted Vanjoki as saying one should "never say never" should a sale of handset manufacturing at some point be warranted as part of Nokia's transformation into a services provider. [ID:nGEE5AR082]

Following the Wirtschaftswoche report, the Chinese-language, Taipei-based Economic Daily on Monday cited unidentified institutional investors as saying Hon Hai (2317.TW), Taiwan's biggest electronics parts maker, would be the most likely candidate for Nokia's handset plants.

Nokia's shares closed 1.1 percent lower at 8.77 euros in Helsinki, slightly outperforming a 1.6 percent weaker Dow Jones Stoxx European Technology Index .SX8P. (Additional reporting by Brett Young in Helsinki and Kelvin Soh in Taipei; editing by John Stonestreet and Jon Loades-Carter) ((tarmo.virki@thomsonreuters.com, +358-9-680 50 235, Reuters messaging: tarmo.virki.reuters.com@reuters.net))

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