* Meltemi intended to compete with Google's Android
* Nokia risks losing position in mass market
By Tarmo Virki
HELSINKI, July 26 Finnish cellphone maker Nokia
has ditched the software it was developing to compete
with Google's mass-market Android phones, three sources
with direct knowledge of the company's plans said, in its latest
move to slash costs.
Loss-making Nokia was hoping the Linux-based software
platform, code-named Meltemi, would replace its ageing Series 40
software in more advanced feature phones - mid-range phones that
sit between basic models and sophisticated smartphones.
Scrapping the platform means Nokia will risk losing its
strong position in the mass-market, where phones are priced at
$100-$200. Nokia controlled more than 20 percent of this market
in the first quarter, according to research firm IDC.
Nokia's Chief Executive Stephen Elop flagged Meltemi in a
leaked video in mid-2011, but Nokia has never officially
confirmed Meltemi existed. It declined to comment on Thursday.
In June, Nokia said it would cut 10,000 jobs - one in five
staff in its phone business - as it battles to pull the company
out of the red. Talks over job cuts are scheduled to end this
week in Finland.
Shares in Nokia extended their gains on Thursday and were
6.1 percent higher at 1.56 euros by 1328 GMT.
"With the pressure to make extreme cost-savings it is little
surprise that it has been cut," said Canalys analyst Pete
Cunningham. Launching and maintaining a software platform costs
hundreds of millions of euros.
One of the sources, who works at a supplier, said the
original plan was for the first feature phones using Meltemi
should to be on the market by now.
Smartphones such as Apple's iPhone which offer a
platform for third-party application developers, is where the
industry's strongest growth is. But simpler feature phones, with
limited support for third-party software, still account for most
Nokia's Series 40 platform is in around 2 billion
cellphones, making it the most ubiquitous software in the
market. But it lacks the smartphone-like experience, such as a
wide choice of advanced applications, that Meltemi could have
Google's Android platform has stormed the smartphone market
in its first few years. Last quarter it was used in roughly 60
percent of all smartphones sold.
Nokia last year dumped its own smartphone software platforms
in favour of Microsoft's Windows Phone, which has so
far had a limited impact, in part due to the high prices of
phones using it.
"The important factor for Nokia is driving Windows Phones
prices low enough to bridge the gap with the feature phones Asha
range -- that should happen in 2013," said Cunningham.
IDC analyst Francisco Jeronimo said Nokia has done well by
adding new features like full-touch screens and keyboards to its
latest Asha range of Series 40 phones.