Nokia Buys Norway’s Smarterphone To Spruce Up Its Feature Phone OS

Just as Nokia (NYSE: NOK) is gearing up for a splash at CES to kick off the U.S. launch of its new line of Microsoft-powered smartphones, it has pulled a quick draw to show it is not going to neglect its lower-end devices in the process. The company has acquired Smarterphone, an Oslo, Norway-based company who makes an operating system for feature phones to work more like smartphones.
We are still trying to get a figure for the deal — no financial terms were revealed in the release put out by Ferd Capital, an investor in Smarterphone. Ferd says that it invested €6.5 milion ($8.3 million) in the company since 2007.
Smarterphone’s main product is an OS for feature phones that delivers a user experience “similar to smartphones” but for lower-cost handsets, presumably built with slower processors and less-advanced screen technology and other less expensive features. Up to now, Smarterphone has been selling on that platform to device makers. It has had particular success with Asian handset vendors. Compal is one of the largest named on its site.
It is not clear whether this will mean that Nokia will drop its own S40 operating system in favor of this, or if it will be integrating Smarterphone’s technology into its own. Nor is it clear yet whether Nokia will continue selling on the OS to other device makers, or whether this is a move that will help it keep that technology and platform to itself.
We are contacting Smarterphone and Nokia and will update the story with more detail as we learn it.
Enhanced, low-cost feature phones that run more graphical interfaces and allowing for such services as app stores (Samsung has one on its own feature phone OS, bada) is a growing trend in the feature phone device segment. As we pointed out earlier today, Samsung’s bada line is strong enough that it is compared by at least one analyst group, Gartner, to smarphones — and is beating some of them already at that game in terms of unit sales and market share; also, feature phones are a key route to tying users to a brand, so that they eventually do choose their more expensive smartphones when they choose to upgrade.
Nokia’s own share in feature phones has been declining, along with the rest of its market share, and it is an area that the company cannot ignore, even as it is giving its all to its new strategy to use Microsoft’s OS for its flagship range of smartphones. Nokia is still the biggest handset maker in developing markets, which are still ripe ground for lower-cost feature devices.
The news comes amid rumors that Nokia is lining up to appoint one of its existing board members, Risto Siilasmaa, as its new chairman; and is gearing up to sell itself to Microsoft (NSDQ: MSFT), with the adoption of the company’s OS only the first step in that process.
Nokia next week will be keeping a strong presence at the CES trade show in Las Vegas, part of a reportedly $200 million marketing campaign around the company’s forthcoming, as-yet unreleased Lumia 900 device.
Other investors in Smarterphone that are now cashing out are Innovation Norway and individual investors Haavard Nord (Trolltech founder) and Lars Øberg.