Symbian is continually advancing the Symbian OS technically towards the volume mobile phone market. As it does so the bill of materials for Symbian phones decreases and licensing costs are becoming increasingly important to growth.

Symbian's latest revenue and operational figures show a decline in the per unit licensing cost for Symbian OS. It dropped 60c US from Q4 2006 and 90c US compared to Q1 2006. Part of the decline is due to license fees for UIQ being removed from the picture, following the sale of UIQ Technology to Sony Ericsson on 2 February. However, Thomas notes that this effect is minimal. The principal reason for the decline is the option for licensees to choose volume based pricing for phones using Symbian OS v9.x.

From July 2006 Symbian has been offering licensees several pricing options: a fixed $5.25 per unit, 2% of trade price, or volume based pricing.

"The volume pricing mechanism resets on 1 July each year," says Thomas. "This means that the first units sold by a licensee, using the volume plan, generate revenue per unit at the highest rate of $6.90. This then declines during the year to as little as $2.50 per unit. This means you will see a trend down in revenue per unit during the year, with the lowest per unit revenue reached in Q2 each year."

While Symbian has not made public details of the tiers in the volume licensing plan, the bands are fixed. This means that as Symbian phones ship in greater volumes, licensees will tend to see per unit costs gravitating towards $2.50.

"It is still early to fully assess the effectiveness of volume pricing," says Thomas. "But it makes sense as Symbian phones move in to the mass market. I believe our design wins with Nokia and others as well as in the Japanese market are good indicators that the plan is working."

However, with some licensees potentially achieving licensing costs approaching $2.50 is this a disincentive for new players, who would not be able to benefit from volume licensing? "The real question here is how we help our licensees achieve volume," says Thomas. "If our licensing plans were any form of disincentive we would not be seeing companies like Motorola, Samsung, and LG coming out with products. I believe these licensees all see the potential to achieve the shipments to take advantage of volume based pricing."

The latest figures show that the number of licensees developing phones has decreased on a year ago. Thomas points out that this is due to Panasonic pulling out of the smartphone market. In addition, the total of eight licensees does not yet include LG, as its Joy phone is not yet shipping.

However, if Symbian phones are going to get to mass market shipment volumes it might be expected that the number of smartphones in development would be growing sharply. Yet there are only seven more devices in development than the last quarter or a year ago. However, Thomas claims that this figure is likely to be an under statement of the true picture. "We are not seeing information on devices under development as quickly as we once did," says Thomas. "The environment has changed a lot. We knew about the Nokia 7650 and Sony Ericsson P800 well before they shipped. Now our licensees tend not to tell us what they're working on, at least not until very late in the product development cycle; they simply don't need to. So we are arriving at a point where licensees only tell us about products as they get ready to release them. So the 63 device figure is not nearly as representative as the numbers were two years ago."

Perhaps the clearest indication that Symbian OS licensing costs are positioned well is the Japanese market. "DoCoMo's multiple OS strategy would suggest a fifty-fifty split in the Japanese market between Symbian OS and Linux," comments Thomas. "However, we are shipping well ahead of Linux in this market."

The emergence of devices from quiescent licensees such as Samsung and LG suggests that the balance of technology and cost offered by Symbian OS is getting more, not less, attractive. Technical advances in Symbian OS v9.5, which will help further reduce the bill of materials for Symbian phones, coupled with volume licensing sees the objective of mass market volumes well on track.