Nokia adopted an entirely new approach in the development of its Internet Tablet, a mobile device used to access the Internet. The hardware was developed entirely by Nokia itself, while the software is based on Linux instead of on Nokia’s own operating system, Symbian. And that’s not all – for its user interface, Nokia even joined the Gnome Mobile Initiative.

Relying entirely on open source meant that dozens of volunteers from the open source community worked on the software free of charge. In return, Nokia also had to contribute to the development process. Open source is about giving as well as receiving. But what is it that encourages programmers to work free of charge for companies, and what makes it attractive for a company to allow hundreds of people to share in its development process, which is usually kept tightly under wraps? These are the questions examined by Professor Georg von Krogh, Chair of Strategic Management and Innovation in the Department of Management, Technology, and Economics (D-MTEC) at ETH Zurich, in a study that he carried out together with the post-doctorate student Sebastian Späth and the PhD student Matthias Stürmer.

Cooperation not unusual

It is not unusual to collaborate with competitors in order to save development costs. If three competitors join forces and each one pays for two developers, then all of the competitors benefit from the work of six developers who work together to solve a problem.

It is an entirely different venture, however, to use the open source community for a new development. It is true that open source represents a means for a company to obtain free development work, but there are also risks involved. Professor von Krogh explains these as follows: “In return, Nokia had to surrender control of its processes and elements and also had to accept the fact that technology sometimes develops in a direction that the company had not intended.” This is quite a substantial risk. Because open source is based on a voluntary approach, all of those involved can decide individually when to work and how much work to do on the project. This can make it impossible to schedule deadlines. Sebastian Späth adds: “In addition, the developers require information in return, such as guidance on what direction the development of a device should take, what the next steps are and what innovations will be brought to market in the future. Understandably, Nokia wanted to keep this information secret, and people were up in arms as a result.” Nokia did not want its competitors to get hold of this information. But after all, the competitors can visit the developer forums at any time and read up on this information anyway.

Problem solved

According to the findings of the study, this posed rather a dilemma for Nokia. On the one hand it had to keep the developers informed so that they did not feel restricted, while on the other it did not want to give away too much information that could be of use to the competition. Professor von Krogh explains: “Collaboration was on a selective basis. For applications that had to be ready for a certain deadline or kept secret from competitors, Nokia commissioned a large number of small independent teams of developers that worked under non-disclosure agreements and were paid for their work.” For example, the company kept all of its e-mail applications and interfaces closed. Yet Nokia benefitted from more than just the development work. The learning effects were also considerable, as the Internet forums were very active and it was possible to identify problems quickly and tackle them in a dedicated manner. The open development process was very positive for Nokia’s reputation, a company not generally known for its openness. “Firstly it made Nokia more attractive as an employer, as developers see the Internet Tablet as a very attractive device. Also, customers valued having an open device that could be self-customised to a large extent and that was not dependent on the manufacturer’s software patches and interfaces”, says Sebastian Späth.

Furthermore, the time-to-market was cut significantly. The adaptation process on the market was much faster because it was possible to use components that had already existed separately from Nokia for a long time. Last but not least, open source allows a very large number of applications to be developed for the device very quickly, and these can then be made available to users for free without the involvement of Nokia. This makes the device very attractive to consumers.

Pronounced trend

The entire operation was such a success for Nokia that the company intends to release its own operating system, Symbian, for open source in the future. This is despite the fact that the system contains millions of lines of individual code, making it a very expensive product that the company has in the past done all in its power to keep under lock and key.

The authors of the study see a pronounced trend in favour of joint development, because innovation is becoming so expensive that there are some problems which individual companies can no longer solve on their own. Professor von Krogh forecasts that: “Parts of the biotechnology sector in particular are likely to rely more and more on this model, as development costs are very high in that industry. However, this will also necessitate new rights for licences.” In brief, when several companies join forces, each one benefits in the end.