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Nokia Taking On Google's Cell Phone Software Play

Nokia,the world's largest maker of mobile phones, is buying the software company that dominates the "smart phone" market, making it a real competitor to the likes of Apple and now Google.

The Finnish mobile giant is buying the remaining 52 percent of Symbian, a British cell phone software maker, which it has held the minority stake in, for a deal forth more than $400 million dollars. This is relevant for the US market, and not just because Nokia is traded on the NYSE (and by the way, up over five percent today on the news). It also significant implications for the rest of the mobile market.

Symbian has been, and Nokia is also, pushing to create an open-source software platform that would allow faster, more flexible innovation of mobile technology. It's not just Nokia behind it-- the software includes touch screen capabilities (think the iPhone) from a joint venture between Motorola and Sony Ericsson. Symbian seems so authentically open source, other mobile companies who are investors in Symbian have agreed so far to accept the buyout offer. That means Sony Ericsson Mobile Communications, Panasonic, Siemens and Telefon AB L.M. Ericsson are confident that Symbian will be creating technology able to improve their handsets, and not just favoring Nokia technology.

So what does open source do? It makes it easier for carriers to develop cool applications for their services, no matter what handset you're using, and it allows independent developers to create services, games, or pretty much anything they want to work on any of the participating mobile carriers. This open source system can do to these smart phones what Facebook's opening its platform did for the social networking site. It attracted independent developers and corporations to create tens of thousands applications for the site, keeping users engaged and on the service longer. Now it's certainly not the same thing, but if users use their phones for more different purposes and for longer periods of time, that's only a good thing for carriers. So why not outsource innovation for free?

On the heels of Apple redefining "smart phone" with the iPhone, Google unveiled plans for its mobile software platform called Android. There's no question there's money in this space, and increasing competition. And Nokia's hoping this latest acquisition will help it move faster.

Nokia is also pushing to compete with Apple in an entirely other way -- with its iTunes business.... The company also launched 'Ovi' an online music store that aims to compete with iTunes. Nokia is pushing social networking, photo and video sharing, and interactive gaming on its phones. And the company has teamed up with Sony BMG and Universal Music Group-- the record labels giving a year's worth of free downloads -- the music yours indefinitely as long as you buy and use certain Nokia handsets. Now we'll have to see how full ownership of Symbian helps the company challenge Apple here in the US.

This is a great profile of the Nokia exec leading the company's foray into the entertainment world, Tero Ojanpera. I interviewed him last year at Forbes MEET conference in Los Angeles and he was very well spoken with some fresh ideas on what it's going to mean to consume content on your phone

Questions? Comments? MediaMoney@cnbc.com

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.