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Royalty for Symbian: it will drop, but cash flow healthy till then

Smartphone OS provider Symbian says 12.3m units running its software shipped in the second quarter of the year, up from 7.8m a year ago. This bagged the company $37.9m in royalty revenues, the bulk of its $41.2m gross revenue.

Despite delays to several of the most anticipated models from Nokia and Sony Ericsson, 24m units shipped in the first half of the year, up 65 per cent from a year ago.

Royalties account for most of Symbian's revenue - partnering and consultancy revenues fell sequentially. Symbian is privately held and the company doesn't disclose its profits.

Earlier this year, Symbian's CFO said the company was comfortably in profit, and that $80m annual revenue represents break even. So by our calculations, the company is on course to clear more than $40m in profit this year.

Overall, 55 models are in development, down one from the start of the year. Ninety-two per cent of 3G smartphones are Symbian devices, the company adds.

Symbian has Nokia and the Japanese manufacturers to thank for its growth. Four manufacturers including Sony Ericsson produce FOMA devices for the Japanese market, the rest are all from Nokia. Symbian included Sony Ericsson's M600i, and Nokia's E60 and E70 as devices that shipped in Q2, although you'd have been very fortunate to find any of these before 30 June.

It's the last quarterly statement before Symbian's new, lower royalty option becomes available. So far manufacturers have paid $7.25 per unit for the first two million units shipped, and $5 per unit after that. The new royalty schedule permits phone makers to take Symbian OS for $2.50 - without Java - or two per cent of the trade price (Nokia's average selling price per phone is a shade over $100).

Symbian's average royalty per unit rose again in the quarter to $5.7 per unit, up from $5.3 a year ago.

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