Jolla’s Small-Scale Approach to Tackling Android

The Finnish Company Hopes to Carve out a Niche among Android Manufacturers and Users

I recently had an interesting update on Jolla and its Sailfish OS from its CMO, Sami Pienimaki.

Jolla is the company commercially developing the open-source Sailfish mobile operating system, which was derived from MeeGo and spun out of Nokia in 2011. The company launched its first smartphone in November 2013. It has distribution deals with DNA Finland, Elisa in Estonia, distributors in Switzerland and Portugal and is negotiating with many more. It’s also available on Amazon in the UK and Jolla is working on geographic expansion. It sees the biggest opportunities in the short term in Asia.

While Jolla could carve out a niche existence as a small-scale smartphone manufacturer, its ambition is of course rather larger and depends on wider adoption of its software. Jolla sees the growth of Android as the big enabler and the opportunity comes in three forms.

First, Jolla announced at Mobile World Congress this year that it would release the Sailfish user interface as downloadable software for Android devices. Sailfish Launcher is an Android app that can be downloaded to any Android device. It provides a different user interface on the home screen, similar to the way Samsung’s TouchWiz and HTC Sense change the standard Android experience.

Sailfish Launcher mimics the Sailfish OS interface, so that, for example, swiping from the side gives a different result from standard Android. It also brings full multitasking — a key differentiator from Android — so that it can show live tiles that update in real time. Jolla has also used the launcher to introduce new business models based on content. It’s working with Rovio and others to offer content bundles to operators with a three-way business model (the operator, the content provider and Jolla share revenue), which is something operators can’t get with standard Android apps and launchers.

Second, Jolla also announced and demonstrated at Mobile World Congress that its operating system will run on common Android hardware. Part of the opportunity is to offer Android users the option to download the full Sailfish OS onto their Android phone, turning it into a completely new experience. A version is already undergoing public beta testing and Jolla plans to put it on open release later in the year. It expects to achieve higher volumes with this and the content bundling business models will also work.

However, the prize is the third option, which is to do deals with handset manufacturers to use Sailfish OS to power their devices. The opportunity Jolla perceives comes from the growth of “non-Google” Android. Jolla estimates that versions of Android without access to Google’s suite of services account for the bulk of the platform’s growth at the moment.

We predict that non-Google Android could account for as much as 40 percent of total Android sales in 2015. Google’s naturally unhappy about this and is changing the governance model of Google Android so that it’s increasingly difficult and unattractive for its partners to use forked versions. Jolla sees that as an opportunity to attract manufacturers that don’t want to be obliged to deal with Google and use Google services — several manufacturers in Asia fall into this camp. As Sailfish OS is an independent operating system unrelated to Android, manufacturers can try it out without interfering with their Android agreements.

Jolla points out that manufacturers do not have to make a binary decision between Android and Sailfish OS, but can put Sailfish OS on a small part of their portfolio, try it out in the market, then adjust the mix to match demand.

In our view, Jolla’s a very interesting company. Historically, large scale has been one of the principal success factors for handset manufacturers, and it’s still essential for manufacturers aspiring to become truly global suppliers with high margins. However, Jolla is a good example of a growing “long tail” of handset manufacturers for which current hardware and software economics make it feasible to survive as a more-focused company with a small share of the global market; these conditions are a recent development in the handset market thanks to reference designs, common hardware chassis, open-source operating software and large local markets such as China.

But Sailfish OS is a major asset for the company and Jolla’s cleverly positioned itself to take advantage of Google’s discomfort as multiple versions of Android grow their share of the market. Unlike previous efforts by big companies such as Nokia to build an ecosystem with an open-source platform, Jolla is small enough not to be a threatening presence for other players. This should mean that other manufacturers are happier to consider doing a deal.

For this to happen, Jolla will need to demonstrate that people like its user interface and the way it works. In our view, there are challenges for the company in this area; we have reservations about the interface, especially for users who are familiar with Android. There are definitely some strengths and features that go beyond Android, but there are also some features that we think will frustrate users. The launcher will be a crucial way to prove that Sailfish OS can achieve widespread acceptance. To do this Jolla needs to make sure the launcher attracts suitable attention, downloads, usage and retention.