Apple (AAPL) changes the game again, it seems to me, pushing Nokia (NOK), the world’s largest phone maker, to buy the remaining 52% interest in London-based operating system maker Symbian Ltd. it did not control, as Nokia announced in a press release Tuesday morning. Nokia will offer Symbian’s operating system and related software free to handset makers, it said separately.

18.5 million phones were sold running Symbian in the first quarter of this year, Nokia said.

After Apple chief executive Steve Jobs’s presentation at the Apple Developer Conference earlier this month, in which most of the discussion was spent emphasizing the iPhone’s software capabilities, it’s not surprising Nokia would take direct control of what has till now been more of a broad software supplier to several handset makers, including the Sony-Ericsson Mobile Communications joint venture of Sony (SNE) and Ericsson (ERIC). Nokia will pay 264 million Euros for the purchase, or approximately $411 million. Nokia is buying the outstanding block of Symbian from fellow handset makers, including Ericsson and LG Electronics.

Nokia said it will form a new non-profit foundation to pool user interface software developed by itself, Ericsson, Motorola (MOT), and other handset makers who’ve been developing for Symbian for sometime. That all sounds rather like Google’s (GOOG) Android, a Linux-based collection of software programs that is being contributed to by several handset makers worldwide.

The Street’s reaction:

  • Nokia is getting this asset “on the cheap,” in the view of UBS Securities’ Maynard Um, who writes in a note Tuesday morning that the effective enterprise value of Symbian of 330 million is a fraction of the $1.6 billion he would have estimated. The reason being that Nokia will be doing away with the royalties that Symbian earns for licensing the operating system (including money Nokia itself paid.) The deal is dillutive to Nokia next year, and profitable starting 2011, writes Jenkins, to the tune of cutting EPS by about .12 Euros this year, .16 next year, .18 in 2010, and .21 in 2011. Jenkins, who has a “Neutral” rating on Nokia shares and a $29 price target on its American Depository Receipts, thinks the deal is primarily about Nokia having trouble coming up with “touch”-style phones a la the iPhone on its own: “We believe Nokia’s S60 support has slowed Nokia in bringing touch products to market…”
  • Likewise, Mark McKechnie with American Technology Research, who also has a “Neutral” rating on the stock, says Nokia needs to step up the time-to-market of its smartphones, and that’s what’s driving the deal: “Nokia likely [is] doing this to increase its control of the overall platform to stave off competition from Research in Motion (RIMM), Apple, Microsoft’s (MSFT) Microsoft Windows Mobile, and Google’s Android. According to the release, NOK says Symbian is now in ~ 2/3 of all smart phones or 6% of all handset units.” McKechnie sounds a somewhat concerned tone: “We are at a critical inflection point for smart phones […] Nokia must make the right moves at this juncture to protect its 40% share / 20% operating margin for cell phones […] Whether Nokia can become the Microsoft of the smart-phone world remains to be seen.”

Update: Ittai Kidron with Oppenheimer & Co. says Tuesday afternoon that he sees “minimal downside and a lot of potential good” from Nokia’s consolidation of Symbian. Nokia will integrate Symbian’s 1,600 engineers with its own, which will pick up the pace of software development, he argues. Meantime, Richard Windsor with Nomura Securities writes in a report, that for Symbian to be successful, it has to pass the major obstacle of software “by consensus,” which could give an advantage to proprietary, or tightly controlled software, such as Windows Mobile and Apple’s OS X, that presumably can be more nimble. He wonders, however, if the giving away of software will also force Microsoft to lower fees for Windows Mobile, and opines that the biggest immediate beneficiary of Tuesday’s announcement could be Taiwanese phone maker HTC, which licenses Windows Mobile.

Nokia shares Tuesday were up 23 cents, or .94%, at $24.66; Apple shares were up 9 cents, or .05%, at $173.25; RIMM shares were down $2.58, or 1.80%, at $140.48; and Motorola shares were down 9 cents, or 1.21% at $7.35.