Mobile Maker Jolla Splits In Two, With Sailfish OS Its First Order Of Business

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Software or hardware? Finnish mobile device and Sailfish OS maker Jolla has always intended doing both. But that could be changing. Today the company announced it’s forking itself, splitting its business into two. One of those businesses will be fully focused on pushing its Sailfish software platform forward.

“Every young company has to find its clear focus at some time, and for Jolla that time is now,” said Jolla board chairman, Dr. Antti Saarnio, commenting on the changes in a statement. “We have huge opportunities in the Sailfish OS licensing business… After three years of intensive Sailfish OS research development we are now moving full speed to new bigger waters, which requires full focus on software from the team.”

The split follows a strategic push by the company towards forming regional partnerships to develop locally flavored versions of its Sailfish OS in the BRICS emerging markets. The opportunity it sees being to offer an OS that supports more localization than Google’s dominant Android OS affords, given the latter’s focus on promoting Google services (whereas Sailfish-based devices could be tightly integrated with local ecommerce players and the like).

The new Jolla Ltd will concern itself entirely with the development and licensing of its Sailfish mobile OS, Jolla said today. While a future (as yet unnamed) business will be established to continue building devices — or at least to do so “where the company sees a specific interest from privacy-aware consumers and corporations around the world”.

The wording of Jolla’s press release is a little vague, so it’s possible Jolla is leaving itself some wiggle room to retreat from hardware entirely. Or at least from new hardware (although it also talks of “focusing on security enhanced devices”). We’ve put some questions to Jolla about its intentions with the split, how the business assets will be divided across the two companies, and whether it is committed to building new devices and will update this story with any response.

By creating two separate companies in this way we can win in both areas.
— Jolla board chairman, Antti Saarnio

Update: Asked directly whether the new Jolla company was committed to making new hardware Saarnio told TechCrunch he can confirm “it is committed” to building new devices but added: “There’s a limitation that the company is not yet established so there’s a plan to start producing it. I personally believe they will start producing smart hardware, smartphones or smart devices, in the future. That’s the plan and the intention.”

The scope of the new Jolla devices company may also be broader than the first wave Jolla, which has brought one smartphone to market and is in the midst of building a tablet. “This new company will have quite a lot of freedom to do all kinds of handsets. And I think what we are looking for is to create a young brand with this that’s able to expand to different interesting areas and utilize the existing hardware ecosystem with this,” Saarnio added.

He said the forthcoming Jolla devices business could even consider using alternative software platforms in addition to Sailfish — by offering multi-OS devices. “I would not rule out the possibility to have devices that are carrying multiple operating systems,” he told TechCrunch. “I think that’s an interesting idea, especially if we include there some security and privacy aspects in with the devices.”

Jolla has previously said it plans to offer a security hardened version of Sailfish, called Sailfish Secure. Differentiating mobile hardware on privacy and security grounds is something other startups are doing, such as Silent Circle’s Blackphone initiative. Multiple companies are looking to capitalize on former mobile security kingpin Blackberry’s marketshare collapse, and to compete with Google’s Android on privacy grounds.

Indeed, this is not limited to startups; Apple has recently ramped up its messaging around user data protection, implicitly contrasting its hardware devices business with Google’s ad-driven business model. So there are plenty of companies scenting opportunity here; Jolla is just the latest to consider taking a dip.

Saarnio will be taking charge of the new software-focused Jolla Ltd. Former CEO Tomi Pienimäki, has been appointed to a new position “outside the company”, in which he will move during August — so presumably he’s joining the as-yet unnamed Jolla device business. Although perhaps not as CEO; Jolla said a new leader for Jolla devices business “will be appointed during this autumn”.

Saarnio said it’s not yet decided who else (if anyone) will be leaving to join the devices business. “We need to understand that this new devices business will be a very, very new startup and it has very different kinds of needs in terms of management as well… Only a very thin organization will be needed in the beginning,” he added. “Most of the things can be outsourced.”

“This is not about dividing Jolla into two businesses; this is about focusing current Jolla into Sailfish OS development as it has — basically — 90 per cent of the investment and resources have been going there already. And I actually think that both of our organizations will focus on the Sailfish OS business. And then we will build a completely new organization, probably utilizing quite a lot of the services and resources as a wonderful customer to Sailfish OS organization.”

Asked about the motivations for creating two separate businesses, rather than continuing to operate both hardware and software under one roof, Saarnio said it’s a question of manageability, and the different needs of two very different types of businesses stretching limited startup resources.

“It’s very difficult to manage two such different businesses in one young company,” he said. “You can imagine that if you have basically one management team it either can discuss about expanding Sailfish OS or expanding Jolla device business. But combining those two into one company is very, very confusing.

“And the second thing is that by the capital nature and business type of nature those are very different cases. The Sailfish OS is very R&D capital intensive. It requires lots of investment. And the device business should be very lean. And has lower margins and… high expenses. So, especially from the investment point of view those are two very different animals that’s why it’s very difficult to, at least in a startup environment, grow both of them… This could be very different if we were a more established company, and we could have different divisions. But I don’t believe that goes well in a startup environment. People have to believe in something and focus on something. By creating two separate companies in this way we can win in both areas.”

In its PR, Jolla name-checks India and Russia as markets where its Sailfish OS has been making a splash in recent months. Its platform has won supporters in the Russian government, with comms minister Nikolai Nikiforov earlier this year saying the Federation would be paying local devs to migrate apps to Sailfish (and other open platforms) — to promote alternatives to U.S.-controlled mobile platforms.

Meanwhile Saarnio said Jolla will have an announcement about India partnerships coming next week, at Mobile World Congress Shanghai, with “major corporations in terms of device licensing and other ecosystem partnerships” — adding: “This should be the biggest announcement so far from Jolla.”

He couched the forthcoming India announcement as a “proof of concept” for Jolla’s BRICs-focused business model, adding:. “I don’t see any reason why we would not be able to expand this licensing agreement to multiple device vendors and multiple media companies and multiple ecommerce companies. I do see that the market is really looking for an alternative at the moment and companies are ready to take actions on that.”

Also today the company reiterated its intention to deliver the Jolla Tablet it crowdfunded last year (but has yet to ship). It said it is “working hard” to get the first tablets shipped. “The software (Sailfish OS) part of the work is in good shape but we have been slowed down by supply issues of certain hardware components. We expect to solve this issue very soon,” noted Saarnio, in a statement.