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9 February 2004 Nokia, the world's biggest maker of mobile devices, today made a bold move to dominate the market for wireless software by seizing control of Symbian, the leading supplier of smartphone operating systems.

The Finnish telecoms equipment giant has offered about £135.7 million (€197.2 million) for London-based Psion's 31.1% share in Symbian. The deal – if approved by the other Symbian partners, Psion's shareholders and competition regulators – will increase Nokia's stake to 63.3%.

The transaction represents one of the most significant developments so far in the still embryonic mobile software sector.

It is being viewed as a move by Nokia to strengthen its hand in its growing battle with Microsoft. But some observers have already warned that Symbian could suffer a backlash if some of Nokia's partners fear that the Finnish company is seeking to monopolise the mobile software market.

Nokia, however, has sought to dampen down such speculation. Antti Vasara, Nokia's vice-president of technology sales, revealed that Psion had taken the initiative to sell its stake and that Nokia had no plans to buy out the other Symbian shareholders. He said that Nokia merely wished to ensure that Symbian had "staying power in an extremely competitive market."

Until now, Symbian was largely seen as an attempt by the combined mobile phone industry to create an operating system powerhouse capable of staving off the threat from Microsoft, which has been seeking to expand into wireless communications.

Symbian, which is based in London, was founded in 1998 as a spin-off from Psion, embodying the-then mobile device maker's EPOC operating system.

Psion sold stakes in the joint venture to the major mobile phone makers, including Ericsson, Motorola and Matsushita, but was most enthusiastically adopted by market leader Nokia, which felt most threatened by Microsoft's ambitions.

Many other wireless device makers, including Sony and Samsung, were gradually signed up as licensees.

But the company has so far failed to live up to its early promise. Despite a company valuation of some £436.2 million (€633.9m), quarterly sales are only around the £10 million mark.

And even before today's withdrawal of Psion there have been signs that the Symbian alliance was weakening.

First, Samsung became a licensee of Microsoft's wireless version of the Windows operating system. Then, one of the founders of Symbian, Motorola, which had already become a Windows licensee and also produced handheld devices based on Linux, sold its 19% stake to Nokia and Psion in October 2003.

Since the Motorola deal, there has been intense speculation that Nokia wanted to take control of Symbian.