Symbian deal is music to Opera’s ears

It is a problem that has perplexed the smartest brains in the computer industry for years – how to recreate the web surfing experience on a small screen mobile device without sacrificing ease-of-use or speed. So when, in October 2002, Norway’s Opera Software not only announced the development of such technology, but demonstrated it as well – showing that it was not mere ‘vapourware’ – it caused a flurry of excitement throughout the industry.

Opera’s ‘small-screen rendering’ technique provides an intelligent way of reformatting existing sites built using standard HTML, by stacking the page vertically so that users only need to scroll up and down – not left and right – in order to see the content.

Images are scaled down or removed entirely if deemed superfluous by the software, which also ensures that, in most cases, the contents are not shrunk to such a small level that the pages cannot be read. The downside of this approach is that the software may remove some data that the user needed.

Unlike alternatives, Opera’s approach does not demand that service providers provide some kind of server-side processing to help the devices re-format and display the pages. Thus, the browser has to download an entire web page before rendering it – meaning it works best when accessing information delivered over a high-speed network.

In addition, web site developers do not have to re-code their pages in another mark-up language, as was the case with the wireless application protocol (WAP). “Our feeling has always been that going down the WAP route was a wrong turn,” says Opera CEO and co-founder Jon von Tetzchner. “We also didn’t really like the idea of having server-based solutions.”

How does Opera make money?

What turns Opera from a small company with a good idea into a genuine hot prospect is its relationship with a number of companies that already license its web browser technology for a variety of applications. Significantly, this group includes Symbian, the mobile device operating system consortium supported by all the major mobile phone handset makers. Opera is Symbian’s ‘preferred’, although not exclusive, web browser.

Opera takes a small chunk of the $5 royalty fee that Symbian receives on each device sold. Von Tetzchner is unwilling to give a precise figure on that ‘chunk’, but it seems likely to be cents, rather than dollars. But with 400 million mobile phones sold annually today, and Symbian-based devices expected to reach the mass market by 2004, the Symbian partnership could eventually amount to tens of millions of euros in revenues.

That is many times Opera’s current sales. While growth was flat in 2001 when a number of key projects were cancelled, von Tetzchner is expecting revenues to double in 2002 from around EU3.2 million in 2001 to about EU6.5 million. Furthermore, he is looking forward to similar growth in 2003 as the effect of the Symbian licensing deal is felt on the top line and the company moves into profitability.

At the moment, Opera derives revenues from three sources: web advertising; desktop browser sales; and royalties from licensing its browser technology – not just to Symbian, but companies as diverse as systems giant IBM and French cable television operator Canal+, which uses it in its set-top boxes.

Advertising revenue comes from the desktop browser it gives away, which includes an advert in the top right hand side. This is regarded as a disadvantage by some, but users can buy a licence to have the adverts removed. Despite this, Opera still boasts several million users worldwide who prefer the features that Opera offers over Microsoft Internet Explorer.

Indeed, the long shadow of Microsoft looms large over virtually everything Opera does. The danger ultimately is that it could represent the ‘collateral damage’ in Microsoft’s war with Symbian. And for Opera there is no ‘plan B’. If Microsoft succeeds in controlling the mobile market as thoroughly as it controls the desktop PC market, “then we will have as small a share of that market as well,” admits von Tetzchner.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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