Nokia and Linux Make a Good-Looking Couple

Pop quiz: What does the Linux operating system have in common with telecom giant Nokia (NYSE: NOK)?

1.     High technology.
2.     It's everywhere, and you don't know it.
3.     Finland.
4.     All of the above!

The correct answer is, of course, D: all of the above. Nokia and Linux are national treasures of Finland, sweeping the globe with high technology you never knew you needed. Thus, it's about time that Nokia got serious about making smartphones based on a mobile version of Linux.

Nokia has been selling "internet tablets" built on the Maemo Linux platform for years. Never seen one? Me neither. These gadgets fall one voice connection short of being a phone, so consumers who wanted an Internet-browsing doohickey in their pocket have chosen alternatives like the Apple (Nasdaq: AAPL) iPhone and high-end BlackBerry models from Research In Motion (Nasdaq: RIMM). It's kind of handy to be able to make a good old-fashioned voice call from time to time.

Now Reuters says that Nokia will move Maemo Linux into actual smartphones. "We have proven it really can be made," said Kai Oistamo, who heads up Nokia's phone division. "You can take desktop Linux and make it work on mobile." And I think it's a good idea, too.

The company's current top-of-the-line phones, like the N97 smartphone, all run Symbian, which is an entirely different animal wholly owned by Nokia, although even Symbian itself is slated to go open-source in the not-too-distant future. The Google (Nasdaq: GOOG) Android software platform is another Linux-based variant, but Maemo has been around for years, and Nokia never signed on with the Android steering community. So, Maemo it is.

Linux is a low-cost alternative to license-laden third-party solutions like Microsoft's (Nasdaq: MSFT) Windows Mobile. Cost savings isn't a good reason for Nokia to go with Linux, since it already has Symbian in-house. But with a global user and developer community behind it, any Linux-based product will have thousands of powerful applications available, including the Sun Microsystems (Nasdaq: JAVA) office suite OpenOffice and upstart Web browser Firefox. It's a fast-train ticket to Flexible City that promises to unleash the full power of the phone's hardware.

Nokia has seen Apple, RIM, and Google eating into its once-dominant smartphone market share, and the company now owns just 13% of the global smartphone revenue pot for phones costing more than $350. Two years ago, its market share stood at a robust 33% in this segment, according to estimates from Goldman Sachs. Maemo-based phones could be Nokia's best chance to get back in this lucrative race for top-of-the-line high-margin smartphones.

Nokia plus Linux is not just a matter of Finnish sisu. It's a perfectly sensible business decision. Maemo phones might not kill the iPhone, but they should be able to carve out a comfortable slice of market space, partly thanks to Nokia's worldwide name recognition. Would you buy a Linux-powered Nokia phone? Share your thoughts in the comments box below.