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Finnish firm aims for a slice of the mobile market

Each program in the Sailfish OS has drop-down menus with shortcuts to such functions as sending a text message.

TOUKO HUJANEN/THE NEW YORK TIMES

Each program in the Sailfish OS has drop-down menus with shortcuts to such functions as sending a text message.

HELSINKI — Marc Dillon still remembers the sick feeling that overcame him when Nokia announced it was scrapping a software project that he and hundreds of other developers had spent years creating.

It was early 2011, and Nokia, the Finnish cellphone giant, was struggling to compete with the sudden rise of Apple and Samsung in the global smartphone market. In response, Nokia’s chief executive, Stephen Elop, ended the company’s plans for its own operating system and joined with Microsoft to focus on building Windows-based phones.

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“I almost threw up when I heard the news,” said Dillon, an American engineer living in Finland, who was laid off after the company’s strategy shift. “Nokia did a lot of great things for a long time. We didn’t want to see this part of the story end.”

So Dillon and three other former Nokia executives took it upon themselves to prove their onetime bosses wrong.

Over the past three years, with the help of around $20 million in outside investment, they have built Jolla, a 100-employee company of mostly former Nokia engineers, to develop the operating system that Nokia discarded. Their goal is to compete with Android, Google’s dominant mobile software. Late last year, they finished the first part of the effort, releasing a smartphone powered by its open-source software, Sailfish.

The ambitions for Jolla — Finnish for dinghy — are twofold.

By releasing its custom-built handset, the company wants to demonstrate a demand for the device by pitching it to consumers, primarily in Western markets, eager to try the latest gadget.

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Though it is still a small player in the global smartphone market, Jolla’s long-term hopes are pinned on talking up its Sailfish software to other cellphone manufacturers, which the Finnish company hopes will lead to licensing agreements.

“The phone shows the world that we can make a product,” Sami Pienimaki, another Jolla cofounder, said at the company’s development office in Tampere, a two-hour train ride north of Helsinki, Finland’s capital. “But the operating system is where the true value lies.”

To other phone makers, particularly those selling phones in fast-growing markets like China, the pitch is simple: We’ll help you stand out from the crowd.

“Everyone is looking for alternatives because few manufacturers are making money from Android,” Stefano Mosconi, Jolla’s Italian cofounder and chief technology officer, said at the company’s offices in central Helsinki, which previously housed a Nokia research lab. “We know we can’t ship 200 million handsets overnight. But phone makers need something new, and we can offer that.”

Despite Jolla’s ambitious plans, it faces an uphill challenge. The global smartphone market has become a duopoly of Google’s Android and Apple’s iOS, which represented almost 95 percent of the 1 billion handsets shipped last year, according to the research company Strategy Analytics. And Microsoft, another technology giant, is doubling down on smartphones, putting the final touches on a $7.4 billion deal to buy Nokia’s handset business.

Several other software makers are also trying to compete for a piece of global smartphone sales.

They include Mozilla, the nonprofit company behind the Firefox Web browser, which has introduced its own software for low-cost phones.

Confronted with stiff competition, Jolla is facing some of these challenges head-on. The company has opened its own app store for developers, but its software also allows customers to run popular existing Android programs such as WhatsApp and Twitter.

That arrangement includes a partnership with the Russian Web giant Yandex, which gives Jolla users access to its app store with more than 80,000 Android programs. Jolla, however, has yet to reach a similar deal with Google’s larger Play store.

“If we didn’t have access to Android, no one would have bought our device,” said Mosconi. “We can show people they can use the same apps available on other phones.”

Much like its more established rivals, Jolla is aiming its software at consumers in developing economies who are only now upgrading from their cheap handsets to more sophisticated devices.

Markets like China and India are expected to report double-digit growth in smartphone sales this year, mostly from low-cost Android devices.

But analysts say local operators like China Mobile are looking for ways to differentiate their handsets and services from those of their rivals.

The use of new operating systems may help to attract customers who have yet to become accustomed to Android or iOS.

Jolla’s software experience is markedly different from those of its bigger rivals.

The Jolla phone is designed for swiping across the screen to move between apps; the operating system does not use a home button for navigation. Drop-down menus in each program offer short cuts to popular functions like sending a text message or checking e-mail.

And open programs — displayed as mini icons on the home screen — update automatically. That allows users to change songs on the handset’s music player or find a contact’s phone number without opening the app itself.

The phones also have technology built into interchangeable rear covers that will alter software features.

While the cellphone startup has sold fewer than 100,000 handsets worldwide since the model was released late last year, many in Helsinki’s technology community say Jolla’s operating system and device, which retails for around $550, show that Finland’s telecommunications industry can still compete on a global stage.

When Jolla started selling its phones in November, for instance, a line of expectant customers snaked around the company’s pop-up store in central Helsinki despite freezing temperatures.

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