Jolla, the Finnish startup behind the Sailfish OS, which formed almost a decade ago when a band of Nokia staffers left to keep the torch burning for a mobile Linux-based alternative to Googleâ€™s Android, announced today itâ€™s hitting profitability.
The mobile OS licensing startup describes 2020 as a â€œturning pointâ€ for the business â€” reporting revenues that grew 53% YoY, and EBITDA (which provides a snapshot of operational efficiency) standing at 34%.
It has a new iron in the fire too now â€” having recently started offering a new licensing product (called AppSupport for Linux Platforms) which, as the name suggests, can provide Linux platforms with standalone compatibility with general Android applications â€” without a customer needing to licence the full Sailfish OS (the latter has of course baked-in Android app compatibility since 2013).
Jolla says AppSupport has had some â€œstrongâ€ early interest from automotive companies looking for solutions to develop their in-house infotainment systems â€” as it offers a way for embedded Linux-compatible platforms the capability to run Android apps without needing to opt for Googleâ€™s automotive offerings. And while plenty of car makers have opted for Android, there are still players Jolla could net for its â€œGoogle-freeâ€ alternative.
Embedded Linux systems also run in plenty of other places, too, so itâ€™s hopeful of wider demand. The software could be used to enable an IoT device to run a particularly popular app, for example, as a value-add for customers.
â€œJolla is doing fine,â€ says CEO and co-founder Sami PienimÃ¤ki. â€œIâ€™m happy to see the company turning profitable last year officially.
â€œIn general itâ€™s the overall maturity of the asset and the company that we start to have customers here and there â€” and itâ€™s been honestly a while that weâ€™ve been pushing this,â€ he goes, fleshing out the reasons behind the positive numbers with trademark understatement. â€œThe company is turning 10 years [old] in October so itâ€™s been a long journey. And because of that weâ€™ve been steadily improving our efficiency and our revenue.
â€œOur revenue grew over 50% since 2019 to 2020 and we made â‚¬5.4 million revenue. At the same time the cost base of the operation has stabilized quite well so the sum of those resulted to nice profitability.â€
While the consumer mobile OS market has â€” for years â€” been almost entirely sewn up by Googleâ€™s Android and Appleâ€™s iOS, Jolla licenses its open source Sailfish OS to governments and business as an alternative platform they can shape to their needs â€” without requiring any involvement of Google.
Perhaps unsurprisingly, Russia was one of the early markets that tapped in.
The case for digital sovereignty in general â€” and an independent (non-U.S.-based) mobile OS platform provider, specifically â€” has been strengthened in recent years as geopolitical tensions have played out via the medium of tech platforms; leading to, in some cases, infamous bans on foreign companies being able to access U.S.-based technologies.
In a related development this summer, Chinaâ€™s Huawei launched its own Android alternative for smartphones, which itâ€™s called HarmonyOS.
PienimÃ¤ki is welcoming of that specific development â€” couching it as a validation of the market in which Sailfish plays.
â€œI wouldnâ€™t necessarily see Huawei coming out with the HarmonyOS value proposition and the technology as a competitor to us â€” I think itâ€™s more proving the point that there is appetite in the market for something else than Android itself,â€ he says when we ask whether HarmonyOS risks eating Sailfishâ€™s lunch.
â€œThey are tapping into that market and we are tapping into that market. And I think both of our strategies and messages support each other very firmly.â€
Jolla has been working on selling Sailfish into the Chinese market for several years â€” and that sought-for business remains a work in progress at this stage. But, again, PienimÃ¤ki says Jolla doesnâ€™t see Huaweiâ€™s move as any kind of blocker to its ambitions of licensing its Android alternative in the Far East.
â€œThe way we see the Chinese market in general is that itâ€™s been always open to healthy competition and there is always competing solutions â€” actually heavily competing solutions â€” in the Chinese market. And Huaweiâ€™s offering one and we are happy to offer Sailfish OS for this very big, challenging market as well.â€
â€œWe do have good relationships there and we are building a case together with our local partners also to access the China market,â€ he adds. â€œI think in general itâ€™s also very good that big corporations like Huawei really recognize this opportunity in general â€” and this shapes the overall industry so that you donâ€™t need to, by default, opt into Android always. There are other alternatives around.â€
On AppSupport, Jolla says the automative sector is â€œactively looking for such solutions,â€ noting that the â€œdigital cockpit is a key differentiator for car markers â€” and arguing that makes it a strategically important piece for them to own and control.
â€œThereâ€™s been a lot of, letâ€™s say, positive vibes in that sector in the past few years â€” newcomers on the block like Tesla have really shaken the industry so that the traditional vendors need to think differently about how and what kind of user experience they provide in the cockpit,â€ he suggests.
â€œThatâ€™s been heavily invested and rapidly developing in the past years but Iâ€™m going to emphasize that at the same time, with our limited resources, weâ€™re just learning where the opportunities for this technology are. Automotive seems to have a lot of appetite but then [we also see potential in] other sectors â€” IoT â€¦ heavy industry as well â€¦ we are openly exploring opportunities â€¦ but as we know automotive is very hot at the moment.â€
â€œThere is plenty of general Linux OS base in the world for which we are offering a good additional piece of technology so that those operating solutions can actually also tap into â€” for example â€” selected applications. You can think of like running the likes of Spotify or Netflix or some communications solutions specific for a certain sector,â€ he goes on.
â€œMost of those applications are naturally available both for iOS and Android platforms. And those applications as they simply exist â€¦ the capability to run those applications independently on top of a Linux platform â€” that creates a lot of interest.â€
In another development, Jolla is in the process of raising a new growth financing round â€” itâ€™s targeting â‚¬20 million â€” to support its push to market AppSupport and also to put toward further growing its Sailfish licensing business.
It sees growth potential for Sailfish in Europe, which remains the biggest market for licensing the mobile OS. PienimÃ¤ki also says itâ€™s seeing â€œgood developmentâ€ in certain parts of Africa. Nor has it given up on its ambitions to crack into China.
The growth round was opened to investors in the summer and hasnâ€™t yet closed â€” but Jolla is confident of nailing the raise.
â€œWe are really turning a next chapter in the Jolla story so exploring new emerging opportunities â€” that requires capital and thatâ€™s what are looking for. Thereâ€™s plenty of money available these days, in the investor front, and we are seeing good traction there together with the investment bank with whom we are working,â€ says PienimÃ¤ki.
â€œThereâ€™s definitely an appetite for this and that will definitely put us in a better position to invest further â€” both to Sailfish OS and the AppSupport technology. And in particular the go-to market operation â€” to make this technology available for more people out there in the market.â€