Home Internet Jolla hits profitability ahead of turning ten, eyes growth beyond mobile –...

Jolla hits profitability ahead of turning ten, eyes growth beyond mobile – TechCrunch

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A milestone for 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 Google’s Android — today it’s announcing hitting profitability.

The mobile OS licensing startup describes 2020 as a “turning point” for the business — 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 — 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 — without a customer needing to license the full Sailfish OS (the latter has of course baked in Android app compatibility since 2013).

Jolla says AppSupport has had some “strong” early interest from automotive companies looking for solutions to develop their in-case infotainment systems — as it offers a way for embedded Linux-compatible platforms the capability to run Android apps without needing to opt for Google’s automotive offerings. And while plenty of carmakers have opted for Android, there are still players Jolla could net for its ‘Google-free’ alternative.

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Embedded Linux systems also run in plenty of other places, so it’s hopeful of broader demand. The software could be used to enable an IoT device to run a top-rated app, for example, as a value adds for customers. “Jolla is doing fine,” says CEO and co-founder Sami Pienimäki. “I’m happy to see the company turning profitable last year officially.

“In general, it’s the overall maturity of the asset and the company that we start to have customers here and there — and it’s been honestly a while that we’ve been pushing this,” he goes, fleshing out the reasons behind the upbeat numbers with trademark understatement. “The company is turning ten years in October, so it’s been a long journey. And because of that, we’ve been steadily improving our efficiency and our revenue.

“Our revenue grew over 50% from 2019 to 2020, and we made €5.4M revenue. At the same time, the operation’s cost base has stabilized quite well, so the sum of those resulted to nice profitability.”

While the consumer mobile OS market has — for years — been almost entirely sewn up by Google’s Android and Apple’s iOS, Jolla licenses its open-source Sailfish OS to governments and businesses as an alternative platform they can shape to their needs — 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 — and an independent (non-US-based) mobile OS platform provider, specifically — 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 US-based technologies.

In a related development this summer, China’s Huawei launched its own Android alternative for smartphones, called HarmonyOS. Pienimäki is welcoming of that specific development — couching it to validate the market in which Sailfish plays.

“I wouldn’t necessarily see Huawei coming out with the HarmonyOS value proposition and the technology as a competitor to us — I think it’s more proving the point that there is an appetite in the market for something else than Android itself,” he says when we ask whether HarmonyOS risks eating Sailfish’s lunch.

“They 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.” Jolla has been selling Sailfish into the Chinese market for several years — and that sought for business remains a work in progress at this stage. But, again, Pienimäki says Jolla doesn’t see Huawei’s move as any kind of blocker to its ambitions of licensing its Android alternative in the Far East.

“The way we see the Chinese market, in general, is that it’s always been open to healthy competition and there are always competing solutions — actually heavily competing solutions — in the Chinese market. And Huawei’s offering one, and we are happy to offer Sailfish OS for this huge, challenging market as well.”

“We do have good relationships there, and we are building a case together with our local partners also to access the China market,” he adds. “I think in general it’s also perfect that big corporations like Huawei really recognize this opportunity in general — and this shapes the overall industry so that you don’t need to, by default, opt into Android always. There are other alternatives around.”

On AppSupport, Jolla says the automotive sector is “actively looking for such solutions”, noting that the “digital cockpit is a crucial differentiator for car markers — and arguing that makes it a strategically important piece for them to own and control.

“There’s been a lot of, let’s say, positive vibes in that sector in the past few years — 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,” he suggests.

“That’s been heavily invested and rapidly developing in the past years, but I’m going to emphasize that at the same time, with our limited resources, we’re just learning where the opportunities for this technology are. Automative seems to have a lot of appetites, but then [we also see potential in] other sectors — IoT… heavy industry as well… we are openly exploring opportunities… but as we know, automotive is very hot at the moment.”

“There 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 — for example — selected applications. You can think of like running the likes of Spotify or Netflix or some communications solutions specifically for a certain sector,” he goes on.

“Most of those applications are naturally available both for iOS and Android platforms. And those applications as they simply exist the capability to run those applications independently on top of a Linux platform — that creates a lot of interest.”

In another development, Jolla is in the process of raising a new growth financing round — it’s targeting €20M — to support its push to market AppSupport and also to put towards further growing its Sailfish licensing business.

It sees growth potential for Sailfish in Europe, which remains the biggest market for licensing the mobile OS. Pienimäki also says it’s seeing “good development” 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 hasn’t yet closed — but Jolla is confident of nailing the raise.

“We are really turning the next chapter in the Jolla story, so exploring to new emerging opportunities — that requires capital, and that’s what are looking for. There’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,” says Pienimäki.

“There’s definitely an appetite for this, and that will definitely put us in a better position to invest further — both to Sailfish OS and the AppSupport technology. And in particular to the go-to-market operation — to make this technology available for more people out there in the market.”

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