Mobiles Phone Blogs

Nokia announced plans to offer maps and navigation software free to its smartphone customers. The content comes from digital maps maker Navteq, which Nokia acquired in 2007, and the Ovi platform. Currently ten smartphones can access the service. Combining the maps and navigation with the camera and GPS on the phone opens up a whole new range of applications, such as augmented realtiy and location-based services, while also putting new advertising income within reach.

This is a big step for Nokia. Navteq was an expensive takeover (EUR 5.7 billion, announced in October 2007) and now the company is deciding to give the content away free. It looks like Nokia is realising that this is the only way for its services platform Ovi to catch on. However, another take is possible. Nokia is copying Google’s strategy, which centres on Google Maps Navigation announced last October. Google gives applications like this away free in order to place more advertising, and Nokia is hoping to do the same thing to drive sales of its smartphones. Smartphones are currently Nokia’s main source of worry, as the handset maker struggles to keep up with the likes of Apple and RIM.

The big losers from Nokia’s decision are clearly TomTom and Garmin, the main manufacturers of personal navigation devices. TomTom’s share price fell as much as 18 percent the day of the announcement from Nokia. Since Google Maps Navigation launched, the share price has roughly halved.

The question is whether Nokia’s strategy can be successful. The trend is increasingly towards personalisation, where customers can use open platforms and applications to meet their individual needs. Whoever wants to use Ovi Maps needs to buy a Nokia smartphone. While this should do sales some good, the question is why is Nokia choosing this model, instead of the currently more usual mode of (paid) applications for rival platforms, such as Android (Google) and the iPhone (Apple).

By offering free Ovi Maps and navigation, Nokia hopes to make the most of its advantages of content and reach. The navigation software is available for 74 countries, traffic information for more than ten countries and maps for around 180 countries. Google Maps Navigation is still restricted to the US. Nokia also clearly has a major market presence and distribution strength, even if its share of the smartphone market fell in the third quarter of 2009 to 35 percent from 41 percent. There are already 83 million Nokisa users who can use the navigation software. In addition to stimulating Nokia smartphone sales, the free Ovi Maps should pay off for operators in increased data use. Nokia was keen to point out how the network costs are just a tenth of what’s required for using Google Maps, as Ovi Maps can also be used offline once a map is stored in the memory, and because the technology used (vector mapping, combined with earlier saved maps) is more efficient than Google’s system (bitmap technology, which requires continuous downloads).

In short, the big question is which model will win the navigation market. Will it be the free service bundled with a Nokia smartphone, a free service bundled with an Android handset or a paid service on any ‘open’ smartphone?  More…