Nokia hits Android with free navigation
Published: 22 January, 2010
READ MORE: Nokia | Applications (Navigation) | Symbian
One of the most attractive features of Motorola's Verizon/Droid launch before the holiday was its offer of free and advanced navigation features, in the US at least. Now Nokia is following suit on a worldwide basis, promising free turn-by-turn directions and casting a long shadow over paid-for navigation companies like TomTom and Garmin.
While Google Maps Navigation, which appeared with the latest release of Android, only covers the US, and a small user base (so far at least), Nokia aims to leverage its massive global reach. It will offer free navigation on several phones in 74 countries and 46 languages - a total of about 20m high end and midrange handsets.
With maps and directions one of the most important drivers of mobile services, this is aggressive from Nokia, and possibly disastrous for Garmin, despite its launch of its own location-oriented Android handset. Though for dedicated personal navigation users, there are still some benefits to the specialized systems, as TomTom and Garmin can be used offline as they store maps locally. This means they can still be used where there is no mobile signal, and response is often quicker, while Google's and Nokia's systems rely on getting real time data over the air.
However, the lure of free is always powerful. Nokia hasn't confirmed the offer yet, but it was reported in the US press and would be a logical way for the Finnish company to claw back lost ground among high end mobile users, and strengthen its Ovi brand. "Nokia used to charge for navigation packages that included turn-by-turn directions. That all goes away now. Now you can get turn-by-turn directions covering 74 countries in 46 languages," writes the San Francisco Chronicle.
It's not all good news for Nokia, which had originally hoped paid-for navigation would be a major revenue spinner, and help justify its massive outlay to buy Navteq for $8.1bn in 2008. It had said it expected one-third of its targeted €2bns ($2.84bn) of services revenue in 2010-2011 to come from navigation. This will have to be balanced by additional hardware sales and market share, especially at the high margin end, and by improved selling prices for smartphones. Longer term, it could strengthen the Ovi brand and attract users to other web services that do generate revenue.
One analyst said the move could also Nokia is getting ready to take a writedown on Navteq goodwill when it reports fourth quarter results on January 28. "Looking at what has happened in the last 12 months ... the environment has become more challenging for Nokia and navigation services," said Michael Schroder of FIM. "There is a risk that they will make a writedown on Navteq when they report fourth quarter data next week, but it is impossible to speculate on the size," he told the Reuters news agency.
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