Nokia’s decision to offer free navigation and associated features could be a huge driver for uptake of cellular navigation in Europe and lay the groundwork for the next generation of pedestrian location services. Patrick Connolly, Research Director at IMS Research, stated, “While this move has inevitably been prompted by Google, IMS Research believes that it is one Nokia has been prepared and willing to make for some time. This is something the industry has speculated on since Navteq was acquired in 2007, being a case of when rather than if.

IMS Research estimates that Nokia has a ready-made installed base of over 80 million GPS-enabled devices, worldwide map coverage and onboard unconnected navigation, giving it an immediate advantage. The issue around associated data costs still remains, but this is outweighed by Nokia’s strong starting position.

Questions have already been raised as to how Nokia plans to generate direct revenues from its acquired maps if it gives navigation away for free. From Nokia’s point of view, this decision presents a number of strategic advantages. Firstly, it will drive awareness of cellular navigation. Despite the industry hype, outside of North America, awareness amongst the average phone user remains incredibly low, which is reflected in the uptake of navigation in Europe. To give an everyday example, very few people are currently rejecting a handset on the basis that it doesn’t support GPS/navigation. We can now expect to see an increase in customers looking specifically for Nokia GPS-enabled handsets. Nokia will still need to reinforce this with extensive advertising, but it does represent a significant step in the right direction.

Another big benefit will be new users of both its maps and the Ovi store. This creates an installed base of active GPS users for any future pedestrian navigation applications it plans to offer. With a far bigger addressable market, a greater variety of applications and significant advertising potential available, IMS Research believes that pedestrian navigation is a key part of Nokia’s strategy. The creation of a GPS installed base has the secondary benefit of attracting would-be Android LBS developers, looking to leverage free navigation, to Symbian and Nokia’s integrated location platform.

In the short term, this is likely to have a much more significant impact on the European market than Google’s announcement in November last year. The one major uncertainty remaining is the reaction of networks operators. Having made their own investments in navigation and LBS (e.g. Vodafone acquiring Wayfinder), it would seem unlikely that operators will now promote and/or support Nokia’s free navigation. One need only look at the how unsuccessful “comes with music” has been to see how devastating this can be.”
www.imsresearch.com