[LINK] Nokia with free Satnav
stephen at melbpc.org.au
stephen at melbpc.org.au
Fri Jan 22 14:46:06 AEDT 2010
Nokia hits TomTom, Garmin with free satnav
BERLIN/HELSINKI (Reuters) - Nokia launched free satellite navigation on
its cellphones on Thursday to boost handset sales and prices, a fresh
blow for satnav makers whose $25 billion market has already been hit by
Following Google's lead, Nokia, the No 1 cellphone maker, will offer free
navigation on 20 million smartphones initially.
Shares in satnav market leaders Dutch TomTom and U.S. Garmin sunk, TomTom
fell 11 percent by 1700 GMT today, while Garmin fell 4.2 percent.
"It's a major shock for the navigation industry." said Gartner analyst
Thilo Koslowski who predicted that if others follow, they could snatch up
to $5 billion of the satnav market in the near-term.
Analysts said the move may also spark a flurry of acquisitions from the
likes of Samsung, RIM and Microsoft, as consumers will expect free
navigation to be a standard feature on smartphones.
"This has massive consequences for pure software companies. It is, of
course, a watershed for the industry," said Michael Halbherr, vice
president for location-based services at Nokia.
Underlining the shift away from separately priced service, Halbherr said
he saw navigation as a "function masquerading as an industry."
"If you are a pure software player, you've got a big problem. Who's going
to pay for turn-by-turn navigation now Nokia and Google are giving it
away," said analyst Martin Garner from British consultancy CCS Insight.
TomTom also sells navigation software -- it charges $70 for its North
American iPhone navigation application -- with 70 percent of sales coming
from personal navigation devices.
HELPING SMARTPHONE BUSINESS
Nokia sells more smartphones than any of its rivals, but it has lost
ground to Apple's iPhone and RIM's Blackberry.
"It will help us to sell smartphones," Anssi Vanjoki, head of marketing
at Nokia, told Reuters in an interview. "It will serve as a defense to
our product prices."
Turn-by-turn navigation has been one of the key revenue sources for
Nokia's services offering, and the company had said it expected one-third
of its targeted 2 billion euros ($2.84 billion) services revenue next
year to come from navigation.
"The big question is -- can Nokia generate revenue enough to compensate
for the revenue streams they kill," said John Strand, chief executive of
Danish telecoms consultancy Strand Consult.
"The only way to do that short-term is through extra hardware sales and a
higher average sales price. It will take time to develop all the new
revenue streams -- years," he said.
But one analyst said the move, when looked at alongside the moves of
Google, could mean Nokia is readying to write down Navteq goodwill in its
fourth-quarter report on January 28.
In 2008, at the peak of the market, Nokia bought digital mapping firm
Navteq -- a rival to navigation specialist TomTom's Tele Atlas unit --
for $8.1 billion.
"Looking at what has happened in the last 12 months... the environment
has become more challenging for Nokia and navigation services," said FIM
analyst Michael Schroder.
"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," Schroder said.
(Reporting by Tarmo Virki and Brett Young in HELSINKI, Sarah Marsh in
BERLIN, Tova Cohen in TEL AVIV, Anastasia Teterevleva in MOSCOW, Matt
Cowan in LONDON and Harro ten Wolde in AMSTERDAM; Editing by Mike Nesbit
and Elaine Hardcastle)
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