[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.


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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