Nokia adopts Google’s Free business model for navigation

BusinessWeek has an article on Nokia’s latest move to provide free navigation tools.

Nokia Challenges Google With Free Navigation Tool (Update1)

January 21, 2010, 01:36 PM EST

By Diana ben-Aaron

Jan. 21 (Bloomberg) -- Nokia Oyj, the world’s biggest maker of mobile phones, is offering navigation on its Ovi Maps service free, challenging smartphones using Google Inc. software.

“This will help us defend our selling price for products that contain global positioning system technology,” Anssi Vanjoki, executive vice president of marketing at the Espoo, Finland-based company, said in a telephone interview.

What else is interesting is the statement by Nokia’s CEO.

Internet Services

Nokia Chief Executive Olli-Pekka Kallasvuo aims to build the world’s biggest mobile Internet services platform to protect market share and create new revenue streams. The company is trying different payment models including bundling with consumer handsets and pay-per-download. Google also has a diversified services business model, with most of its revenue coming from advertising.

Nokia made a good move buying Navteq in 2008.

Nokia bought Chicago-based Navteq in 2008, acquiring a maps database to compete with Google’s maps as well as with navigation device companies such as TomTom NV and Garmin Ltd. The Finnish company’s smartphone market share fell three percentage points to 39.3 percent in the third quarter, according to Gartner Inc. figures, as Google drove into mobile handsets with its Android software.

“They’re in a race with Google to get lots of users onto their service as social networking creates new business models,” said Martin Garner, a London-based analyst with CCS Insight. “Google’s linked its maps to advertising and advertising can only come if you have a lot of users.”

I had just read The Economist article on Nokia.

Nokia tries to reinvent itself

Bears at the door

Can the world’s largest handset-maker regain the initiative?

Jan 7th 2010 | ESPOO
From The Economist print edition

Illustration by Claudio Munoz

ASK Finns about their national character and chances are the word sisu will come up. It is an amalgam of steadfastness and diligence, but also courage, recklessness and fierce tenacity. “It takes sisu to stand at the door when the bear is on the other side,” a folk saying goes.

There are plenty of bears these days at the doors of Nokia, the Finnish firm that is the world’s biggest maker of mobile handsets. Although it is still the global leader in the fast-growing market for smart-phones, its devices are losing ground to Apple’s iPhone and to the BlackBerry, made by Research in Motion (RIM). On January 5th Google took a further step into the market with the launch of the Nexus One, a handset made by HTC of Taiwan that the internet giant will sell directly to consumers, and which runs Android, Google’s operating system for smart-phones.

Despite this situation morale is reported to be high at Nokia.

Yet in Nokia’s headquarters in Espoo, near Helsinki, morale is far better than one might expect. Hardly anyone would deny that there are problems. But executives insist that they can be overcome. When board members met financial analysts in December, they made some bold predictions. Within a year, promised Olli-Pekka Kallasvuo, the firm’s boss, the ageing Symbian software will have been vastly improved, to enable Nokia to offer “magic devices”. As for services, the goal is to have signed up 300m users by the end of 2011. “I’ve rarely heard such explicit statements," says Ben Wood of CCS Insight, a long-time Nokia watcher.

The company is changing.

All this will no doubt help Nokia come up with better, if not magic, products. The firm may even reach its goal of 300m users by the end of 2011 because its efforts are not aimed just at rich countries, but at fast-growing emerging economies where Nokia is still king of the hill, such as India. There, services such as Nokia Money, a mobile-payment system, and Life Tools, which supplies farmers with prices and other information, fulfil real needs, says John Delaney of IDC, another market-research firm.

Here is something didn’t know about Nokia.  It’s origin is 1865 as a paper mill.

Yet it is an entirely different question whether Nokia will manage to dominate the mobile industry once more—not just by handset volumes, but by innovation and profits. The example of the computer industry, in which the centre of gravity began shifting from hardware firms to providers of software and services over two decades ago, is not terribly encouraging: of the industry’s former giants, only IBM really made the shift successfully. Then again, Nokia has reinvented itself many times since its origin in 1865 as a paper mill. That, points out Dan Steinbock, the author of two books on the firm, is thanks not only tosisu, but also to a remarkable willingness to embrace change and diversity. Nokia will need those traits in the years ahead.

I made the mistake of thinking of Apple, Google, and RIM as the smartphone market.  Nokia shouldn’t be discounted out.  And, Microsoft’s mobile group isn’t going to give up either.

The mobile device market connected to data center services is the fastest growing market.  So, no one is give up the fight as long as they have the resources to invest.