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Nokia Follows Google But Can They Capitalize In The US?

The Free Nav Bandwagon:

Nokia's newly-announced free navigation is being positioned as a planned part of their Location Based Services (LBS) offerings, delivered via their "Ovi" web services platform.

Is "free nav" from Nokia a part of a plan, or a defensive reaction to try to take back lost smartphone market share and try to establish a US beachhead in the face serious pressure from "new" movers and shakers like Google, Apple, RIM, Palm, and others?

It certainly seems Nokia had no choice but to go this route, as they are in market share freefall and have had no answer for the beloved iPhone, years after its launch. They lost 10% smartphone market share in Q4 2008, while Apple and RIM took off. In the middle of all this, Ovi's May 2009 app store launch was widely considered a flop. Now Google is in the mix too, bringing some serious mobile advertising chops to-bear. Nokia makes excellent hardware and have a dominant global market share position (38%), but they seem to have stood by and watched, as the US mobile advertising market rapidly evolved. They let Google jump behind the counter while no one was minding the store.

"While smartphone sales overall increased 3.7% in Q4, Nokia's share slid from 50.9% to "just" 40.8% on 15.6 million units. While many, including Samsung and HTC gained, it was RIM and Apple that made the biggest advances. RIM increased its share of the lucrative market to 19.5% (7.4 million units) from 10.9% while Apple more than doubled its share, up from 5.2% to 10.7% (4.1 million units)." Source.

Nokia dropped $8BN to buy Chicago-based Navteq, the leader in US base map data and Nokia bought their own navigation routing engine (Gate5) in 2006. Nokia acquired Boston mobile ad agency Enpocket almost exactly a year later. Navteq, before it was acquired by Nokia, invested in (and now owns) marketing agency Acuity Mobile. In December of 2006, Navteq bought The Map Network, a small company that was doing some very interesting things around placing the branded locations of hotels and restaurants near convention center maps. This morphed into Direct Access (video link)- a program that allows retailers to plug in locations and logos, as ads, into Navteq maps. They also own Traffic.com, which makes a majority of its revenue from location-aware advertising. Location Point (video link) is what Navteq calls their ad services.

So, the Nokia/Navteq paid services and advertising capabilities deck is long, but can they sort out all the moving pieces to form a coherent strategy and move "beyond the device" and establish new effective revenue-generating touch points with the users of their devices?

What started this ball rolling, remember, was when Google blew the lid off the "free nav" can of worms back in October 2009, announcing free navigation on free maps, via their Android mobile operating system (on up to 35 phones)! Google loves giving away a free services to open up more opportunities to sell ads. Maybe we should start calling this disruptive innovation tactic "Freegling"?

So Nokia answers Google to try to gain back marketshare. Not much of a statement until you stop and consider that Google is not a device manufacturer. Google sells ads and they are very good at what they do. All products lead to this profit center and they can loss leader like mad to drive more people to see their ads. Free is their friend and people like free.

Free works, as long as there is a "Trojan horse" element in the form of advertising, paid value-add services or market share upside that pays for free. Nokia is certainly in a good position today, as they have sold more phones capable of running navigation served by their Ovi platform than there are dedicated personal navigation devices on the planet. While device sales are brisk now (esp in Europe), the long-term problem is that they have almost no market share in Google's US back yard and they have no track record of getting people to pay for Nokia services, after they buy the phone.

Nokia launched its first phone in 1987. Google's founders were likely in 7th grade and would not start Google for 11 more years. Nokia has a market capitalization of about $47BN, while Google's is about $172BN. Nokia says it would like to generate about $2.89BN in annual revenues from web-based services offered to users of its phones by 2011. Google makes this amount via web-based services..about every 5 weeks. My point is that, if Nokia hopes to catch up by charging the millions of users of their devices for "after sale" services and delivering ads on the back of free navigation, they had better get moving.

Nokia is now up against a lot more than Google for ads and apps. Their free nav move has just forced every other navigation platform and device company to rapidly accelerate their location-aware advertising and web services plans. Location-specific advertising served by proximity to those using their phones to get where they are going is (finally) about to become the hottest game in town.

Read the original blog entry...

More Stories By Wilson Kerr

Wilson has 11+ years experience in the Mobile and Location Based Services (LBS) space. Recently, he became Director Of Business Development and Sales for Unbound Commerce, a Boston-based mobile commerce solution provider. He has deep expertise in the areas of mobile commerce, social media, branded location integration, branded content licensing, and is knowledgeable in a broad range of navigation technologies. Wilson has worked with top tier brands, content providers, device manufacturers, and application developers, including Nokia, Unbound Commerce, Tele Atlas/TomTom, The Travel Channel, Langenscheidt Publishing, Intellistry, Parking In Motion, GPS-POI-US, and others. Wilson is a blogger on all things location-based, edits the LBS topic page on Ulitzer, teaches a Social Media 101 class, and has served as a panelist and speaker at Mobile LBS conferences and networking events. Wilson has held positions in Business Development, Sales/Marketing, and Digital Licensing at The North Face, Outdoor Intelligence, Fishing Hot Spots Maps, Tele Atlas North America/TomTom and, most-recently, Unbound Commerce. Wilson left Tele Atlas to start Location Based Strategy, LLC in 2007. Company Website: http://www.LBStrategy.com. Twitter: @WLLK

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