What Does Nokia’s Launch of Free Navigation Mean to the Market?

Monday 25th January 2010 - 18:34

On 21 January 2010, Nokia announced that it is to make turn-by-turn navigation free with its Ovi Maps offering. The research firm Canalys claims the move is a logical one for Nokia to take, especially in light of the recent launch of Google’s free navigation solution.

Google’s navigation currently supports only Android devices and is confined to the United States - though Canalys expects both of these limitations to be addressed this year.

“As Google’s free solution becomes more widely available, it will inevitably have a negative impact on consumers’ willingness to pay for navigation, making it increasingly hard for application providers to charge for their solutions. Yet Nokia’s move should be viewed less as a defensive measure and more as it going on the offensive,” state Canalys.

“It already has the necessary assets in-house, with its own navigation software, ownership of Navteq, and a huge, growing installed base of GPS-integrated smart phones. In making its own solution free now, it has a head start over Google and any other vendor that follows in every supported market except the US, giving it time to firmly associate itself with the concept of free navigation through promotional activity.”

Canalys’ end-user research has repeatedly shown that navigation is a feature that consumers want on their mobile phones. Being the first to make global navigation free across so wide a portfolio of devices will give Nokia handsets a true value-add and help it differentiate its products in the increasingly competitive smart phone space, according to the research group.

Alanysts predict Nokia’s free navigation announcement will not be welcomed though by all its mobile operator partners.

“While some are happy to endorse or support services that help encourage data consumption, many offer chargeable GPS navigation services themselves, albeit with varying success outside the US, and may well be reluctant to support a move that encourages consumers to expect navigation and other mobile content and services for free, eroding potential revenue streams,” says Canalys.

According to the analysis, Nokia’s announcement may conceivably push more operators into partnerships with third-party navigation solution providers, where navigation is bundled with the cost of a data plan, providing their own effectively free navigation solutions with an incentive for customers to sign up to data plans, while maintaining customer ownership advantages.

“Similarly, handset competitors may consider entering into deeper, closer relationships with selected navigation software vendors to offer their own bundled or free solutions. This would minimize Nokia’s ability to use navigation as a differentiator and enable them to also take advantage of the growing consumer appetite for, and expectation of, having free navigation available on smart phones out-of-the-box,” states Canalys.

That it may prompt operators and some of Nokia’s competitors to pay more attention to their own navigation partner relationships.

Canalys analysts claim the most significant impact for navigation vendors will likely be the effect that a widespread Nokia advertising campaign will have on consumers and their willingness to pay for navigation.

"All providers will come under substantial pressure to reduce prices, and few consumers will be happy to pay the kind of prices that vendors such as TomTom or Navigon are currently able to command through application stores,” thay say.

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