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Nokia Highlights Location as a Revenue Driver for Smart Phones

15 March 2010

Mobile applications have seen astronomical growth in availability and popularity since Apple made its iPhone the hub of mobile applications. Although there had been applications available on other handsets and operating systems before the iPhone, it took Apple to show industry players and end-users alike the true power and potential of applications on mobile handsets.

The next stage in the development of mobile applications was outlined in February at the Mobile World Congress in Barcelona, where Nokia discussed how location will be a revenue driver for many of its other services.

Utilizing Ovi Maps
Nokia followed Google into the world of free Turn-by-Turn (TbT) navigation with its announcement that users of its smart phones will be able to download the complete application for free. Nokia is similar to Google in that it owns its maps, but Nokia is able to provide its users with a worldwide solution—a hybrid system that does not require network connectivity.

Since the “Free-for-All” announcement, Nokia has recorded more than 3 million downloads of Ovi Maps. The countries with the largest number of downloads are China, Italy, the United Kingdom, Spain and Germany. The company also reported that repeat usage is at about 80 percent.

For Nokia, giving away TbT navigation for free is a way to utilize a high fixed-cost asset and to capitalize on the scale of the company to generate revenue. It also allows the company to provide a platform for other services that can be monetized, to create a closer relationship to its users and to keep them engaged with their devices and services multiple times a day.

The overall goal, however, is to maximize the content available on a device in order to defend the Average Selling Price (ASP) of the solution—hardware plus services—using the global reach of the company while avoiding the cannibalization of hardware margins.

A New Platform
Location has become an important part of the platform for not just Nokia but also for Google and Research In Motion (RIM). Whereas location in the past was a data point to provide routing info, it is now a platform to launch a multitude of services and applications.

While the deployment of location information might not be as clear-cut or obvious as it had been in the past, location information has become one of the foundations of mobile strategy for a wide variety of companies in the mobile space. No device maker wanting to attract application developers and users will be able to avoid providing a rich set of Application Programming Interfaces (APIs)—location included—that can build integrated applications and allow users to interact with their devices in new, localized and customized ways.

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