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Nokia Taps Location-Based Services to Navigate out of Slump

27 April 2009

Nokia is striving to bounce back from its weak first-quarter performance by capitalizing on its strength in GPS and Location-Based Services (LBS), according to iSuppli Corp.
In its first-quarter results, Nokia announced its devices and services sales fell by more than 33 percent year-on-year and more than 24 percent as compared to the fourth quarter of 2008. This result comes on the heels of briefings Nokia held during CTIA at the beginning of the month, during which Taneli Ruda, vice president of strategic development, described a rethinking and reorganization within the company.
Stating that Nokia is a consumer-led company, Ruda emphasized that the company is not distinguishing between devices and services, but sees both parts of Nokia’s business as complementary and indistinguishable from each other. The goal is to provide solutions to the user, including devices and services.
Location and connectivity play a central role in this undertaking. In December 2008, the company announced
that it expects navigation services to generate about half of its Internet service revenue for 2009. The proliferation
of GPS in its devices is one part of the equation, while the other part focuses on enhanced services Nokia categorizes as People & Places.
To achieve success in this undertaking, Nokia used a two-pronged strategy: Acquiring outside talent for location applications and developing services that are geared toward a localized user experience.
Nokia is in a unique position to determine the direction of a complete industry segment. By leveraging its vast user base and its in-house capabilities, the company is able to push the envelope of new services and devices to match them. When other companies must find partners, either software providers or hardware makers, they are not able to fully control the life of its product portfolio.
Nokia is also the first company that made GPS capabilities a priority, not only for its high-end models but also on lower-level devices, which other handset makers have been slow to follow. Furthermore, Nokia’s services and user interfaces will be able to evolve naturally and incrementally because software updates can be distributed over-the-air easily, even during the lifetime of a single device.
While other device makers provide GPS receivers in their devices, the user is not presented with an integrated
portfolio of services that can utilize the technology. Nokia, on the other hand, provides a free routing option similar
to Google Maps, a premium turn-by-turn navigation application from TeleNav, Telmap, NIM or any other third-party provider and location-based services like viNe, all under the Nokia brand.
Portable Navigation Device (PND) makers face an even tougher uphill battle. They must explain to end-users
why they should continue to buy their navigation devices, even though these devices will continue to provide limited usability for the mobile user. They have to become more than a one-trick pony and cannot emulate the fastevolving
technical abilities of always-connected devices like handsets.
Nokia’s competitors have much to catch up to, while Nokia itself is not resting on its laurels. Nokia is trying to make
inroads in markets like the United States and is working to release its own application store soon. Ultimately, this rethinking of its corporate structure will enable Nokia to stay in a dominant position in the devices and services spaces.

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