Skip navigation
Perspectives on building technology businesses and AcceleratorIndia from Cartezia

Nokia makes big move into location-aware services

Friday, November 16, 2007

Nokia has put the turbulent times of 2001-2003 well behind it, emerging as the leader in mobile, with steady year-on-year revenue growth from 2003 to 2007, while sustaining margins around 13%-15%.  With 40% market share and a market capitalisation of 85 bn, backed up by 2007 revenues of 51 bn and profits of 7.5 bn  (15.6%), Nokia is well placed to dominate the market for mobile services.  In contrast, its nearest competitors, Samsung, Motorola and Ericsson, enjoyed an aggregate share of 35.6%.  Nokia's new strategy is clearly to become the mobile internet platform of choice, and to become a dominant force in the provision of mobile services.

Nokia's strategy to become the dominant provider of mobile services is already evident in a number of areas:
  • The creation of a mobile portal with a range of services, including its own music store
  • A move into mobile advertising, with the acquisition of Enpacket
  • The delivery of DVB-H TV services to mobiles
  • The provision of video services from CNN, IBN, Jamba and Sony Pictures through Nokia Video Centre

And now its ambitious strategy in Location-based services has become more visible.  The move into Location-based services facilitated by:

  • Provision of GPS capability in all hand-sets, which reduces its dependence on mobile operators and the triangulation-based location services provided by the carriers
  • Acquisition of Mapping and Portable Navigation Software company, Gate5
  • Acquisition of Navteq, largest global provider of mapping geo-data for $8.1 bn

      Nokia is now well-placed to play in the delivery of key location-based services including:

      • Location based applications, centred around portable navigation
      • Localised Search
      • Localised Advertising

        The global market for location-based services is currently quite small but is projected to grow dramatically.  It is estimated that there about about 10 miilion GPS-capable devices in the market right now but this number should rise to about 300 million subscribers by 2010 (about 10% of the market).  It is estimated that the
        European market for LBS by 2010 will be worth at least E 600m. And US market growth will be driven not just by GPS, but also by E911 legislation and the associated handset upgrades. The US carriers are all getting into location-based services, led by the main CDMA 3G networks (Verizon and SprintNextel) and the UMTS Carriers (Cingular, T-Mobile).

        The potential for both personal and coporate LBS applications is large:

        Personal Applications:

        • mobile maps
        • portable navigation
        • personal finder applications
        • contexual information delivery
        • contexual search
        • contexual advertising

        Corporate Applications:

        • Fleet management
        • People tracking/workforce management

        Nokia's new strategy is likely to change the relationship between Carriers and Device Manufacturers in the medium term, so watch out for some interesting announcements from the carriers and the other device suppliers.