Last week Nokia announced that it is making its premium Ovi Maps navigation service free to consumers. In public statements accompanying the news, Nokia has been typically bullish, predicting that offering Ovi Maps for free will enable it to become number one in navigation, just as adding cameras to its phones at no extra cost helped it become a top camera manufacturer.
On the face of it this is an aggressive, offensive play, but in our view Nokia’s move has a more defensive coloring.
Nokia is determined to be the leader in navigation and location services, and has been ramping up its expertise in this space over the last few years, notably through the acquisitions of Navteq and Gate5. It has put a lot of effort into making Ovi Maps a genuinely pleasing service and has always positioned it as the flagship in the Ovi portfolio.
A key differentiator touted by Nokia is the fact that most mobile navigation services require network connectivity to update the map but Nokia’s solution is on the phone and is not dependent on network connectivity.
Nokia might still be a giant in the mobile phone market, but it is losing market share and in particular is facing a serious challenge in the smartphone market from the likes of Apple, RIM, Google Android and even Microsoft Windows smartphones.
Nokia is going to fight with all it’s got to stay ahead of these rivals, and the decision to offer Ovi Maps for free should be considered in this light. Offering Ovi Maps for free will help Nokia shift more smartphones in the short term, but it will not be enough to take the edge off Apple and other rising stars in the longer term. Google has already launched its free satnav service in the US in October 2009 (so who is copying whom in the free stakes?) and Apple and other app store vendors will no doubt react.