Nokia Smart2Go: disrupting the business model of cellphone-based navigation?

With free mapping for over 150 countries and affordable pay per use turn by turn navigation in 30 countries, Nokia is reshaping the rules on the early stage market of cellphone-based navigation. But is it enough to create a consumer rush?

Nokia announced a few days ago that it is making its Smart2go mapping and navigation platform, available for free download on selected Nokia S60 and Windows Mobile 5.0 devices and is planning to roll out support for most of the major mobile OS platforms including Nokia S60, Series 40, PocketPC, Linux and other Windows Mobile devices. The platform allows for mapping and routing in over 150 countries and has support for full turn-by-turn satellite navigation in over 30 countries. While the map, the point of interest content and the route calculation is free, the turn by turn voice guidance is a premium service sold over the air via credit card payment and ranging from €8.99 for one week to €99.99 for three years for a region like Western Europe.

Nokia describes Smart2go as an hybrid map solution: Map data from Tele-Atlas and Navteq can be downloaded directly via wireless network (e.g. GPRS/3G/WLAN) or via an additional PC desktop tool. If all the desired map data is stored, no network connection is needed for mapping, routing and navigation.

At the same time Nokia is announcing two additional GPS enabled handsets to its high priced N95 device. Out of these three products the most interesting is definitely the affordable smartphone Nokia 6110 Navigator to be available in the second quarter 2007 for an unsubsidized price of €450. All new Nokia smartphones will also embed the Smart2go application under the name "Nokia Maps".

The Smart2go pricing structure is clever, flexible and particularly appealing to consumers. First the maps are free as well as the points of interest (restaurants, ATMs, gaz stations), therefore consumers will be able to try and use the solution for free. Moreover this will offer an excellent pedestrian navigation solution – where turn by turn and voice guidance is not needed. Second, the licence fee for turn by turn navigation can be purchased for one week, one month, one year or three years. Frequent travellers will be happy to have a navigation solution for under €10 when they are on the road abroad for a limited period of time. Additionally this onboard solution doesn’t require to be connected to the network and therefore to pay huge roaming fees to network operators.

Comparing this solution with onboard competitors on the market today, companies like TomTom or Route 66 are charging €119 to €129 for software and Western Europe maps with unlimited use. But this unlimited use is fictional because after three years — or even less — maps are out of date.

It is clear that in Europe Nokia is emerging as a very serious contender to GPS navigation brands in the cellphone space. Nevertheless, in the US the situation is slightly different. First, the Nokia brand is far to be dominant. Second, the off-board navigation solutions are getting some traction on the market. Most of the phones on the CDMA networks (Sprint, Verizon) already integrates a GPS and there is no roaming fees: unlike Europe the cost of data download is the same everywhere. Additionally Verizon Wireless has been marketing agressively its VZ navigator pushing its competitors to follow the same path.

While Nokia’s business model is smart and will give some headaches — if not more — to its competitors, its success will mostly depend on when and at what speed GPS enabled GSM phones will be available on on the market. Consumers will really adopt cellphone based navigation when the GPS will be integrated. Only the most technically advanced consumers will accept to carry a separate bluetooth receiver and its charger and pair it with its cellphone.

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