Nokia to offer free navigation

HELSINKI, FINLAND: Nokia will follow Google, offering free maps on its cellphones, in a move to boost handset sales but one that will hit other satnav players, the San Francisco Chronicle reported on Thursday, citing the Finnish company.

"Nokia used to charge for navigation packages that included turn-by-turn directions. That all goes away now. Now you can get turn-by-turn directions covering 74 countries in 46 languages," the report said.

A spokesman for Nokia declined to comment. The firm is scheduled to hold news conferences related to its services offering around the world from 0930 GMT onwards.

In 2008 Nokia bought for $8.1 billion digital mapping firm Navteq -- a rival to navigation specialist TomTom's Tele Atlas unit.

Analysts said free navigation could enable Nokia to support its flagging position in the global smartphone market. It still sells more smartphones than any of its rivals, but it has lost ground to Apple and RIM.

"Nokia wants to maintain a high market share in devices, and this is one way of doing it, by linking them to services," said Nordea analyst Martti Larjo.

"Navigation originally was one of the services they thought they could get money from, but Google is coming (with turn-by-turn navigation), as are other competitors, so they have to do it," he said.

Google started in late 2009 to offer free navigation on Motorola's Droid model smartphones in the North American market.

Nokia offering free navigation on some 20 million smartphones is set to hurt key players on the global navigation market, including TomTom and Garmin.

Shares in TomTom fell 3.5 percent by 0830 GMT, while Nokia stock was up 1.2 percent, inline with stronger stock markets.

Turn-by-turn navigation has been one of the key revenue sources for Nokia's services offering, and the company had said it expected one third of its targeted 2 billion euros ($2.84 billion) services revenue next year to come from navigation.

"The big question is -- can Nokia generate revenue enough to compensate for the revenue streams they kill," said John Strand, chief executive of Danish telecoms consultancy Strand Consult.

"The only way to do that short-term is through extra hardware sales and a higher average sales prices. It will take time to develop all the new revenue streams -- years," he said.

Writedown coming?

But one analyst said the move, when looked at alongside the moves of Google, could mean Nokia is readying to write down Navteq goodwill when reports fourth quarter results on Jan. 28.

"Looking at what has happened in the last 12 months ... the environment has become more challenging for Nokia and navigation services," said FIM analyst Michael Schroder.

"There is a risk that they will make a writedown on Navteq when they report fourth-quarter data next week, but it is impossible to speculate on the size," Schroder said.