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Nokia's OVI Maps for free? Not.
Nokia's history has never seen such a mysterious announcement as the one they made on January 21st. I don't think it'd be an exaggeration to say that Nokia, for the first time ever, managed to keep the whole event in secret, having invited bloggers and journalists only one week prior to the announcement. Apart from an online broadcast from their main event that unfolded in London, they also held similar presentations in Deli, Berlin, Mexico City, Moscow and other venues. Again, I must stress that no other phone maker has ever held anything even remotely similar in scale. A lot of rumors were floating around the Web, promising something Big. Nokia kept tweeting that "the way we use phones will change". All invitations featured "OVI" on them, making it crystal clear that January 21st will be all about services. But which ones? We were kept in the dark until the very last hour when Reuters ended the unbearable suspense with a story that Nokia was going to give the world free navigation. So it happened. Now let's try to evaluate the consequences of this milestone event and look at it from various angles.
OVI Maps - Before. Or how it used to be
Those who don't remember how Nokia entered the maps market, here is a brief review. Some time ago Nokia acquired a German software maker Gate5, whose developments made for a solid foundation of Nokia's own Maps application. Back when it debuted along with the Nokia N95 I had a couple of meetings with some of Nokia's top-managers and all of them assured me that maps were one of their top priorities.
Then, like a bolt from the blue, at the end of 2007 Nokia announced their plans to purchase Navteq, the world's largest map maker. A couple of months and 8.1 billion dollars later Nokia laid their hands on the maps of most major cities and regions. Nokia Maps, already known as OVI Maps back then, got a huge boost, since Nokia came to that market with nothing behind their belt. For example, most maps for Russian cities came out only during the second half of 2009, and they are still working on them.
Nokia's major forte was a novel distribution model that made their maps uploadable from PC (so that an active data connection was not required for navigation) and there were no fees or charges - needless to say, that was an extremely welcome feature in roaming zones.
Nokia still made money, however, by selling guides and full-fledged turn-by-turn navigation for pedestrians and drives. A full commercial license usually went for 70 Euro a year, or 9 Euro a month. Not that pricey, but not free either. And while this approach seemed reasonable to Nokia, the market gave it a cold welcome - in fact, their sales were nearly non-existent. Back then Nokia opted not to publish any reports regarding their maps application and sales in order to avoid a sticky situation and several questions that they would rather not answer. Instead they only listed the number of phones that supported their Maps service. The value of this market was stressed by Nokia's determination when it come to navigation-savvy smartphones - they were churning them out one after another. First, the Nokia 6110 Navigator that saw release in May 2007. Retailing for 450 Euro it never became a success and its sales left much to be desired. In fact, Nokia were simply jamming the 6110 through, so they decided against putting their own navigation app inside the phone (back then it was known as Smart2GO) and installed Route66 instead.
Next year saw the Nokia 6210 Navigator that came armed with a digital compass and maps that rotated automatically, depending on the user's position (now, however, it's something you expect from any Nokia-branded smartphone). This time around, both maps and application were Nokia's own, and the price tag got considerably lighter - only 300 Euro. The 6210 Navigator was also the first phone to benefit from a supplementary 6-month license that shipped with each unit. However, even that didn't help the phone's sales - Nokia's navigation wasn't making any progress at all, and none of their schemes seemed to work.
Autumn 2008 - Nokia decides to add navigation licenses (varying by length) to several products that came preinstalled with Nokia Maps. Two packages, with 3 and 12 month licenses respectively turned out to be more popular than the others. And naturally their cost was included into the price tags of the phones they came with. And this moment signified a turn for the better for Nokia's navigation business. Was it a "fair" method of distribution? I think not, as the service was sold along with phones even to consumers who didn't have any use for maps or navigation, nor were they aware that they paid an extra for that. It's worth noting that Nokia didn't care to notify its customers that licenses were included into the package, or provide a method to get a refund. In some countries, like Russia, this policy got Nokia into some unpleasant stories, as "navigation-ready" phones were distributed in cities that weren't covered by Nokia Maps, and therefore their licenses were next to useless. Essentially, Nokia was forcing this service on consumers, although from a legal perspective this might not be the case.
The third iteration of Nokia's navigation-centric device, the 6710 Navigator, couldn't boast substantial sales either. And in the future, even if we will see more Navigators from Nokia, they won't have any bells and whistles onboard, as now this feature is available on all Nokia-branded smartphones. My question regarding the fate of this brand didn't get a clear answer - this matter is being discussed right now and the decision can go either way. But let's take a look at the situation from a different point of view.
Google vs OVI Maps
Google is probably the biggest proponent of free services and applications out there - all their new products can be used absolutely for free, including the Java-powered navigation app, giving all users access to Google Maps. It debuted back in 2006 and on November 28th, 2008 the world saw its second version that made it possible to retrieve the user's current coordinates even on phones that didn't have GPS receivers via base stations. Within cities this method worked great and provided just enough precision for most users.
The fact that this application was free made it the industrial standard - a lot of users uploaded it onto their phones, and even some manufacturers made Google Maps for Mobile their default navigation applications. Unfortunately I couldn't find exact statistics on how many phones had it onboard, but even rough estimates show that this number should be well above 200 million units. Over at Google they probably know all the numbers, since the application sends data packets to their servers every time it goes online, which is of its most notable differences from OVI Maps, as the latter doesn't require an active data connection.
The debut of the "Hybrid mode" in the second version of Google Maps, along with the release of StreetView feature for selected countries made Google Maps an undisputed trend-setter. But as long as it was based on Java, it didn't pose a considerable threat to Nokia, as it was only useful on S40-powered phones, filling the gaps in functionality left by Nokia.
But all of that changed at the end of 2009, when Google's navigation services made a leap forward with a beta version of turn-by-turn navigation for Android. This feature is already available in the Motorola Droid and Nexus One, however as of today it's limited only to the US, since Google draw all maps themselves. Nevertheless, this announcement changed the market, as the manufacturers of "traditional" navigators, such as TomTom, made the most money from voice-aided turn-by-turn navigation. So, when someone decides to make this service free, this part of their business becomes obsolete. At the same time, it challenges Nokia, for Android is one of their S60's rivals. And while Android is doing fine on its home turn, it has still got of a lot of catching up to do in Europe, while for Nokia it's the other way around.
It's easy to see that Nokia, having made a strategic decision to distribute maps for free, has solved two problems in one sitting - first, they have protected their European market from Android-based solutions offering free navigation, plus they no longer need to sell their own service separately, or make it a centerpiece in some phones.
Are they really free?
One could argue that Nokia's Maps are truly free now, but as we all know, business is not something you can be good at if you don't sell anything. Let's see what really stands behind this lucrative offer.
So, starting January 21st, ten S60 smartphones from Nokia will come with lifetime navigation licenses with voice tips available in all supported languages and city guides (LonelyPlanet, Michelin). In other words, all the things you had to play for before, are now out there up for grabs for $0. And there are no refunds for those who already own a license. Fair? Not exactly, but I doubt there are many consumers who got one anyway, and all new users will see this offer as their golden opportunity to get navigation for free.
On January 28th they'll add support for the Nokia N97, and then all more-or-less fresh offerings will get free nav, one after another.
It won't be long before all phones that come boxed with licenses vanish from the shelves (it'll take them from 6 to 9 months). Nobody is going to withdraw them today, obviously, since there were no complaints before, and there are no reasons to expect them today either. However I was puzzled who was going to pay for these "free" services at the end of the day. I got my answer from Jukko Hosio of OVI Maps: "There is no extra charge for OVI maps navigation service, it is included in smartphone price starting in March for new models". Then there were some more questions, and in one answer they mentioned that from that point on all S60-based smartphones would come with this service.
So, to make it clear for you: Nokia has included the cost of its navigation service into all S60 products and called it a "free" offer. Having dumped the license-based business-model, Nokia will be selling a piece of its navigation service with every smartphone that will go on sale starting March 2010. . Nokia will definitely benefit from this move, as free services, especially sophisticated ones, always attract crowds of new users, plus as far as quality is concerned, Nokia's maps are pretty decent.
I don't want to go into detail about new features now available with OVI Maps - we'll talk about them on Monday. Here I'd like to focus more on the reasons behind the decision to make all maps free and how it's going to affect the market.
All in all, this announcement delivers a crushing blow to the makers of traditional navigators - TomTom's shares, for example, lost 15 percent in price right after the press-conference of the Finnish manufacturer. And this is probably the best indication that the market has already clued in on the fact that the rules have changed. But will OVI Maps become their major selling point? I think it'll be more of a welcome addition, as navigation is not the service many crave for these days. It will start to matter more down the road, though, make no mistake about that. For now Nokia has secured its position in Europe and gave Google a run their money. We'll see how they'll respond.
A couple of Euros on top of every S60 smartphone's price tag isn't that much, but as competition gets tougher even a couple of cents can make all the difference. Will Nokia's plan work out and the buyers of top-of-the-line solutions will see free navigation as the determining factor? In some regions - definitely. But we'll see whether it can really be a sales booster in the near future. The only thing I have left to say is that it's still unclear whether they'll offer free navigation for S40 too - the decision is yet to be made.
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