Nokia-Navteq Points To Where Smartphones Are Headed

Nokia's planned $8.1 billion acquisition of map data specialist Navteq is part of the leading cell phone manufacturer's ambitious strategy to broaden into Web-based services. It's also a sign that smartphones are quickly evolving beyond e-mail and multimedia to include a range of new capabilities, many of which incorporate location information.

Location-based services, able to pinpoint people and things in real time, have long been recognized for their business potential. So far, they haven't been widely used beyond logistics, shipping, and field-service operations, but business uptake will come as these services become more widely available on a range of mobile devices.

In August, Nokia launched a Web strategy, dubbed Ovi, to offer music downloads, online photos, and interactive games. Nokia CEO Olli-Pekka Kallasvuo last week called location-based services a cornerstone of that strategy. While many of the services under the Ovi brand are aimed at consumers, the company is making a bid for enterprises, too. With high-end smartphones listing for $750, says market researcher Jack Gold, Nokia needs to create an "ecosystem" of services to make those phones worth the price.

Nokia's business mobility offerings include call-administration and cost-control functions, desk-phone-like features on mobile devices, and enterprise services such as VPNs, firewalls, and device management. In May, Nokia released a version of its Intellisync Call Connect system that combines Cisco's wireless LANs and Unified Communications Manager with Nokia's E-series phones, creating the most powerful platform yet for fixed-mobile convergence for businesses. Add in Navteq and you get dual-mode Nokia phones with cellular and Wi-Fi connectivity built in that include mapping features, voice over IP, e-mail (including Microsoft Exchange integration), and Web browsing.

Nokia isn't alone in seeing big potential for navigation and location-based applications. Garmin last week released a $99 software program that can turn a smartphone into a mapping- and directions-enabled device.

Still, Wall Street expressed skepticism about the Nokia-Navteq deal. "This is an expensive acquisition that we think is more about long-term control and inhibiting competition than about a financial investment in a growing asset," Nomura International analyst Richard Windsor wrote in a research note. But he added, "If Ovi is successful, then this acquisition could contribute a lot of value to Nokia."

GOING MAINSTREAM
For some companies, the value of location-based services already is proven. Heating-oil distributor Parker Fuel uses location services from Navteq competitor Navtrak for its service and oil trucks. "We've saved a ton of money on gas usage, as well as made sure that people are getting paid for the work they do," says service manager Ralph Adams. "Navtrak has really become the drivers' time clocks. It took a lot of the B.S. out of the process, frankly."

However, location-based services can still be hard to use and GPS devices tend to suck battery power, confining them to specialized apps. That's beginning to change with new easier-to-use GPS-capable phones. At the Metropolitan Group, a Portland, Ore., consulting firm that helps nonprofits with strategy and communications, some employees use Google maps on iPhones with no help, says operations manager Jason Rambo. He worries that GPS services on phones will be harder to use. "Nokia could change this," Rambo says. "I hope they do."