Nokia is mapping the future


Previously the world’s mobile phone leader, Nokia is repositioning itself as the world’s largest mapping company. Will this turn the company’s fortunes around?

Once upon a time during the heady tech boom years Nokia contributed a quarter of Finnish growth to the country’s economy.  For a time, the company was so powerful that the whole nation was referred to as "Nokia Finland".

Recent years have brought less flattering headlines. Still, with a history dating back to 1865, Nokia has changed its course many times before. Its earlier incarnations include paper manufacturing, rubber boots, and cables. This time the new direction lies in virtual location – and possibly means a shift from hardware to software.

Every cloud has a silver lining

"Nokia is now Europe’s largest start-up – that’s the state we’re in and we’re proud of that," says Michael Halbherr, head of the Location & Commerce unit. The Berlin-based mapping division, one of Nokia’s most important business units, is charged with turning the company’s fortunes around.
While the 2007 acquisition of Navteq made Nokia the world’s largest mapping company, it wasn’t until November 2012 that the company capitalized on this distinction by launching its HERE-branded mapping platform.

In reality, Nokia has been in the mapping business for almost 25 years. Navteq has many major clients such as Yahoo, Bing, Amazon, Flickr, Oracle and car companies including BMW, Honda, Ford, and Volkswagen and says that it’s building integrated in-dash navigation into 4 out of 5 cars globally. One of Nokia maps key advantages over the competition is that they can be used in an offline setting.
Will this new platform along with Nokia’s Lumia line of Windows phones put the company back on course?

"Mapping could definitely help," says Tero Kuittinen, a New York-based telecom analyst. "The key here is that Apple has no low-end smartphones and putting advanced mapping software into cheap smartphones could really aid Nokia in emerging markets such as Brazil, South Africa, India, and China."

"The iPhone market share is already stalling in low-income markets such as Brazil and Spain – there clearly is room for budget models with some nice value-add features," adds Kuittinen, who works for Alekstra, a company that recently launched the Ratemizer app that helps consumers lower their phone bills.

Apple attack

Last year Nokia offered maps to iPhone users following Apple’s map difficulties, which had resulted in misleading instructions for drivers heading for the city of Mildura.

The benefit in providing location and mapping apps for a competitor lies in Nokia’s belief in cloud-based services.

"The competitive advantage has migrated from hardware to software," says Halbherr. "The next competitive advantage is cloud services, customers expect everything to work across all platforms.”

Brave new waves

Is Nokia transitioning into a software company?

"It could well be," replies Kuittinen, though he cites the necessity of overcoming quality-control problems.

"Nokia had a chance to really create a big iPhone app in order to gain some ground in Apple’s front yard. But the HERE app got some bad reviews and quickly dropped out of Top 200 list of most popular iPhone apps," he says.

According to Kuittinen, what Nokia has going in its favour for the future is formidable brand awareness, distribution in emerging markets, and deep knowledge of emerging market product development. "That has to be the key, because getting even to ten per cent market share in America or 20 per cent in the UK is a huge challenge. Africa, India, China – that’s where Nokia’s future is," he says.

Seeds of innovation

Nowadays, reliance on one large player is likely to be unhealthy for a country’s economy. Future growth is dependent on diversified small- and medium-sized businesses. Nokia has acted as an incubator and financier for many start-ups by former Nokia employees.

According to a recent BBC report, former Nokia staff has created 220 start-ups. At Helsinki’s Slush, the largest start-up conference in northern Europe, Peter Vesterbacka who heads Rovio, maker of the Angry Birds video game, told the BBC’s Mark Bosworth that, "Finland has become one of the most dynamic places on the planet for start-ups and for creating new innovations and business."

Vesterbacka founded Slush five years ago. Rovio has been one of Finland’s biggest success stories in recent years, and Supercell – a tablet gaming company housed in a former Nokia research centre – is the current superstar with Clash of Clans and Hay Day, two of the world’s top grossing iOS apps.


Text by Katja Pantzar

A longer version of this article was published in Finnair´s Blue Wings magazine (Feb 2013).

Published February 15, 2013

Category: Market updates