The stock prices of TomTom and Garmin fell Thursday in the wake of Nokia's rollout of a free mobile app that delivers turn-by-turn navigation voice guidance in 74 countries. Nokia's Ovi Maps currently can be downloaded onto 10 Nokia smartphones, including the Nokia E72, N97 mini, 5800 XpressMusic, and 6730 classic.
What's more, Nokia expects to ship new smartphones beginning in March that will come preloaded with local country map data for the new Ovi Maps app, which will also include free travel-guide content from Lonely Planet and Michelin. IDC Research Manager Francisco Jeronimo believes the free Ovi Maps will end up being a huge "game changer" for the personal-navigation device (PND) market.
"It will have a strong and very negative impact on companies selling navigation products or applications," Jeronimo said. "Competing with Nokia is difficult, but competing with Nokia's free services is almost impossible!"
Navigation as a Commodity
Google's decision last year to offer free navigation on Android -powered phones in the United States was the first notable setback for PND makers TomTom and Garmin, which suffered significant stock-price declines at the time. Jeronimo thinks Nokia's free navigation offering is an even bigger threat.
"The only way navigation companies will be able to survive is by selling location-based services or selling their applications to other manufacturers forced to deliver a similar offering, like Apple," Jeronimo said. The danger is that navigation will quickly become a commodity that consumers will no longer be willing to pay for, he added.
"The question is whether or not consumers will prefer to buy a PND because it has a bigger screen, the battery lasts longer, and the signal is better," the IDC analyst said. "In my opinion, consumers will shift to mobile phones as their primary GPS devices because what they are saving is a significant amount of money."
Garmin said Nokia's latest move "reaffirms our view that consumers want a smartphone that contains robust navigation features." The PND maker also noted that it now offers the Garmin-ASUS nuvifone -- a mobile handset that offers free navigation capabilities, but is different than rival handset offerings in that it has been built from the ground up to function as a GPS device. (continued...)