Quit the whining. All the arguments are very thin. Nokia has a vision, a strategy to achieve that vision, and they’re acting on it. If their actions are causing some re-examination of strategic direction within the industry, that is probably a good thing. Lots of technology companies and Wall Street analysts out there just don’t get it. It seems Nokia does. Maybe it’s the fresh air in Finland, or maybe they just think more long term. Probably both.
Motorola is a good example. CEO Ed Zander has been quoted as saying “We looked at it and went our own way,” and “We are not in the applications business.” The implication was that Moto is going to focus on hardware and platforms. Alright – a valid strategy, but one which strikes me as extremely risky. You don’t have to be “in the applications business” to realize that hardware is heading toward commoditization, and the services delivered through applications running on that hardware will be the revenue stream. Michael Dell is learning that lesson right now, as are Gateway and Packard Bell.
Innovative hardware is great, but so far Motorola has not shown the ability to deliver the rapid stream of innovations it will take to stay on top of the market, and make money, using that strategy. Their latest RAZR is a big ho-hum. What’s next? The Koreans will kick Motorola’s butt unless Mr. Zander can work some rapid development process miracles. Apple already has, as evidenced my Mr. Zander’s apparent dismissal of the iPhone as not such a ground-breaking device. Got anything to compete with it, Motorola? Let’s see the product in consumers hands, then. Hardware and platform superiority can work as a strategy, but it’s a tough road and Motorola will have to be a different kind of company than they seem to be right now.
It just seems to me some things need professional development, and navigable maps is one of them. You just can’t turn everything into a community-created product. Community-created POIs – now there’s a value proposition. Everyone welcomes input on the best restaurant, or sights to see in a new city, or finding out what people like themselves are doing or liked doing. But the underlying map data has to be factual and accurate. Wikipedia is great, and quite handy, but I don’t know anyone who would reference it in their PhD dissertation. WikiMaps are the same.
Meanwhile, down on Wall Street some people are still whining about how much Nokia paid for Navteq, referencing silly EBITDA ratios. They’re drinking the short-term, make-me-rich-today-not-tomorrow Wall Street Kool-Aid. The EBITDA ratio is just a current guesstimate calculation, and means almost nothing about the real value of a company in the future. It would be like saying the value of a used car can be based upon a ratio of the model year to the number of miles on the car. Let’s see – that means a 1985 Ferrari 308 with 50,000 miles (ratio .0397) is clearly not worth as much as my wife’s 2003 Toyota Corolla with 45,000 miles (ratio .0445). Anyone who pays more for the Ferrari is a fool. It must be true, that’s what the numbers say. The opposite kind of Kool-Aid is the flavor that over-values companies like Facebook. Those same people can use a different analysis and say Nokia paid too much for NAVTEQ. Wall Street logic just doesn’t work sometimes.
In conclusion: The NAVTEQ purchase was brilliant, at the right price, and unless other companies take Nokia’s lead and look forward instead of back at what they did yesterday or down at this quarter’s financial ratios, the location-aware future will pass them by. It will go by them so fast they may not even notice until their market share vaporizes and they are sold to I-bankers for scrap. It’s happened to bigger and better companies than Motorola and Garmin.
Copyright ABI Research
Disclaimer: The opinions expressed herein are the personal opinions of the author and are not necessarily those of GPS Business News.