Changing the business model of the market
“This move suggests that Nokia is considering a different business model to support navigation, possibly one that will be free or low-cost to consumers” said Koslowski. “Costs could be offset by location-specific advertising and marketing, with the consumer agreeing to allow relevant, location-based information — such as traffic information or personalized points of interest — to accompany the navigation data. By combining search engine functionality with location-based information, Nokia can create a powerful location-based service experience.”
Opportunistic and connected
To face this change, Thilo Koslowski recommends to in-dash navigation providers and vehicle manufacturers to adopt an opportunistic approach. “You will likely lose business opportunities from embedded vehicle-centric systems as alternative, device-based solutions continue to evolve. Recover revenue by embracing innovative device-to-vehicle integration solutions”. And to add ”explore ways to partner with Nokia and create intuitive solutions that leverage the navigation information from cell phones to be used while driving. For example, take advantage of the much larger auto dashboard screen to display navigation information and develop voice control interfaces that access the application on the phone.”
Thilo Koslowski also believes that PND manufacturers should “develop a device strategy to address the growing phone-based navigation market”. According to him the product proposition should be segmented according to consumer’s usages of navigation: “Target heavy users of navigation services with dedicated PND solutions” and “start thinking about how to embrace the cell phone as a device platform to offer navigation to sporadic users”. He also thinks an important point should be “to develop connected services that leverage a wireless network, for example, traffic information and dynamic points of interest”.
Nevertheless, one might argue the cannibalization of the PND market by cell phones has yet to be seen: usability (screen size, touch screen, keyboard, battery life) and consumer preferences for multiple dedicated devices are rather strong barriers to this movement. As an example the digital camera and MP3 player markets continue to grow despite their equivalents on million of handsets (On this topic read our previous article here).
Additionally it is important to keep in mind that Nokia’s influence is not the same everywhere. In the US, where its market share is much lower than elsewhere, we might doubt about its power to change the business model of the navigation market. Obviously this is more credible in Europe and in Asia-Pacific where the Finnish company is a dominant player.