Nokia hopes local services, phones pay for satnav

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Nokia, which last week shocked the satnav market by launching free navigation on its cellphones, hopes to have an edge over the competition by pushing local applications and services on its mobile maps.

The move, a blow to satnav makers such as TomTom and Garmin, is also targeted at Google, which started to offer free navigation on Motorol a's Droid smartphones in the North American market in late 2009.

Analysts question how Nokia can compensate for the loss of one of the key revenue sources for the firm's offering of services. Nokia had said it expected a third of its targeted 2 billion euro (USD 2.82 billion) services revenue for 2011 to come from navigation.

"We are moving from one model to another, and we will monetise it in three different ways," Tera Ojanpera, Nokia's Executive Vice President Services, told Reuters in an interview at a media conference in Munich.

He said Nokia was banking on users willing to pay more for a phone that included a navigation package, as well as on location based advertising, and on applications working on top of its location platform.

Ojanpera said at first most of the additional revenue was expected from the pricier phones, but declined to give details. He said later the role of different location-based local offerings would grow.

"You can do it for free and then there are other business models which come for a fee and you get more additional data, more visibility," said Ojanpera.

That in turn would be interesting to local merchants who want to target neighbourhood consumers.

Phone vendors and telecoms operators are seeking to offset rising price pressures in the mobile phone market by offering additional services.

Nokia has sold more smartphones than its rivals but it has lost ground to Apple's iPhone and RIM's Blackberry.