Tech heavyweights are racing to release more accurate mapping and location services for use in smartphones, cars, tablets, cameras, and more. But it was Nokia (NYSE: NOK ) that stole the spotlight last week, when the Finnish handset maker announced a new partnership with Oracle (Nasdaq: ORCL ) . Under the terms of the deal, Oracle's enterprise customers will gain access to mapping and location content from Nokia. The agreement is particularly important for Nokia, as it could eventually help offset losses in the company's embattled mobile business.
A new direction
In 2007, Nokia acquired Navteq, the world's largest digital mapping company. Today, the $8.1 billion purchase is starting to pay off. Nokia's location and commerce unit currently accounts for about 4% of revenue, though that figure is growing at a rapid pace. Earlier this year, Microsoft (Nasdaq: MSFT ) ditched its own Bing Maps feature in favor of Nokia's location platform on all Windows Phone 8 devices.
The phone maker also has ongoing partnerships with Amazon, Groupon (Nasdaq: GRPN ) and Yahoo! (Nasdaq: YHOO ) . After multiple failed attempts to win back share of the smartphone market, it's refreshing to see Nokia make advances in its location services business. Meanwhile, other tech giants have been slow to start in this regard.
Apple (Nasdaq: AAPL ) is the latest big name to drop the ball, after its fledgling navigation app received fierce criticism from users. For many iPhone 5 users, the updated iOS 6 was hardly the joy ride they'd anticipated. As a result, Apple CEO Tim Cook was forced to issue an apology last week, saying, "We are extremely sorry for the frustration this has caused our customers and we are doing everything we can to make Maps better."
Cook went on to suggest that owners use one of the third-party apps, such as Microsoft's Bing, AOL's MapQuest, Google Maps, or Nokia mapping applications, while Apple works on improving its own option. Still, if Nokia wants to truly capitalize on Apple's misstep, it should release a version of its navigation product for iOS 6.
Mapping Nokia's future
The Wall Street Journal reports, "Opus Research has estimated that mobile ads associated with maps or locations accounted for about 25% of the roughly $2.5 billion spent on ads in mobile devices in 2012." This figure should continue to grow over the next few years as mapping technology and location-based programs become more advanced.
Additionally, advanced location services create unique commerce opportunities for local businesses. For example, Groupon inked a deal with Nokia in August to integrate its Groupon Now service with Nokia's Maps application on the Windows mobile marketplace. This way, when users search using Nokia's Maps app, the letter "G" will pop up on the map, denoting nearby Groupon deals.
However, of all these partnerships, the Oracle deal is especially important because it expands Nokia's reach beyond the individual consumer to business customers. If Nokia plays its cards right, the company's location and commerce division may one day be a key revenue driver, as more organizations license Nokia's mapping technology. Essential to this is the success of the Nokia Location Platform.
That's because the Location Platform business offers a set of application programming interfaces, which let corporations build out mapping services specific to their organization's needs. This allows a company such as Oracle to seamlessly combine Nokia's mapping capabilities into its own Oracle-based software. Perhaps more important is the fact that Nokia wholly owns, builds, and distributes its mapping content.
This could explain why many leading automakers rely on Nokia for location data, as well. Major car brands, including BMW, Mercedes, and Volkswagen, have chosen to integrate Nokia's navigation technology into their vehicles. Looking ahead, Nokia should continue to benefit from its market-leading position in mapping and location services.
Nokia is the clear winner. Unlike Apple Maps or Google Maps, Nokia location-based applications can work without a data connection. Not to mention, Nokia's option currently provides turn-by-turn directions in more than 110 countries, and coverage in roughly 200 countries. For comparison, Apple's turn-by-turn navigation works in 56 countries and Google Maps reaches just 39 countries.
If the Finnish phone maker can lock down more licensing deals, it could lift the company out of its recent mobile funk. It's no secret that Nokia currently has Apple beat when it comes to mapping experience. However, Nokia doesn't hold a flame to Apple's mobile dominance, and I don't see that changing anytime soon. Find out how you should play Apple in the Fool's new premium research report. The report's detailed analysis covers every angle of the Apple investment thesis, and also includes timely notifications on the stock. Click here to get your copy now, while it's still available.