Could Future Mapping Deals Save Nokia?

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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.

Spot on
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.

Fool contributor Tamara Rutter owns shares of Apple and Amazon. Follow her on Twitter, where she uses the handle @TamaraRutter, for more Foolish insights and investing advice. The Motley Fool owns shares of Microsoft, Oracle, and Apple. Motley Fool newsletter services have recommended buying shares of Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Motley Fool newsletter services have recommended creating a synthetic covered call position in Microsoft. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (4) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 06, 2012, at 12:00 AM, techy46 wrote:

    Nokia finally gets some respect for their location services. Just maybe, people will also realize that Nokia new Lumia 920 is the most best smart phone on the market based on features, services and price.

  • Report this Comment On October 06, 2012, at 7:41 AM, drbldr wrote:

    If anyone thinks Apple won't fix their mapping problems, they're only fooling themselves. What happens then? Better mapping doesn't come close to helping Nokia catch up to Apple, and once Apple addresses the problem, Nokia will be right back where they were a couple weeks ago. Nokia needs to figure out that fair attempts at copying Apple and Samsung won't get them a major position in the smartphone market. Apple and Samsung actually understand what people want from their phones and continue to come up with new features that make the experience better. Nokia's features sound good on paper, but continually fail to interest customers. That's the bottom line. If they can't fix this, then they're done.

  • Report this Comment On October 06, 2012, at 9:26 AM, ddeeds wrote:

    For all of the bad press Apple has received for their mapping program, I think it may be far better than people think. I was going to a game last night and printed out Google's pick of a route early in the day. The expected time (no traffic) was 28 minutes. I ended up using Apple maps to get me there and it chose a completely different route. It took 5 minutes less than Google and that was during rush hour.

  • Report this Comment On October 07, 2012, at 3:11 PM, Videnak wrote:

    I keep wondering, why people (especially those writing for fools) think that "smart phone" (especially IPhone) means entire mobile phone market.

    With great respect to the Apple success, "high end" smart phones (Iphone, Lumia, Galaxy...) is just a small segment of the business.

    Asia and Africa is not gonna buy those in big numbers, primarily because its expensive and because there isnt coverage of network and services. However, "low end" smart phones and "stupid phones" will sell there in big numbers. And that is by the way the market where NOKIA has it stronghold and where NOKIA can build on their mapping service.

    It would be great if NOKIA got 30% of smartphone market in the US, but that market isn't important any more. I would rather see NOKIA success elsewhere.

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