The recent focus on maps and location services in the media has centred on Apple’s botched first attempt to offer its own map service riddled with errors. However, we want to highlight the successes occurring in the background such as Nokia’s continued building towards its ambition to become the leading “where” platform in advertising, automotive and enterprise markets.
Nokia’s Location & Commerce (L&C) unit remains one of the brighter spots for company. Despite being loss making, the L&C unit increased its revenue 25% to €1 B in 2011. Based on its performance during 1H 2012, the division looks set to grow revenue by more than 10% in 2012. Nokia L&C accounted for just below 3% of Nokia’s total revenue in 2011, against a backdrop of falling sales in its core handset business. With Nokia doubling down its investment in key strategic areas including location, investors need evidence of where and how L&C will grow its revenue in the future. A combination of recent announcements helps shed some light on its L&C business as a growth area:
Advertising & Marketing: Nokia has partnered with Groupon to deliver local targeted offers via Nokia Maps. We expect Nokia to take a share of the advertising revenue by providing Groupon with access to Nokia Map users on Nokia devices. In order to maximise the advertising revenue potential (for Groupon and Nokia) it makes sense for the Groupon integration to be extended to other WP8 licensees like HTC and Samsung, which we expect to be next steps.
Automotive: At the Pairs auto show Nokia announced extensions of existing relationships with major automotive players BMW, Mercedes, Volkswagen, Hyundai, Pioneer and Garmin. These deals not only enable Nokia to maintain existing licensing revenue with these vendors but to also increase the licensing opportunity through provision of ADAS related content.
Enterprise apps: Just this week, Nokia announced that Oracle had created a link between its Nokia Location Platform (NLP) web service and Oracle’s Fusion Middleware MapViewer. Nokia is currently the only provider of both map data and online mapping services that are integrated with Oracle products. This new integration is intended to reduce the complexity and cost for customers to integrate map content into business applications, and should see Nokia move up the Oracle enterprise value-chain.
With respect to the use of business location information, many enterprise apps contain information about customers or assets such as fleet vehicles that is connected to specific geographic locations. Having access to up-to-date location information is necessary for business users to do their work. The value of having this information mapped visually within the worker’s business applications can range from moderate to extreme. In industries such as transportation, energy/mining, facilities management etc. the ease and speed of use and the level of detail that can be provide by visual maps are essential. In other industries such as finance and healthcare, visual mapping of customer and other sites is useful but not critical.
As access to and use of location information becomes easier and less costly due to advances like the ones listed above, more consumers and business users will benefit from the rich maps that will pop up in lots of new and exciting places. This bodes well for Nokia’s strategy to double its investment in location and commerce to pursue growth across all segments.
Nitesh Patel & Mark Levitt