I noticed today that Nokia released a free mapping program called Smart2Go which can easily be downloaded over the air to cell phones. In and of itself, I did not find the news terribly interesting as Google Maps is a great app which is also free and there are countless others going after the space. However what is interesting is that Nokia is offering this service through an acquisition they recently made. In addition, for users with GPS chips in their phones, Nokia is offering a premium turn-by-turn service which will be paid for on a monthly basis. In other words, from a business model perspective, Nokia is going directly after the end consumer and encroaching on precious data and subscription revenue of their carrier partners. Take this thought further and ask yourself why Nokia is offering phones with dual-mode chips (wifi and cellular) and even offering VOIP services? I wonder where this ends up in the long run but what is clear is that smart handset manufacturers understand that there may be potentially more revenue in the monthly subscription fee than one-time sale of hardware. We should certainly keep an eye out for Nokia and every new app they launch in the future. We also need to figure out if they are doing it with partners or doing it themselves either from an internally built application or through an acquisition. For me, it is pretty clear where Nokia is trying to go. By the way, combine this new map application with their purchase of Loudeye last summer and you can start to put the pieces in place. As it says from the press release in August:
Loudeye operates 60 live services in over 20 countries and multiple languages across Europe and South Africa, Australia and New Zealand. Loudeye aggregates rights and content from all the major labels and hundreds of independents and currently offers licensed catalog and complete media for over 1.6 million tracks.
Why would Nokia need Loudeye if it wasn’t planning to offer its own music service direct to consumers. Once again, for Nokia, recurring monthly revenue from every new cell phone buyer is a wonderful thing. Everyone knows that margins on hardware are declining quickly, carriers are increasingly looking to Taiwan to private-label handsets to consumer to drive margins down even faster, and that ultimately cell phone manufacturers need to find alternative revenue streams. The only question is when will this happen, not if. So going after their wireless carrier partners’ data revenue may be controversial but in the end could be a must have for survival.