IN-DEPTH: Interview with Christof Hellmis, vice-president - product, Location, Nokia

The personal navigation industry is increasingly facing threats as more and more consumers increasingly use their cellphones for satellite navigation in cars.

In fact, the industry witnessed a 68% increase in the use of mobile mapping and direction services across Europe in the last year. In February, more than 21 million mobile users (age 13 or older) in five countries –the U.K., France, Germany, Spain and Italy - used their mobile handsets for navigation. The highest growth, according to comScore, was seen in the UK market, with an 86% increase to 5.7 million mobile map users.

According to comScore, among those who accessed maps via their mobile devices for the three-month period ending February 2010, most (68.2%) accessed those services in a car or other vehicle.

One of the major developments this year has been the availability of free navigation system on Nokia’s handsets. Also, mobile mapping services continue to be in news, be it for their potential for integration with other location aware services or the location-based advertising market.

For its part, Nokia has sought to increase its share of the value end of the market by launching new smartphones and offering services such as free navigation.

And the company has already witnessed 10 million downloads by Nokia smartphone users within the three months since its introduction.

“Navigation has truly become mobile,” says Christof Hellmis, vice-president - Product, Location, Nokia.

Hellmis spoke to TheWhereBusiness correspondent Ritesh Gupta about the significance of location based services, monetising free mobile navigation and much more. Excerpts:

Ritesh Gupta: Over the past few months, it has been witnessed that the emergence of free navigation applications has had an adverse impact on the PND makers. What according to you have been the biggest changes over the past few months?

Christof Hellmis: Navigation has truly become mobile. According to research firm Canalys, the number of people worldwide using GPS navigation on their mobile phones was approximately 27 million at the end of 2009.

With GPS chips having become a standard smartphone feature it was a logical step for Nokia to offer navigation for free in order to give even a greater number of customers the possibility to use and experience that service. With this disruptive move we potentially almost doubled the size of the installed user base of 27 million to about 50 million as millions of users with compatible devices could activate free navigation immediately after our announcement through a download of the new Ovi Maps application.

As of today, we have already experienced 10 million downloads by Nokia smartphone users within the three months since our announcement and we are very pleased with the usage patterns we are seeing. We will continue to grow this base even further as going forward all our GPS smartphones will come with free navigation out of the box.

After our announcement, Canalys considerably changed their forecast on the usage of PNDs and mobile phones for navigation, predicting that already in 2010 there will be more people using a mobile phone for navigation than a PND.

What’s even more when we are talking about navigation we are not only talking about car navigation on a mobile handset that is as good as in built-in systems. We’re also talking about real pedestrian navigation, a true solution for pedestrians, built with dedicated maps and experience, that makes a huge difference for any user.

RG: In early February, Nokia stated that Ovi Maps with free navigation crossed one million downloads in a week and the company is averaging a download a second, 24 hours a day. The new version Ovi Maps is a key part of Nokia’s strategy to lead the market in mobile maps, navigation and location-based services. Are location based services going to be the key differentiator going forward?

CH: Location based services will be one of a couple of key differentiators. In the end what matters is the whole solution that is being offered.

Nokia has always been about “Connecting People”. To that mission we are now adding the dimension of location so that now we are not only connecting people but also people and places. Together with great devices this is a truly convincing solution for customers. What’s more third parties can also benefit from our open approach when it comes to our platform and build great services and applications upon it adding up to and completing the experience of our customers.

RG: The industry has also seen impact of free navigation applications on other companies. For instance, Vodafone was in news for closing down its mobile navigation division Wayfinder in March. What do you make of such developments?

CH: In the end, a comprehensive location and navigation platform is an enabler for a variety of other services and applications. To build-up and maintain such an infrastructure in the long term, however, is very expensive. Nokia for its share is fully committed to that task – which is one of the reasons why we acquired Navteq in 2008. Others have to consider themselves if they want to create such a platform on their own or use existing ones like ours and build their services and applications upon that.

RG: What are the key challenges in monetising free mobile navigation at this stage?

CH: Free navigation is part of a solution for the user. But that, of course, doesn’t mean that it is B2B-free. The business model behind it is based on the idea to offer our customers first-class solutions. These are composed of great devices and services that our customers are willing to pay for as a whole.

At the same time, we believe that the price erosion which is natural in a product life-cycle will be much slower when the solution has more to offer.

Regarding other models of monetisation, we are only at the beginning. There are, however, a number of possibilities. For instance, there are premium services like the hotel reservation service (HRS) integrated into our solution where you can book a hotel within the application directly from your mobile. The revenue coming from such transactions is then shared between the partners. Other models may be based on advertising – but in a different way than we are used to because mobile advertising has to be more intelligent and must provide additional value for the customer.

Also for our B2B customers like operators this is an interesting development as they can now sell their data plans to consumers even better.

RG: What do you make of contextual advertising and promotional deals associated with navigation applications at this stage? How do you assess the maturity level of such campaigns?

CH: In terms of contextual advertising and promotional deals we are also only at the beginning. The possibilities are manifold and we will see some experiments in the near future. We already had one very encouraging trial in Finland with McDonalds. One option, for instance, is to partner with third parties and advertise jointly together. But as already mentioned: There need to be new and fresh models of advertising because mobile advertising has to be more intelligent and specific and has to provide additional value for the customer.

RG: For mobile developers and publishers, Ovi Maps represent a significant opportunity. For instance, in the travel industry, we have seen several applications including ones from Lonely Planet and CarTrawler. How do you intend to capitalise on this horde of applications to monetise the same?

CH: Also here the beauty of the story lies in the variety of possibilities for monetisation. One of them, for instance, is to offer premium services to download via Ovi Store, another is made of specific contextual advertising and a third one is based upon referral deals. Since we’re only at the beginning we will simply try out the variety of possibilities and see what works best for whom. It’s going to be an interesting time.