Nokia acquires Navteq for $8.1 billion

Finnish handset vendor Nokia continued its march into the services arena, through the acquisition of US mapping and location based services (LBS) firm Navteq for $8.1 billion, making it Nokia's largest acquisition to date.

Navteq's digital map services span 69 countries across six continents. In 2005, the firm teamed with Nokia to create mobile search solutions for the handset giant's smartphone range. In addition to Nokia, Navteq powers many in-car navigation services for manufacturers like Chrysler, Ford, Mercedes-Benz, Volkswagen and Navteq is also one of the providers of mapping data used in Google Maps. Every mobile device should include mapping services. It’s a natural fit.

Purchasing a company which specialises in digital mapping, including gathering a wide range of information on local points of interest, is a smart move for Nokia. These kind of data will provide the essential contextual underpinning of an integrated mobile service strategy, enabling Nokia to deliver more relevant information based on a user’s location.

The Navteq negotiations represent Nokia's latest move into the mobile services market--in early September, the company Nokia introduced Ovi, a new Internet services brand developed to expand its focus beyond mobile devices and platforms to embrace a range of web services. Ovi ("door" in Finnish) promises to enable consumer access to social networks, communities and content as well as provide a gateway to Nokia services. Nokia trumpeted the music download capabilities of Ovi, which drew on its August 2006 acquisition of digital music firm Loudeye. Its Nokia Maps navigation service also falls under the Ovi range of services.

Last month, Nokia bought mobile advertising specialist Enpocket for an undisclosed sum, an event which coincided with the launch of Google's Adsense for mobile service.

Nokia commands almost 40 per cent of the handset market but evidently believes that, at least in part, its future success rests on securing a share of the services market. At the launch of Ovi, Nokia chief executive, Olli Pekka Kallasvuo, announced: "Devices alone are not enough anymore."

I m not sure how Operators around the world are taking this new positioning of Nokia for the long term as Nokia is certainly dipping into the business territory of the Operators. While there have been suggestions that Orange in particular reacted warily to the launch of Ovi, other operators are more sanguine. My view is that Operators will remain the strongest point of contact with the end users and supporting an open mobile internet experience and working with multitude of partners including internet players like Myspace, Facebook, Google Maps, eBay and Youtube (similar to the i-Mode business model in Japan) will certainly be a better long term strategy for the Operators.