A Brazilian Twitter follower, @rlcarbonell, asked “what do you have to say about this last move by Nokia Maps being ‘free’?” An important question, but one that cannot be answered in 140 characters.
Maps, and more to the point, the associated driving directions, are becoming free because the services that can be wrapped around them are more valuable than the map information itself. Google started the trend when it made free real-time, turn-by-turn driving instructions free on the Verizon Droid and, soon there after, other Android phones. Of course, google Maps has been free from the beginning on computers and many different handsets. But Google Maps used data from Tele Atlas (now owned by TomTom) and Navteq (acquired by Nokia) and Google did not buy the very expensive licenses required to provide real-time navigation.
Instead Google built its own database of North American maps with information it gathered while collecting the photos for Street View. Owning its own maps, Google could provide real-time nav without paying any license fees. And nav leads to very valuable search ads. Advertisers are willing to pay a lot per click for people on the interstate searching for motels because these inquiries turn into sales at a very high rate.
Earlier this month, Nokia, taking advantage of its ownership of Navteq and the fact that Google isn’t ready to go with its own maps outside North America, announced its free Ovi Maps service for selected Nokia smartphones in 70 countries. Monetizing free maps is somewhat more difficult for Nokia than for Google, but they two will do it by providing paid services around free maps.
Apple is likely to be the net player in the free nav game. The current standard Maps iPhone app, which does not provide real-time navigation, is just a rebranded Google Maps. But last summer, Apple quietly bought a mapping company called Placebase and is thought to be developing its own in-house mapping capability. It’s just a matter of time before Apple announces its own free mapping application for the iPhone and other products.
All of this is bad news for the paid competition, of course. Providers of paid services for phones, such as Telenav and TeleCommunications Systems (formerly Networks in Motion) are coming under a lot of pressure. Probably the biggest loser is TomTom, unless it can find a way to make money from its expensive Tele Atlas data in this new world of free maps.