Nokia Map Giveaway Gashes Garmin

Taking a page from Google's navigation book, Nokia makes maps and direction services free.
Author:
Publish date:

Updated with analyst comment

NEW YORK (

TheStreet

) --

Garmin

(GRMN) - Get Report

shares turned south as

Nokia

(NOK) - Get Report

took

Google's

(GOOG) - Get Report

direction with free maps and navigation services.

Nokia said Thursday that it is giving away its

Navteq

maps and turn-by-turn direction software to owners of its smartphones. The move comes just three months after the arrival of the

Motorola

(MOT)

Droid

, a

Google Android

-powered phone that featured free maps and a GPS navigation system.

Other Android phones like

Google's own Nexus One

opens a floodgate of smartphones that sport free maps and navigation.

For Nokia, the switch to "free" marks a big departure in strategy.

Nokia acquired digital map maker Navteq for $8.1 billion in 2007 as part of a service bundling effort. Nokia hoped consumers would use phones to buy mobile services like email, navigation and music. But Nokia's Ovi has not quite matched the success of

Apple's

(AAPL) - Get Report

iTunes or Apps Store ventures.

Nokia's move away from paid navigation services probably indicates a shift toward an ad-supported model. With GPS enabled phones, Nokia is likely to try and capitalize on so-called location-based services and whatever advertising gravy train that creates.

While Google moved first into free GPS navigation, some analysts spy a low budget opportunity for top phone shop Nokia.

"The Android vendors have been way too slow in addressing the low-end smartphone market," says MKM Partners analyst Tero Kuittinen. "If Nokia can fan out cheap navigation smartphones fast enough, they could well undermine Google."

Meanwhile, GPS device specialist Garmin continues to find its navigation niche trampled by competitors offering freebies.

Garmin shares were down 7% in premarket trading Thursday.

-- Reported by Scott Moritz in New York

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