Nokia takes on Google and Microsoft

I wrote a few days ago how Google would be Nokia’s next competitor. Having trounced the opposition in the mobile handset marketplace, the Finnish mobile phone giant is looking to expand into the GPS market in order to grab a large share of the lucrative location-based and mobile advertising market.

The article I wrote was speculative, based on piecing together rumours and Nokia’s recent buying spree. Now, though, this supposition has been confirmed, as Nokia has stated that it “really sees itself one day competing with Microsoft, Google, and Yahoo in this space.”

More details after the jump.

The location-based mobile advertising market

In the article that I wrote for FinderMentalism, I noted that the location-based and mobile advertising market could be worth as much as $20 billion by 2011, and that both Microsoft and Google are already sizing it up. Google are looking to develop their own Google gPhone to take advantage of it, while Microsoft are looking at buying GPS device manufacturer Garmin.

It’s Nokia that’s really setting the pace, though, with its planned $8.2 billion purchase of GPS mapping company Navteq, its statement that its 2008 phones will feature GPS receivers, and now its new statement confirming its intent to enter the location-based advertising market aggressively.

Nokia reorganizes itself

A couple of weeks ago, Nokia bought Enpocket, a company that specialises in mobile advertising. Nokia CTO Tero Ojanpera said in a statement, “Nokia has already announced its intention to be a leading company in consumer Internet services, and we believe that mobile advertising will be an important element in monetizing those services for our customers and partners.”

The company also noted that it will reorganize in January to include a software and services unit, and has already released a number of mobile services, including a store called Ovi selling music, games and maps, and a mobile social network called Mosh.

According to Mike Baker, head of Nokia’s mobile advertising division and former chief executive of Enpocket, “Advertising is a key part of the revenue from the software and services business…This company really sees itself one day competing with Microsoft, Google, and Yahoo in this space.”

In an interview with the Boston Globe, Roger Entner, senior vice president of communications sector for IAG Research, said “They want to be more than just a phone purveyor, or an infrastructure purveyor. They want to be involved in the whole value chain…That’s why they bought Enpocket. They want to make this a substantial part of their business, ideally with billions of dollars.”

Nokia vs Google vs Microsoft

So Nokia really is pushing into the location-based and mobile advertising space in a big way. It won’t be long before Google and Microsoft play their cards, and then we’ll have a battle royal as all three try to carve up this huge marketplace for themselves.

In my opinion, Nokia are going to win in the gadget stakes. They’re far too dominant in the mobile handset market for Google or Microsoft to compete effectively, and I can’t see that changing soon. As such, the Google phone will be a novelty that won’t hit the mainstream, while whatever Microsoft does with Garmin, it won’t make much of an impact.

However, longer term, it’ll be Google that wins out in the advertising market. Nokia may have the mobile handset market sewn up, but Google rules the data it’ll need to feed that market.

So Nokia will supply the devices that access the location-based services (and ads) while Google will power the services with its gigantic databases. Either way, it’s a victory for the consumer as we get super-functional handsets, uncannily accurate location-based services, and all for a super-cheap price due to the advertising effectively subsidizing the handsets and services.

Seems I do know what I’m talking about after all!

[Source: FinderMentalism, Boston Globe]