Leadership

On the road again?22 January 2010

on the road again

Last year, I pulled together some examples of the business strategy known as Lethal Generosity .

This week, Nokia unleashed a prime example when they made their satellite navigation software free to all current and future owners of their smartphones.

Those losing out most from Nokia’s “generosity” are Garmin and TomTom who charge up to £100 for in-car navigation systems and the various companies charging for downloadable apps to other phones. On my iPhone for example, Navigon AG charge £52.99 for a fully functioning satnav for the British Isles and NNG Global Services want £54.99 to guide me to “any address in Europe with the help of out outstanding graphics, clear visual cues and precise voice instructions.”

Anssi Vanjoki, Nokia’s Executive Vice President, denied that the decision is a defensive move against companies like Google who are encroaching on their turf. “It is a very offensive move if you will,” he said. “We are not talking one product for one country, we are talking map coverage in 183 countries, launching simultaneously globally in 76 countries with 46 languages and with millions of devices already out there, plus with all of our new products being equipped with this. So it does not sound too much like defence to me.”

The full cost to Nokia of this act of lethal generosity will include the £5.6 billion they spent in 2007 when they bought map firm Navteq. How much value they derive in market share remains to be seen and how long will the handheld satnav remain an app of choice for smartphone users?

When I was a kid, our family stopped taking our transistor radio (google it if you’re under 50!) in the car when the motor manufacturers fitted car-radios as standard. In a world where every carmaker needs the sustainable-green-low-carbon-footprint-save-the-fossil market, how long before they swallow the costs of fitting them to every vehicle as standard? Fuel economy goes out the window if you get lost on the way…

In the complex interlocking system of companies making maps, apps, phones and cars, it’s a brave man who bets the thin end of seven billion Euros for an indeterminate gain.

Brave leadership or desperation? On the road again, or on the road to ruin?

We’ll see.

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