Motti Kushnir on rapidly-changing business models.
2010 is an interesting time to be a mobile navigation company, to say the least, with business models changing by the month.
Last year, navigation firms ditched their traditional monthly subscription pricing in favour of one-off download fees on the App Store, charging in excess of £50 for their apps but without the longterm revenues provided by subscription models.
Then, in recent months Google and Nokia have dropped bombshells on the sector, releasing their own apps – Google Maps Navigation and a new version of Ovi Maps respectively – for free. Google’s app is only available for a limited number of handsets for now, but Nokia’s app has already been downloaded more than three million times.
How big a threat are these developments? ME sat down with Telmap at Mobile World Congress to get the views of chief marketing officer Motti Kushnir.
The company’s business model has historically focused around operators, with customers including the likes of Vodafone, Orange and Telefonica. It’s continuing with this white-label model.
“It’s crucial for the service providers,” says Kushnir. “They want to control the user experience associated with the product, and they want to have a lot of local content too. If you get our product in France, you’ll get totally different local content to what you’ll see in the UK – everything from speed camera data and points of interest to congestion zone widgets.”
Kushnir says that Telmap’s apps are being used on average nine times a month, for a total of 240 minutes. The company is also focusing on its widgets platform, getting developers to create plug-ins for its applications.
So what about those business model changes? Kushnir’s view appears to be that Google and Nokia’s actions are more a threat to operators than to Telmap.
“In previous years, navigation was a premium service, where operators resold it to consumers, and everybody was making money,” he says. “In the last two years there’s been a tremendous change – location has been a foundation layer, like messaging and voice. Everyone now wants to have a basic offering of maps and location that can be offered to all their customers.”
Aren’t Google and Nokia undermining that by offering decidedly not-basic offerings to their own customers, though?
“It clearly emphasises the importance of this domain, and the operators now fully understand that those guys are after their lunch,” says Kushnir. “They’re looking for ways to introduce location-based services and enablers to all of their customer base.”
In the case of Nokia, Kushnir warns against seeing Ovi Maps as purely ‘free’ – but rather as a service whose cost is bundled into the price of a handset, which will increase customer loyalty to Nokia rather than their operator.
He’s pretty bullish about operators’ chances though. “The thing that makes operators successful is that they are service provider, whereas Nokia is a handset manufacturer – it’s in their DNA. They launched N-Gage for games and it didn’t work. They launched Comes With Music and... well, I have nothing to say about that.”
Fair points, although you could argue that three million downloads so far indicates that Nokia is having more success with Ovi Maps so far. Even so, it’s clear that Telmap’s strategy is to work with operators to make basic navigation features free, while upselling customers to more premium elements – traffic data for example.
“Free is not always the best model, especially when it’s a one-size-fits-all approach,” says Kushnir. “Premiums will be specific to what people need in different countries.”
For Telmap, this involves signing partnerships with local companies and organisations. For example, users of its apps in Israel can pay for their parking via their phone bill in Tel Aviv, thanks to a deal between Telmap, its operator partners and the local government.
“Nokia cannot do that,” he says. “We and the operators have the local content and connections. If you do this, you have the killer app. And don’t forget, the operators also have a huge advantage when it comes to customer care. If I have a problem with my Nexus One, I have to send Google an email? That’s no good when I’m trying to navigate to an important business meeting...”
But he comes back to the idea that while navigation services may feel like free to consumers, there’s a well-established business model behind them.
“80% of our business before Nokia and Google came in was free,” he says. “You bought the device from Vodafone or Orange with a data plan, and got the app for free. In EMEA, we are used to that model on top-range data phones, but now it will go down across all the data plans. We get our fee, and the operator is supporting its ability to charge for the data plan, while monetising through upsells and advertising.”
Even so, he admits that the actions of Google and Nokia are speeding up the transition of the mobile navigation market from a premium service to a “commodity”.
So what about advertising, then? Kushnir says that while location-based advertising has long been seen as the holy grail for mobile, it’s been slower to take off than some experts had predicted. However, he says that advertising networks are now moving to a more contextual targeting approach, with navigation apps set to benefit.
“We are not going to allow anyone to spam our applications,” he warns. “Unless it’s very relevant, we won’t introduce advertising. We’re very, very cautious of it. If you’re on your way home to the office and just want to check traffic, we won’t offer you an ad.”
However, Telmap is allowing widgets for specific brands, retailers and restaurants – for example McDonalds or Starbucks – effectively treating them as points of interest so users can find their nearest branch. Coupons and discounts are also set to play a significant role in making ads feel less like, well, ads.
“We have held numerous trials, and here is one example: if a guy is navigating ...
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