February 13, 2009

Ericsson Turns to Navigation
    

Swedish Telecom Joins Race With Nokia, Others to Provide GPS Services

By SARA SILVER

WSJ.com

Wireless carriers are rushing to offer cellphone-based navigation services to help replace lost revenue from declining voice sales. In a deal being announced Friday, Telefon AB L.M. Ericsson hopes to lure them to buy these services from Ericsson.

Ericsson, of Sweden, says it will begin offering customers turn-by-turn directions branded for each carrier in partnership with Networks in Motion Inc., of Aliso Viejo, Calif.

Ericsson, the world's largest supplier of wireless network gear, is entering a field that has attracted major investment by Nokia Corp. and others, as the makers of wireless hardware move into the more profitable services business.

Cellphone-based navigation has been made possible by the spread of handsets with chips that can connect to the global positioning system, or GPS, as well as the trend toward larger screens that make it easier to read digital maps.

Laurence McDonald, Ericsson's head of consumer and business applications, said Ericsson and NIM have talked with several carriers but haven't yet signed any deals. Revenue from consumers, who will typically pay $4 to $7 a month, will be shared among Ericsson, NIM and the carrier.

"It's a good complement to use our installed base to get carriers more applications that can drive traffic on their networks," Mr. McDonald said.

Device makers, too, have long been interested in the lucrative navigation space, which is among the most profitable applications offered on cellphones, though it is far behind text messaging.

Nokia spent $8.1 billion last year to acquire the digital-mapping firm Navteq, and recently introduced an updated mapping and navigation service, venturing onto the turf of carriers aiming to sell those services themselves. A Nokia spokeswoman declined to comment on Ericsson's move.

"If it's all done through the device, with built-in mapping software, then the operator is cut out of the deal," said Charles Golvin, a telecom analyst with Forrester Research. "This could be an effective strategy, since Ericsson and NIM are enabling carriers to get a piece of the action."

Mr. McDonald said Ericsson's network will use its mobile-positioning technology that connects phones to its network to enhance the satellite-based GPS signals, which can be obstructed indoors or by tall buildings in urban areas. Such services, known as Assisted GPS, connect devices faster to navigation and other location-based services, such as those directing cellphone users to the nearest cash machine, the cheapest gas station or films starting in the next hour.

Ericsson selected Networks in Motion, which already supplies carriers including Verizon Wireless after spending months reviewing competitive bids submitted by the major providers last summer. In the U.S., NIM's major competitor is TeleNav Inc., which released navigation services for phones based on the Android operating system of Google Inc. and was selected by Ford Motor Co. to power its in-car navigation systems.

TeleNav won't say if it bid for the Ericsson contract, but the company says it is working directy with carriers to bring its products to market in Europe. "Working directly with carriers allows us to directly meet their needs," said Sal Dhanani, co-founder and marketing director for TeleNav.