This sudden decision can be accounted to a drop in the mapping service quality of the new iOS 7 software. However, the iOS 7 users can still access the HERE service from their mobile website.
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We believe that the removal of HERE mapping solution from the iOS platform will not impact Nokia’s revenues as it was a free service. However, losing millions of users from the iOS store may dent its popularity moving ahead.
Stiff competition from Google Inc.’s (GOOG) Android-based smartphones has resulted in continuous deterioration of mobile phone sales for Nokia. As a result, the company was forced to sell its handset business to Microsoft Corp. (MSFT) for $7.2 billion (5.44 billion euros). The deal has already cleared all the regulatory hurdles and is expected to close in the first quarter of 2014.
However, Nokia will be retaining its Solution and Network and HERE segments. In the third quarter of 2013, both the divisions reported revenues of $3,433 and $279 million, down 26% and 20.4%, respectively, as compared with the last year quarter.
A slowdown in auto sales during the quarter has resulted in the decline in the HERE segment’s revenues. Thus, it was absolutely necessary for Nokia to upgrade its popular HERE mapping technology in order to support the new iOS 7 platform, which has a wide premium user base.
Nokia currently carries a Zacks Rank #3 (Hold).