With the sale of its handset division to Microsoft Corporation (NASDAQ:MSFT) finally reaching completion this month, Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is expected to get the lion’s share of future revenue from Nokia Solutions and Networks (NSN), and that business has enough problems that it isn’t a reason for analysts to get behind the stock. Nokia is putting money into the smaller mobile mapping division HERE, which could be a better way to drive growth.
“We will invest in HERE. We have three businesses and that is not going to change,” said HERE executive VP Michael Halbherr, reports Daniel Thomas Financial Times. “The businesses need to be successful on their own right. They need to stand alone on their own.”
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HERE has struggled for mobile market share
The HERE mobile app has had a difficult time competing with Google Inc (NASDAQ:GOOG) Maps and other competitors – it pulled out of Apple Inc. (NASDAQ:AAPL)’s App Store late last year because of poor customer experience. Microsoft Corporation (NASDAQ:MSFT) has a license to pre-install it on Windows Phones for the next four years, but some analysts have questioned its ability to increase market share when the HERE division is no longer attached to a mobile manufacturer.
Halbherr hinted at some next generation mapping features being developed at HERE, including augmented reality and contextual mapping tools, and that the unit is working hard on improving social integration. Augmented reality gets a lot of buzz (though the apps have yet to live up to the cool name at this point), and social integration is pretty clearly the direction all things are going. HERE might come up with a social-mapping game changer, but that’s not the upside that most analysts are talking about when they mention HERE.
HERE’s main business is auto navigation
HERE’s main business is selling mapping information to in-dash navigation devices, a growing category that Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) can build on in the future. Working social integration into onboard auto navigation has lots of immediate advantages over a smart phone app. Since it’s integrated into your car’s dash it should be easier to use than fumbling around for your phone. Asking your HERE navigation device if your friends recommend any nice restaurants within a fifteen minute drive, accounting for traffic seems is just one example of an app that seems feasible and useful.
HERE has been valued at $1 billion, and Microsoft Corporation (NASDAQ:MSFT) apparently made an offer on the unit while it was negotiating with Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V), but its ambitious plans offer plenty of upside for a unit whose revenues are already fairly stable.