PARIS (Reuters) - One consumer in four who gets free maps with a Nokia mobile phone has subscribed to an additional navigation service in the first weeks, more than expected, the head of digital map supplier Tele Atlas TA.AS said.
“About 25 percent of users already subscribe to the navigation services. And that’s a big number. I hope it stays there,” Tele Atlas Chief Executive Alain De Taeye said at the Reuters Global Technology, Media and Telecoms Summit in Paris on Wednesday.
This takeup of additional services was the reason why the cell phone segment would be at least as profitable for Tele Atlas as current navigation devices, De Taeye said.
Market research firm Canalys said on Wednesday its research showed that 62 percent of consumers agreed it would be useful to have satellite navigation built into their phone, with higher levels among existing navigation users and business drivers.
“Consumers are much more excited by the prospect of having GPS (global positioning system) on the handset than mobile TV,” Pete Cunningham, senior analyst at Canalys, said in a statement.
Tele Atlas shares traded down 0.4 percent at 15.71 euros by 1204 GMT after initially rising to 15.85 euros following De Taeye’s comments.
The world’s top cellphone maker Nokia NOK1V.HE, client of Tele Atlas, started to offer free maps in February, while charging extra fees for turn-by-turn navigation.
Sales of its top model N95, which carries an integrated GPS chip and map data, started in late March.
De Taeye said he hoped the share of people using additional services could increase further, but cautioned it might also fall as those to take up the device so far were early adopters who tend to be more enthusiastic about technology.
He was cautious over market research forecasting that 25 percent of mobile phones would have GPS by 2010, but said it was a huge potential market.
“In-car was about millions of units, portable navigation is about tens of millions of units, mobile phones is about hundreds of millions,” De Taeye said.
“Anything in the future that will hold a GPS chip will one way or the other have a map.”
About 30 million cars, 14 percent of cars on Europe’s roads, now have a built-in or portable navigation system, such as those made by market leader TomTom (TOM2.AS), a number that was expected to rise to 36 percent by 2009, De Taeye said.
De Taeye said concerns that GPS-equipped mobile phones would replace navigation systems was overblown.
Market research conducted on behalf of Tele Atlas shows that a large majority of people who already use a navigation system said they would keep using it even if their phone also had navigation capabilities.
additional reporting by Tarmo Virki