For example, in 2007, Nokia spent $8 billion on mapping company Navteq, showing how serious it was about entering the GPS market. Its new 2008 line-up will feature a plethora of GPS phones, but it’s not just about providing Sat-Nav to your mobile.

“We’re not in the business of not making money from investments. Navteq is a profitable business, but if you were to view the [$8bn] investment as a standalone operation, you could question it. But if you replicate that business in, say, 50 million cars, and then move that to three billion mobile phones around the world, the economics suddenly start to look very different. The long vision is that [people] expect GPS in phones like they expect Bluetooth. And GPS is only useful if you have a mapping device.”

In other words, a world class mapping service will drive the sales of handsets. If Nokia owns that mapping service, and it’s tied into its handsets more than its competitors, then people will choose Nokia phone over and above its competitors’.

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Nokia as a content company

What all this means is that Nokia is trying to tie its content into its mobile devices in order to differentiate itself from other mobile phone manufacturers. However, although this is an interesting strategy, and one that will succeed in parts (particularly with GPS), I can’t see it succeeding much in areas such as music. If anything, it’s no different than the walled garden approach that failed so dismally for the network operators.