Nokia hits TomTom, Garmin with free satnav

BERLIN/HELSINKI (Reuters) - Nokia launched free satellite navigation on its cellphones on Thursday to boost handset sales and prices, a fresh blow for satnav makers whose $25 billion market has already been hit by Google.

"I''m sure Nokia''s real enemy here is Google," said analyst Tero Kuittinen from MKM Partners.

Shares in satnav market leaders Dutch TomTom and U.S. Garmin sunk, TomTom fell 11 percent by 1700 GMT, while Garmin fell 4.2 percent.

"It''s a major shock for the navigation industry. Going forward profit margins have to come down," said Gartner analyst Thilo Koslowski who predicted that if others follow, they could snatch up to $5 billion of the satnav market in the near-term.

Analysts said the move may also spark a flurry of acquisitions from the likes of Samsung, RIM and Microsoft, as consumers will expect free navigation to be a standard feature on smartphones.

"This has massive consequences for pure software companies. It is, of course, a watershed for the industry," said Michael Halbherr, vice president for location-based services at Nokia.

Underlining the shift away from separately priced service, Halbherr said he saw navigation as a "function masquerading as an industry."

"If you are a pure software player, you''ve got a big problem. Who''s going to pay for turn-by-turn navigation now Nokia and Google are giving it away," said analyst Martin Garner from British consultancy CCS Insight.

TomTom also sells navigation software -- it charges $70 for its North American iPhone navigation application -- with 70 percent of sales coming from personal navigation devices.

HELPING SMARTPHONE BUSINESS

Nokia sells more smartphones than any of its rivals, but it has lost ground to Apple''s iPhone and RIM''s Blackberry.