Wayfinder Bid a Bold Move by Vodafone

Vodafone's offer for Swedish navigation software developer Wayfinder this week puts it at odds with the likes of Nokia and Google, and shows Vodafone has no intention of just becoming a bit pipe.

"Up until now the carriers have very much been collaborating with the solution providers and the device manufacturers, but with this move by Vodafone it's clear how important mapping and navigation is to the industry," said Paolo Pescatore, analyst at CCS Insight.

It also shows that mobile carriers want to have a greater control over the overall service offering as opposed to collaborating and embracing the revenue share model with various partners in the industry, according to Pescatore.

The plan to acquire Wayfinder should be seen as a power play against Nokia by Vodafone, according to Gartner analyst Annette Zimmermann.

Nokia is getting to be a very strong force in the mobile navigation space, and Vodafone wants to have something to put against that, according to Zimmermann.

The support for navigation will be key to many mobile services. "It the most important application right now," said Zimmermann.

Future mobile services will integrate both navigation and contacts with social networking. "If you, of course, own elements of all of that functionality you are in a better position to integrate it and then maximize the revenue opportunity, which would include transaction subscriptions or advertising, for that matter," said Pescatore.

Also the differentiation between operators will depend more on service aggregation and content offerings, and less on, for example, the network speeds, according to Pescatore.

For Vodafone, owning its own navigation software is about integration.

"By having this kind of expertise and this kind of technology in the Vodafone family it will enable us to achieve tighter integration between the handsets and the service, and innovate much more quickly," said Mark Street, spokesman at Vodafone Group.

It also gives Vodafone more control over the evolution of the product, so that it can set long term strategic goals, according to Street.

At the same time, Vodafone gives the customers a choice between different services: that's what Vodafone wants to be known for. "Give them choice and see whether they actually choose the proposition we are putting out before them," said Street.

The part about tighter integration makes sense, but that doesn't necessarily make buying Wayfinder the right decision, according to Zimmermann.

"We have been saying that operators don't necessarily have to own everything in the value chain. They should rather focus on their key strengths, like being a good mediator, billing processor and things like that. But if any operator could do [it] it's Vodafone, because it's big enough," said Zimmermann.

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