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Nokia forges into navigation market

New GPS device for European travelers also plays music and displays photos and videos. Photos: Nokia gives directions

Nokia on Monday became the latest major consumer electronics company to enter the booming European car-navigation market, upping the ante for market leader TomTom.

Finland-based Nokia, the world's biggest maker of mobile phones, unveiled its 330 Auto Navigation device with preinstalled Europe-wide map data from Netherlands-based navigation firm Route 66.

The product will use digital maps from U.S.-based Navteq, and not from its main Netherlands-based rival, Tele Atlas, whose maps are used in a that doubles as a navigation device.

Nokia 330 Auto Navigation

The Nokia 330, which also plays music and displays photos and videos but does not function as a phone, is expected to be available in Europe in the fourth quarter, retailing for $456 (360 euros), excluding taxes.

It competes directly with the higher-end Go devices from Netherlands-based TomTom that sell for about $760 to $890, including taxes.

TomTom's less-expensive One devices do not offer multimedia services such as music. TomTom, which said last week it sold 1.2 million car navigation devices in the July to September quarter, has more than half of the European car navigation market.

"TomTom won't need to worry for 2007 (sales and profits), but Nokia entering the market does pose a real threat," ING analyst Cornelis Bos said. "Nokia will now offer navigation on cell phones as well as standalone devices. It has clearly defined it as an opportunity and will gain a lot of experience."

TomTom executives have told Reuters they are not concerned about major electronics brands entering the market as long as they offer basically the same product.

Nokia recently acquired its own navigation software company, Gate 5, but chose to work with the more established Route 66, which has sold navigation software for advanced mobile phones for many years. The two have sold packages of GPS location modules, software and Nokia phones for the last two years.

TomTom expects that total sales from all car navigation devices makers will be 8 million units in Europe this year, up from 3.8 million units in 2005. U.S. consumers will buy 2 million units this year, up from 800,000 in 2005.