Shares in Dutch navigation device maker TomTom NV fell sharply Thursday after Nokia Corp. said it will offer free navigation services for users of its smart phones.
By early afternoon, TomTom shares were trading 15 percent lower at euro5.61 ($7.89) as investors worried that consumers will have little use for the company's devices when they can get the same basic function for free on their phones.
TomTom and its major U.S. rival Garmin Ltd. believe that there will always be demand for specialized devices with superior function.
TomTom's shares also dropped precipitously in October, when Google Inc. announced intentions to offer navigation on its phones.
TomTom has one strategic advantage over Garmin: it owns Tele Atlas, one of only two major makers of high-quality digital maps.
TomTom acquired Tele Atlas for euro2.9 billion in 2008, though it was eventually forced to issue new shares to cope with the debt it incurred through the purchase.
Nokia owns the other top digital mapmaker, Navteq, which it bought for $8 billion in 2008.