SAN FRANCISCO (Reuters) – Nokia plans to add navigation to half of the phones it sells within a few years to find new revenue streams amid decreasing handset prices, a senior official at the world’s top cellphone maker said.

Michael Halbherr, the head of Nokia’s location-based activities, told Reuters he remains comfortable with Nokia’s year-old goal for seeing up to 50 percent of its phones equipped with global positioning system (GPS) chips in 2010 to 2012.

“We are planning to ship 35 million GPS units this year,” Halbherr said, adding “and many more location-enabled phones that use cell-towers to orient themselves on the map.”

“You will see few ‘E’ or ‘N’ Series phones without GPS,” he said.

Last year Nokia sold 437 million phones, and it expects the volume to grow more than 10 percent this year. It sold 38 million phones in its multimedia range “N Series” and some 7 million “E Series” business phones.

GPS chips use orbiting satellites to pinpoint the whereabouts of a phone user, thereby enabling a host of location-based services. SiRF Technology Holdings Inc is the world’s largest maker of GPS chips.

Last October, when unveiling an $8.1 billion offer for U.S. based digital map supplier Navteq, Nokia said it would have tens of navigation-enabled phones on the market by end-2008.

It sells five models with built-in GPS and has unveiled four more which will ship in the coming months.

Halbherr said his company’s GPS phone strategy goes far beyond the phones themselves.

It’s part of a comprehensive strategy to make location-enabled, context-aware phones available across its product line, he said.

Beyond phones specially equipped with location-finding technology, all Nokia phones stand to benefit as GPS phone users move about and effectively update Nokia Maps in real time for other phone users.

“Location will ultimately be in every device,” Halbherr declared, not just the half of phones with special GPS chips.

In addition to GPS chips, Nokia’s strategy involves pushing Wi-Fi enabled devices that use local wireless network antennas to achieve more or less the same location-awareness in these devices. Even phones without GPS or Wi-Fi can use local cellphone towers to identify their position on maps, he noted.

Nokia Maps, first introduced in early 2006, will come out with a version 2.0 for phones worldwide later this month.

Halbherr mocks the current rush by Internet companies such as Google , Yahoo and Microsoft to deliver all their services as centralized, Web-based services over the network, rather than using the growing powers of the device in users’ hands.

“I believe memory and computation speed will grow faster than bandwidth,” he said. “I am not a believer in cloud computing.”

“All the American navigation solutions are basically server based, which overloads the network and degrades the consumer experience,” Halbherr said, referring to both Internet map services and companies specializing in car navigation.