In a surprising — and unwise move, according to some industry analysts — mobile phone maker Nokia is purchasing GPS mapmaker NAVTEQ for about US $7.7B. To put the purchase price in perspective, compare this to GPS manufacturer TomTom’s recent purchase of GPS mapmaker, and NAVTEQ competitor, TeleAtlas for “only” US $2.7B.
Why does Nokia need to buy NAVTEQ outright? When is it ever going to recover the purchase price? Probably never. Imagine also the enormous amount of money they will have to pour into NAVTEQ.
It will be interesting to see what the #1 GPS manufacturer in North America, Garmin, is going to do to ensure it has unrestricted access to a reliable mapmaker for its GPS devices. No doubt their top execs are meeting right now to discuss all the ramifications and their next move.
Nokia’s competitors will want to distance themselves from using NAVTEQ maps in their next generation GPS-equipped mobile phones as they ramp up their Location Based Services (LBS) features. GPS manufacturers also would want to distance themselves from both TeleAtlas and NAVTEQ.
In the short term, Nokia’s and TomTom’s competitors have no choice but to continue relying on TeleAtlas and NAVTEQ for their maps, but you can be sure that they will keep their eyes open to a more “independent” map supplier. This opens up the door for a third player in the GPS mapmaker space. GPS-based devices are the next hot item and the major players are jockeying for position.
The acquisition is expected to close in the first quarter of 2008.
Press Release: Nokia to acquire NAVTEQ or here
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