Hamey

 

Nokia announced today that they are acquiring mapping company Navteq for $8.1 billion, here is the 2-minute deal run down:

About Navteq

• Founded 1985, has extensive digital map content and an associated data platform
• $582 million in revenue 2006
• Provides for car navigation, mobile navigation and internet based mapping
• Provides significant data to Google (the other major vendor is Tele Atlas)
• More info

The deal

• $8.1 billion ($78 cash per share)
• Price represents 34% premium on NAVTEQ stock a month ago
• Navteq will continue existing services
• It has pushed Garmin shares down 12% today

The play

• Nokia want to expand their location based services
• Acquiring Navteq will accelerate their time to market for mapping products
• It may be a play to try nudge Google away (although it would be interesting to know what portion of Navteq’s revenue comes from Google)
• This isn’t the first mapping company Nokia has snapped up. Last year they also acquired gate5
• Could be part of a more serious play to enter mainstream GPS market competing head to head with Garmin, TomTom, Navman

It seems an interesting acquisition. Ultimately, viewed as a content play, there are two obvious ways to monetize that:

1. Make your customers pay a premium for the service / product generated from the content
2. Establish an advertising network but provide content for free

There are of course, obvious problems with both of these two options being Nokia. With the first, you have to convince consumers that Google Maps (free) isn’t as good despite having partially the same data. With the second, you have to build an advertising network that essentially competes with Google.

Last time I checked, Google were still doing pretty well with the whole advertising thing.

Either way you cut it, Google is going to keep overshadowing Nokia without a shake up somewhere. Even if Nokia develop straight consumer GPS units (emphasizing product rather than content) they obviously cannot ignore their core mobile devices business.