Nokia could stir up map market
new york -- Nokia Corp.’s offer to buy digital map supplier Navteq Corp. threatens to reshape the consumer navigation device market, putting pressure on market leader Garmin Ltd. and perhaps opening the door for Google Inc.
The $8.1-billion bid for Chicago-based Navteq, if successful, could make the world’s largest cellphone manufacturer a leading player in the navigation business, one of the technology industry’s fastest-growing segments.
Nokia’s financial resources, wireless technology and carrier relationships may give the Finnish company an edge in creating phone-based navigation devices, analysts said. What’s more, it could damage Olathe, Kan.-based Garmin’s ability to influence design decisions at Navteq, its biggest map supplier.
“Should the deal go through ... it could have profound implications for the navigation and wireless markets,” said CIBC World Markets analyst Yair Reiner.
Devices made by Garmin, TomTom and others use signals from government satellites to pinpoint a user’s location. Map makers like Navteq augment that with data such as traffic conditions, nearby hotels and whether a highway exit is on the left or right.
Navteq had been seen as a takeover target since Netherlands-based TomTom offered 1.8 billion euros ($2.6 billion) in July for Tele Atlas, Navteq’s only global rival, also based in the Netherlands.
Market watchers said Nokia’s willingness to put down about $8 billion for Navteq showed it saw enormous market potential for navigation devices, which could see wider adoption this holiday season because of price cuts and cheaper models.
“It validates this market segment and it means that the combination of TomTom and Tele Atlas is maybe a takeover target in itself,” Fortis Bank analyst Felix Oberdorfer said.
An industry executive speaking on condition of anonymity said Google might decide it needed access to a digital map database, especially if the widely rumored Google phone turned out to be a real product. Google is already taking comprehensive pictures of cities for its online maps system.
“If Google turns out to be a Nokia competitor in six months, it could be a worry for Google” not to have the same access to digital maps, the executive said.
In such an event, Google could try to buy TomTom after the acquisition of Tele Atlas closed instead of making a counter-bid for Navteq or Tele Atlas directly, the executive said.
“Navteq has been shopping around and found Nokia’s offer to be the best -- so a counter-bid here seems unlikely. That also makes it likely that the merger between TomTom and Tele Atlas is going ahead,” Fortis’ Oberdorfer said.
Google had no immediate comment.
