Everybody Wants Nokia’s Maps Division
Driving around a city block in downtown Berkeley, Calif., a white Subaru with cameras and laser radar mounted on its roof is drawing gawkers. One pedestrian asks the driver if the car is part of Google’s Street View team. No, comes the response: The Subaru is with the other guys. It’s snapping photos and recording location data for Nokia Here, one of the largest competitors to Google’s decade-old effort to index every bend in the world’s roads and an asset that’s suddenly of immense value to parent company Nokia.
Every business betting on a future full of self-driving cars and delivery drones will need a mapping service that can navigate in three dimensions, and most would love an alternative to eternal dependence on Google Maps, especially if they compete with Google in other arenas. (Google sells ads against Maps and sometimes charges app makers who want to incorporate the service into their software.)
Nokia began soliciting buyers for the Here division in April, seeking as much as $4 billion, about half what it paid for the service, then called Navteq, in 2008. Bidders have included a group of German automakers led by Volkswagen’s Audi, say three people familiar with the matter. Uber and Chinese giants Baidu and Tencent are also among the interested parties. “The buzz is a good indication that what we thought was really valuable is really valuable,” says John Ristevski, Here’s head of 3D image processing. Ristevski declined to comment on the bidders, who haven’t discussed their offers publicly. Google declined to comment for this story.
Here’s 2014 revenue was about $1.1 billion. Microsoft, Yahoo!, FedEx, and Amazon.com pay Nokia for access to its 27 million miles’ worth of maps. Eighty percent of cars in the U.S. and Europe with built-in navigation systems have Here somewhere in their guts to provide turn-by-turn instructions, Nokia says. The company is racing Google to provide reliable 3D mapping showing stop signs, lane markings, crosswalks, and other up-to-date details. “This is infrastructure that goes beyond just getting you from A to B or finding a restaurant,” Ristevski says. On this day, his fleet of cars collected about 3,000 miles’ worth of 3D data across 16 countries on four continents.
Based in Espoo, Finland, Nokia was for a time the biggest maker of mobile phones, but last year it sold its struggling devices business to Microsoft. Nokia still has a market value of about €24 billion ($27 billion), but it mostly sells networking and telecommunications equipment while trying to win its way back into consumers’ hearts with mini tablets.
Here, its other major asset, is a better consumer product, says Forrester Research analyst Julie Ask, if Nokia or a buyer can make more money from it. “The technology solution of Here is superior, but the commercialization of Google is superior,” she says. “Nokia has always been about being a platform where you pay for services or you embed it in your phones, and that just hasn’t gone well.”
Fortunately for Nokia, Google’s control of the mapping industry, combined with its prototype self-driving cars, has made a lot of powerful tech companies and automakers nervous, says Richard Wallace, director of transportation systems analysis at the nonprofit Center for Automotive Research. “If nobody is left to battle Google on map quality, maybe not this year but three years from now, then you can’t fight it when they say the price is going up,” he says. “That’s why I think this bidding war is so severe.”
It’s tough to create a database of map info that’s 100 percent reliable. (Ask Apple.) Factor in the 3D elements, public transport data, and regular addition of new cities, and Nokia probably spends about $2 billion a year on Here’s R&D, estimates analyst Horace Dediu, a former Nokia business development manager who runs researcher Asymco.
If an Uber or Tencent snaps up Here, independent map data may become even more scarce, and Nokia’s auction has put more attention on other sources. Shares of TomTom, which Apple uses for its Maps data, have risen more than 82 percent this year, to about €10. Mapbox, which culls data mostly from free public sources for clients such as Uber and Foursquare, raised $53 million in funding on June 17. Marc Prioleau, a director at Mapbox, says, “There is more stuff going on across the whole location sector now than I’ve ever seen in 20 years.”
The bottom line: Nokia is seeking offers of as much as $4 billion for its maps service, its last major product with a consumer bent.