29 Comments

Summary:

[qi:012] Nokia (NOK), the Finnish mobile phone giant with nearly a third of the global handset market, has decided to bet big on location-based services (LBS), and is buying Chicago-based digital map company NAVTEQ (NVT) for $8.1 billion. That works out to about $78 a share. […]

[qi:012] Nokia (NOK), the Finnish mobile phone giant with nearly a third of the global handset market, has decided to bet big on location-based services (LBS), and is buying Chicago-based digital map company NAVTEQ (NVT) for $8.1 billion. That works out to about $78 a share. This is one of Nokia’s largest purchases to date — the Finnish mobile giant has a mixed track record when it comes to acquisitions.

This is also the second megabillion dollar buyout in the maps (LBS) space. Earlier this year, Dutch GPS device maker TomTom bought Tele Atlas for $2.8 billion.

Nokia is paying 32 times EBITDA while TomTom paid around 27 times EBITDA. Since the deal for Tele Atlas hasn’t closed, TomTom might have to pay a little more. The deal may have some negative ramifications for guys like Garmin, a NAVTEQ customer, but it is too early to say what Nokia’s strategy will be. Nokia had also released Nokia 330, a GPS-based navigation device targeting the European market, and so could find itself competing with Garmin.

nokiaceooli.gifOne thing is clear: the company wants to diversify its reliance on the handset business and move into software and services, where its brand positioning can really help. (Related: Nokia goes web 2.0) NAVTEQ is Nokia’s second purchase in the LBS space; last year it acquired gate5, a small German startup, for an undisclosed amount. Nokia also has a deal with Sunnyvale, Calif.-based Trimble.

“Location-based services are one of the cornerstones of Nokia’s Internet services strategy,” said Olli-Pekka Kallasvuo, Nokai’s president and CEO. “By joining forces with NAVTEQ, we will be able to bring context and geographical information to a number of our Internet services with accelerated time to market.”

According to iSuppli, there will be 250 million GPS-enabled phones shipping per annum by 2010. According to some estimates, the number of mobile users accessing maps and related information on their mobile phones is going to grow to about 43 million in 2012 from 4 million in 2007.

Maps on Mobile is apparently something people want. In a recent chat, Google (GOOG) vice president Marissa Mayer told us that Google Maps usage soared after the introduction of the iPhone.

  1. Martin Lawrence Monday, October 1, 2007

    TomTom is actually a Dutch company (not Danish). The name of the affected company is Garmin, not Gramin. Also, isn’t it EBITDA, rather than EBIDTA?

    Share
  2. Carolyn Pritchard Monday, October 1, 2007

    Thanks for the close eye, Martin.

    Share
  3. This move also strengthens Nokia’s market position versus Apple given Google’s supplier relationship with Navteq.

    Great move by Nokia, brilliant actually.

    Share
  4. Hi Om,

    I have been covering Navteq for a while. Have a look at this and embedded links for the full analysis.

    http://sramanamitra.com/2007/10/01/nokia-buys-navteq-place-becomes-key/

    Sramana

    Share
  5. Have you noticed how every gadget has a free FM radio lately? Location tech looks to be next in line for the free gadget add-on. Hard to see how Nokia makes any money here, but they need the technology.

    Share
  6. Jesse Kopelman Monday, October 1, 2007

    Tom, tell that too Verizon Wireless. Lately they’ve been disabling built-in GPS features so that they can sell you their $10/month package. Anyway, FM tuner is free because nobody would pay for it. I had one in my handset (Nokia, BTW) as early as 2002 and after playing with it for 5 minutes, never used it again. Now that any decent phone can play MP3s this feature is even more useless.

    Share
  7. [...] tu próximo Nokia venga con mapas, o servicios geográficos y de ubicación. Como mencionan en GigaOM: El 2010 habrán 250 millones de celulares con GPS, y el número de usuarios accediendo a mapas e [...]

    Share
  8. [...] October 2nd, 2007 · No Comments Via GigaOM [...]

    Share
  9. And… Om… Nokai? :)))

    Share
  10. [...] here at GigaOM. We have covered the business extensively, including the recent mega-billion-dollar acquisitions made by Nokia (NOK) and Tom Tom. In other deals, Google (GOOG) bought Jaiku and last week, Platial acquired [...]

    Share

Comments have been disabled for this post