The traffic probes Here captures in Northern Europe. (Here)
Maps have become a crucial centerpiece of a host of digital technologies and businesses, ranging from smartphones to cars. Now there's a major bidding war pitting software companies, Internet firms, and automakers against one another to acquire one of the foremost mapping companies in the world.
Once-great cellphone maker Nokia is transforming itself into a networking and communications firm and is considering the sale of its Here mapping and navigation software. Plenty of buyers are interested – last week the New York Times reported that one of the top bids has come from online ride ordering firm Uber for $3 billion dollars. That may be cheap. Nokia bought the navigation firm back in 2007 for over $8 billion, and its value may have increased since then.
Having accurate maps is not only critical to finding a restaurant or gas station, the right map can enable autonomous systems for cars, increase fuel efficiency, and reduce delivery times for companies like FedEx and Amazon. So it's not surprising that a group of German automakers, said to include BMW, Audi, and Mercedes-Benz, is also reportedly bidding for Here. There has also been speculation about Microsoft, which acquired Nokia's smartphone business and is still desperate to boost its mobile presence, may be a potential buyer.
With free Google Maps on our smartphones, we tend to take navigation for granted. But it's far from perfect. Driving from Philadelphia to New York this week, my car's navigation system instructed me to "Take a slight right." It was a sharp right-hand turn. At another point it instructed me to "Exit the highway." But it actually intended for me to stay on the highway. Waze habitually flakes out on my smartphone. Google fails to denote new hotels on my routes.
In other places around the world, the challenges are even greater. Roads wash out in some countries during the rainy season. Others arteries are shut off completely when winter snows arrive. And there is construction and traffic congestion. Crowdsourcing - in which drivers report changing conditions - helps, for example with Google's Waze program, but it's still less than ideal.
By contrast, Here has a long history of using teams of professional cartographers on the ground, updating, correcting and mapping new roads. It also allows volunteers to add local details that Here teams cannot access. As a result, its road maps cover the world - nearly 200 countries - on top of which the company includes live traffic flow information. In Europe, it also includes information on the location of photo enforcement cameras (similar alerts are omitted in the U.S. versions of its navigation software). Perhaps more important, Here includes topographic data detailing the location of hills and valleys, which will prove crucial to the next generation of semi-autonomous cars. Indeed, at least one Rolls-Royce model can anticipate hills using such software and then shift between gears automatically, maintaining its mellifluous ride and improving fuel efficiency.
Potential Winners and Losers
Here's most noteworthy business is supplying maps to automakers. It's in 4 out of every 5 in-dash systems now, according to the company. If Here were to fall into the hands of, say, Google (which is still experimenting with its autonomous cars), it would mean that automakers would have to rely on a company that may turn out to be directly competing against them and is at the very least looking to dominate the dashboards of future self-driving cars. This would makes a Here acquisition beneficial to the likes of Mercedes and BMW - if they want to remain in control of their autonomous car destinies.
If Uber were to acquire Here, it would be the smartest move the company has made to date. Uber already faces competition from services like Lyft. And Uber's confrontational approach to local laws covering taxis and cabs hasn't won them many friends around the world. Many cities are already developing their own apps to compete against Uber. So a serious mapping program of their own could significantly boost Uber's stature - and accuracy. (While I've never had a problem testing Uber, I've had several people complain to me about drivers that couldn't find them.) On the other hand, if Uber doesn't win the bidding war, it shouldn't harm its fortunes significantly.
Microsoft may be the silent winning bidder sitting in the back of the hall. If it could acquire Here, it would give Microsoft a new entree into the automotive market, where its fortunes have been waning of late. It could also help its mobile handset business, bringing the Nokia software back into the fold. And there's the enterprise market, Microsoft's bread and butter, which could use improved logistics in just about every aspect of its business.
Even though the winning bidder may shell out more than $3 billion for Here, free maps and navigation for consumer are here to stay. Although, if Nokia does sell Here, you may be paying for it via increased prices for other services.
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