Oct/Nov 2007

This autumn's announcement that Nokia is to acquire Navteq took the mobile computing market by surprise, and has prompted extensive speculation about the rationale.

Nokia makes mobile phones; Navteq produces and supplies digital road and street mapping for satellite navigation systems and for enterprise computer applications such as route-planning, vehicle tracking and geomarketing, and is thought to be the global leader in its field.

Nokia, like other mobile phone manufacturers, has been adding value to its products by developing location-based service capabilities, and has had notable success with navigation services, but the Navteq acquisition appears to elevate the importance of navigation well above its former status. Consultancy Ovum concludes that 'there is some justification for Nokia to accelerate its implementation,' but adds: 'Did it have to buy Navteq to achieve this?'

According to Olli-Pekka Kallasvuo, Nokia's president and chief executive: 'Location-based services are one of the cornerstones of Nokia's Internet services strategy. The acquisition of Navteq is another step toward Nokia becoming a leading player in this space.' He adds: '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.'

 

Some analysts speculate that the recent acquisition of Navteq's main rival Tele Atlas by satnav specialist TomTom may have forced Nokia's hand, prompting it to make the acquisition in a bid to avert the risk that Navteq might be acquired by a rival. Others think the deal might portend a broader move by Nokia to build up its LBS portfolio.

Nokia has made it clear that Navteq will retain its identity and branding under Nokia ownership - arguably an essential precaution, since many Navteq customers are arguably rivals to Nokia.

Navteq was founded in 1996, and was originally known as Navigation Technologies, or NavTech. It later changed its name in a marketing revamp. The deal values the company at around $8.1 billion, and is due to be completed in the first quarter of 2008.