The Netherlands: In the digital mapping and navigation sector, options for would-be buyers are rapidly narrowing, fuelled by a growing appetite for location-based services. “The market is consolidating,” said Egon Minar, chief of Navigon, Europe’s third-largest navigation device maker. “In the end there will be four big players.”
Hotly contested by the likes of Microsoft, Apple, Google and Motorola, the sector has already been radically reshaped in recent months with the acquisitions of players such as Poly9, Quicksee and Aloqa GmbH.
An industry source noted: “The big technology companies don’t want to depend on contracts with map makers. They want the maps.” On the other hand, many smaller players in the navigation industry are looking for a buyer after Google and Nokia stormed the sector with free offerings in the past 12 months.
Wave of Merger & Acquisition (M&A)
The success of location-based mobile services from the two, and from smaller vendors like Foursquare, has started to attract technology industry heavyweights, including Microsoft, looking at companies whose data or technology would enable cheaper or faster positioning, industry sources and analysts say.
A company source told Reuters that Dutch digital mapping company AND International Publishers was in exploratory talks with potential buyers, which could lead to a deal within a year.
Buying AND, which has a market capitalisation of only USD 22 million, would help Google or Microsoft build their own maps as the companies don’t want to lower their dependency on licensing contracts.
“Google puts pressure on companies like Microsoft,” said Canalys analyst Tim Shepherd. “I would not be surprised if Google is looking at it (AND),” he said, adding that some big handset vendors are also likely to look into buying AND.
Handset vendors have so far left phone maps and navigation mostly to Nokia and Google, but this week Taiwan’s HTC introduced its mapping offer, seen as a strong rival to offerings from its bigger competitors.
Jeff Mize, Sales Chief at top mapping firm Navteq, said only a few map makers will survive independently. “It’s a big, big investment. At a minimum hundreds of millions and to maintain it and to add additional content (it will cost) billions.”
“It would have to be a pretty large company with tremendous commitment to location. You would need to have the size, the global reach, the financial stability and financial investment capability that not many companies have.”
Closely-held Navizon builds and manages database of celltowers and wifi networks, which enables rough, but quick positioning. In a similar position is Dubai-headquartered GloPos, whose algorithm enables more accurate positioning even indoors.
In an industry struggling with weaker demand due to the rising popularity of GPS-equipped smartphones, personal navigation devices (PND) makers are left weighing their options, including strategic alliances and buyouts. Some smaller PND makers are due to be sold or will die, industry sources and analysts said, while bigger firms like TomTom and Garmin are expanding their business beyond PND devices.
“There’s bound to be further consolidation in the market. There are still far too many vendors,” Canalys’ Shepherd said. TomTom’s Chief Executive Harold Goddijn said innovation is getting more expensive as the industry matures. MiTAC, the world’s No.3 vendor of navigation devices after TomTom and Garmin, said it is in talks on cooperation or alliances with rivals and other GPS services firms as it seeks a new growth engine.