As the number of connected mobile gadgets — from smartphones and watches to cars — continues to grow, the market is heating up for accurate location data to serve those of us who use these devices.
That fact is being played most expensively at the moment with the sale of Here, the mapping and location services division of Nokia. The companies in the running to buy it include Uber, Baidu, a variety of car manufacturers, Chinese mapping company Navinfo and several private equity firms. The deadline for bids is today, June 18, TechCrunch has heard from two sources.
While Here was last valued at around $2 billion, offers might come in significantly higher than that: Nokia’s trove of driving directions and maps, as well as related location technology and patents, is one of the biggest and more valuable mapping assets to come to the market in years.
How valuable? One former longtime senior employee of Here estimates there are around 300 different location attributes, with corresponding historical databases, that can be tracked using Here’s technology. They include more obvious mapping and location-based applications such as driving directions and street maps, but also spatial data technology used in video and gaming applications.
“It’s incredibly difficult to get the type of mapping data that Here has. Base geometry and 20-40 road attributes are relatively easy to collect. However, to collect the 250+ attributes needed for the best navigation experience requires a combination of field teams and user-generated content,” notes entrepreneur Kurt Uhlir.
“Here has proprietary collection hardware and software that is unmatched, even by Google. Plus, they have the most extensive patent portfolio covering collecting and creating spatial content for current generation of maps and dynamic data. Here also has the foundational patents covering usage of spatial data for creating video games, movie content and the upcoming ADAS vehicle applications.”
Nokia’s trove of driving directions and maps, as well as related location technology and patents, is one of the biggest and more valuable mapping assets to come to the market in years.
Using third-party services is not ideal in every situation: apart from the fact that the data belongs to someone else, in cases of some applications it doesn’t give a company the ability to customize and query the data as it may need to do.
Putting to one side the private equity groups that have been named in connection with the acquisition — Hellman & Friedman, Silver Lake Management and Thoma Bravo — there are at least three strategic groups we’ve heard in connection with the Here acquisition.
A group of European car companies — namely Audi, BMW and Daimler — would be the most obvious and likely buyers for Here, multiple sources tell TechCrunch, a position bolstered by a report yesterday in Bloomberg that noted that this group was Nokia’s preferred buyer.
Our sources see the auto companies’ interest as a kind of locked-in necessity: Nokia already has a very large part of the automotive industry committed to using its maps, upwards of 80 percent by some estimates, so changing that could be a huge pain. “If you’re an auto company, it just doesn’t get much simpler,” a source said. (Ironically, a day after this article came out, Nokia put out a press release confirming this 80 percent figure.)
Early on, the car companies hoped to come together as a consortium to get the asset and somehow make it open for all of their use. They first approached Nokia, represented by Ernst & Young, even before the sale process was made public, but they originally could not collectively commit to paying more than $3 billion and that stalled discussions.
If the car makers don’t manage to get Here, this could also have some interesting ramifications. One source mentioned that the European automakers have, in the event of a sale to an international group, even suggested that they will appeal to European regulators to potentially halt the sale, because it would affect such a large number of big European companies. Separately, there one report in the German press floats the suggestion that TomTom may even come into play if the car companies fail to win Here.
Here has also been growing its business in a very car-friendly way in recent times. Its HD product produces pictures in 10-centimeter detail, ideal for dashboard systems. “They are targeting cars and self-driving cars,” a source said. “They know that is really expensive data to process and so that’s where they have put all their investment in the last two years. It hasn’t been on the consumer side but in the highly detailed maps space for the car companies.”
But if the car companies are focused on certain aspects of the Here business, it also brings into question where the other parts of the bigger group of assets — such as for applications for smartphones, or the technology for gaming services — would go.
Uber and Baidu
Chinese search engine Baidu and transport juggernaut Uber are also bidding together. “Baidu is still very much in the running and remains in a consortium with Uber,” one person close to the story notes to us. A joint bid could also include a third party like Apax Partners. The companies are already linked in another way: Baidu invested in Uber last year. The fact that Uber is reportedly raising yet another $1.5 billion also could be in aid of this. (Some believe this could change, and in fact Daimler is already working with Baidu in China)
The interest for Uber is a pretty obvious one: the company is building a global transportation network, and despite some early hiccups, it seems intent to use that as a backbone for a wider distribution and delivery business. As it continues to staff up its R&D efforts to work out what forms transportation of the future will take, getting the mapping component right will be key. Uber’s existing network of drivers would also give it a clear way of keeping Here’s database up to date and growing.
Uber is building a global transportation network and seems intent to use that as a backbone for a wider distribution and delivery business.
Meanwhile, Baidu, like its U.S. counterpart Google, has been slowly building out an ambitious business that expands well beyond its biggest, earliest web search product. And as with Google, that has extended to maps. Baidu has been somewhat quiet on its global ambitions outside of its home market in China, but becoming a shareholder in the Here maps business could be one way of building out its own location services and mapping services to new markets.
Navinfo and Tencent
To date, Navinfo has been the only company that has publicly confirmed that it is interested in acquiring Nokia Here. It’s likely to go in on its bid with Tencent, which is an investor in Navinfo, and private equity firm EQT Partners. Navinfo strangely published an item on its own media pages detailing a $4 billion bid for the assets, although it was then quickly taken down.
Navinfo is in some ways a very obvious buyer for the Nokia assets. It’s a large mapping company in its own right, although its focus to date has been on the Chinese market. Here would give it a trove of data covering the rest of the world, usable as Navinfo looks to grow its business internationally.
Tencent, meanwhile, already has a long list of investments that happens to include a lot of other businesses whose technology is complementary or could be helped by Here’s assets. They include Uber competitor Didi Kuaidi, delivery service Renren Kuaidi, Satellogic, Skymind and many more.
Navinfo and Nokia have a history, too. The two partnered on a joint venture for maps in China — partly to get around regulatory blocks that prevented Nokia, as a foreign company, from developing these on its own — which was called Nav2. Then, in 2013, when Here was already needing to shore up funds, Nokia quietly sold its stake in Nav2 to Navinfo, for RMB79 million ($12.6 million).
E-commerce giants Alibaba and Amazon have not recently come up as potential bidders for Here, which is in a way a surprise. Both companies are logistics and distribution powerhouses, using their networks as a key way of expanding and (literally) delivering on their e-commerce might. Alibaba in particular has made investments into expanding its logistics business internationally; and Amazon has been working on what the next generation of delivery services might look like in its drone operations.
On the other side of Amazon’s business, it’s been building out a huge B2B operation in the form of AWS, providing cloud-based services to developers and enterprises.
Taking all of that together, you can see where Here could be useful to the companies. As with Uber, the advantage of having maps that you can customise to your needs could not only improve the logistics of the business today, but could help them plan for what they would like to deliver tomorrow.
Although they are not being named by anyone right now, it doesn’t mean they are not interested. One source close to Nokia tells us that as recently as last year, Alibaba had talks with Nokia and Here about making a significant investment in the operation.
As we reported in May, Facebook quietly started to use Here maps in some of its mobile apps. This could be a precursor to Facebook using those maps elsewhere (such as on desktop or for new apps), but so far it seems unlikely to be a prelude to a bigger deal like Facebook buying Here outright.
Facebook is no stranger to the location conundrum, trying out different apps that can provide its users with their own location-based local listings. Facebook has also been positioning itself as a platform for developers to add a social layer to their apps, and for businesses to interface with their customers.
Facebook has been positioning itself as a platform for developers to add a social layer to their apps.
Two other names that have not come up much are Apple and Samsung. The iPhone maker’s bold move in 2012 to ditch Google for its own in-house map technology for iOS ended up becoming one of the few missteps that Apple has made in the last several years. The company has been working hard to build up that business, hiring people (including senior people from Here) and making acquisitions. As one of the richest companies in the world, Apple has the funds, and with clear interests in all the areas where Here is doing business, it seems like a no-brainer.
On the other hand, Here currently has around 6,000 employees, a size that does not sound like an Apple acquisition. Apple has also recently extended its mapping deal with TomTom for maps and related information, along with OpenStreetMaps and other sources. Apple reportedly has plans to build out its mapping business in-house — no surprise given how many people it appears to be recruiting right now (nearly 200 only on the keyword search of “maps”).
Samsung is another name that has been absent. The company is the world’s largest smartphone maker at the moment and has been looking for ways to further differentiate itself from the rest of the Android pack. And it made some early moves to put Here maps on its devices and has its own ambitions in cars and other connected devices.
While location, and the kind of technology that Here has developed, seems to be an ever-present aspect of so many services today, it can be problematic as a business. Nokia’s Here division has 6,000 people working for it, and some of the processes it uses to collect and develop its data services are antiquated and costly, people say.
Even with the ubiquity of location services and the demands for accurate data, maps have come to be seen as something of a commodity with the advances that have been made in collecting data, such as through crowdsourcing (a la Google’s Waze) and the availability of satellite data.
Nokia never actually managed to turn that business into a huge money-making machine. Although it’s profitable now and far from the business that cost Nokia $1 billion to run in 2012, it’s still only one-tenth the size of Nokia Networks in terms of revenues, according to the company’s last quarterly report.
In the end, Nokia acquired Navteq for $8.1 billion in 2007, and despite the passage of time, the growing valuations of so many other businesses in tech, and the money Nokia invested, it may be lucky if it gets that much for it in 2015.