Is Google Going Better Than Free On Navigation? Will That Set Off Antitrust Alarms?

from the should-it? dept

A few friends have passed along Bill Gurley's excellent (as usual) analysis of how Google is disrupting the navigation market by ditching the two big players in the space (Tele Atlas and Navteq), going it alone and also (the big news) offering its navigation info for free. Gurley points out that the truly disruptive part is that Google is actually offering mobile operators a deal that is better than free, in that they get to share in some of the ad revenue associated with anyone using the services. The point is pretty clear: those who are relying on the old business model of getting paid for navigation info are likely in serious trouble.

Of course, there are some perception issues. Plenty of companies who have tried a "we'll pay you" approach to marketing often find that it actually breeds some level of mistrust, as partners/users start wondering why, and if there's some sort of nasty catch. Google, of course, has a pretty good reputation, and ought to be able to overcome that issue. However, it does make me wonder if this will set off the Justice Department (and Google's enemies) on some silly witchhunt, claiming that this is somehow "predatory pricing." That, of course, is ridiculous if you actually think it through. The only real problem with predatory pricing is if it's used purposely to drive others out of business to then jack up prices. But Google's idea is to just give it more opportunity to make ad revenue. It's not predatory, it's just smart from a business sense. However, with so much scrutiny on Google these days, you could certainly see this backfiring.

Filed Under: better than free, business models, free, navigation
Companies: google, navteq, tele atlas

Well Played Garmin. Well Played.

from the check-and-mate dept

Sometimes you just need to stand back and applaud a strategy that works so well. Many people thought that navigation device provider Garmin would be in trouble earlier this year after its main rival TomTom agreed to buy mapping service Tele Atlas and Nokia agreed to buy TeleAtlas' only real rival Navteq. Potentially, that could have left Garmin without a mapping partner, though it seem difficult to believe that Nokia would cut off Garmin. However, Garmin tried to outbid TomTom for Tele Atlas while also buying up 5% of Tele Atlas' shares on the open market, leading TomTom to significantly increase its own bid, from the original $2.5 billion offer all the way up to $4.2 billion. People were waiting to see if Garmin would go even higher, but instead, it pulled a nice switcheroo. First, it worked out a settlement with TomTom on various patent lawsuits the two were fighting, and then went in for the kill. Garmin signed a long term deal with Navteq, guaranteeing access to its maps for the next 10 years (6 years, with a 4 year option afterwards) and then dropping its bid for Tele Atlas. In other words, Garmin doesn't have to worry about being shut out from mapping services for 10 years (at which point other options may be available), it doesn't have to pay $3.3 billion to buy Tele Atlas, it forced its main competitor TomTom to spend $1.7 billion more than it wanted to. And, oh yeah, it'll make back a bunch of money when TomTom takes over Tele Atlas, because that 5% stake that Garmin had acquired will get sold at a nice premium in the acquisition. Well played, Garmin. Well played, indeed.

Filed Under: location based services, mobile phones, navigation
Companies: garmin, navteq, nokia, teleatlas, tomtom

Garmin Doesn't Want To Be Left Without Maps... Bids On Tele Atlas

from the musical-mapping-chairs dept

Over the summer, navigation device maker TomTom announced plans to buy Tele Atlas, one of the two leading providers of mapping data. Earlier this month, Nokia announced plans to buy Navteq, the other major provider. That resulted in immediate speculation about how Garmin (TomTom's main competitor) would respond. Apparently, the answer is with lots and lots of money. Garmin has now put in an unsolicited bid of $3.3 billion for Tele Atlas, hoping to outbid its rival by 15%. So, at this point, a game of musical chairs begins, with Nokia, Garmin and TomTom fighting it out over the two mapping data providers. Since both TomTom and Garmin seem to feel that they need to have Tele Atlas, don't be surprised to see the price keep going up.

Filed Under: gps, mapping data, navigation data
Companies: garmin, navteq, nokia, teleatlas, tomtom

Nokia Finds The Shortest Route To Navigation Info: Buys Navteq For $8 Billion

from the turn-right-$8-billion-ahead dept

Nokia made a bit of a splash this morning by announcing plans to buy digital mapping/navigation firm Navteq for $8.1 billion. Navteq is definitely the leading player in the space, followed by TeleAtlas -- and the two companies basically dominate the market. Earlier this year, you may recall, navigation device maker TomTom announced plans to buy TeleAtlas, though that deal is not yet completed.

Many people are speculating on what this could mean for Garmin, TomTom's main rival in the navigation device space. Garmin uses Navteq for its maps, but it seems hard to believe that Nokia would simply cut off Garmin. That would take a huge chunk of revenue out of the deal, making it a lot less worthwhile. What's much more interesting is how this shows the strength of Nokia's commitment to really leveraging mobile devices for location-based services and navigation information. People have talked about such things for years, and Nokia's purchase certainly suggests that they're about to make a big push into moving navigation info and location-based services out of a separate device and into mobile phones.

Filed Under: location based services, mobile phones, navigation
Companies: garmin, navteq, nokia, teleatlas, tomtom