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Nokia to buy Navteq for $8.1B

Nokia is cementing its position in the mapping/location-based services space, announcing today an agreement to buy GPS-mapmaker Navteq for $8.1 billion in a cash-for-stock deal. The acquisition fits squarely into Nokia’s strategy of moving beyond hardware and into mobile and Web-based services and complements its own recent launch of its Nokia Maps navigation service.

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“Location-based services is one of the cornerstones of Nokia’s Internet services strategy,” Nokia president and CEO Olli-Pekka Kallasvuo said in a statement. “The acquisition of Navteq is another step toward Nokia becoming a leading player in this space.”

Navteq provides the core map data that powers applications spanning multiple industries—from fleet tracking apps in industry verticals, to online mapping services like Mapquest and Google Maps, to the vehicle navigation devices sold by Garmin and TomTom. Along with competitor Tele Atlas, Navteq also sells the maps and positioning data to wireless vendors and applications developers promoting the new location-based services industries. Its map data figures prominently not only in Nokia’s own mapping application but in the phone-base personal navigation services developed by TeleNav, Tele Map and Networks in Motion. Those services are in turn being embedded by phone vendors in their devices and sold by carriers.

That may put Nokia in a bit of a competitive quandary as Navteq’s core business customers are directly and indirectly competing with Nokia’s current and future services. Nokia said it plans to incorporate Navteq’s data into numerous applications and services under the new Ovi umbrella, but it would let Navteq operate independently as a separate business unit and continue to serve current and future customers.

Nokia’s acquisitions over the last few years have ranged from music platform providers to mobile advertising companies, each occupying a lucrative space in the mobile data world. It’s interest in mapping began last year, when it bough mapping service provider Gate5, and relaunched its service and portal as Nokia Maps. The culmination of all of those strategic threads, however, was Ovi, which combined services like Nokia Maps with a downloadable music service and gaming portal. According to analyst Jack Gold, principle of Jack Gold Associates, the Ovi portal is just the beginning.

“We believe that this acquisition puts Nokia well down the road towards becoming a mobile services provider, not just a device manufacturer,” Gold said in a research note. “Nokia will require more pieces to fully flush out the services it will ultimately need to offer, but Nokia is cash-rich and can afford to make more pointed acquisitions, and likely will over the next one to two years.”

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© 2014 Penton Media Inc.

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