German automakers Audi, Daimler AG and BMW AG have agreed to buy Nokia’s digital mapping service Nokia HERE for about $2.7 billion, reports WSJ. The report states although the three automakers have agreed to buy Nokia HERE in principle, the deal is not certain yet.
It also adds that if a deal is struck, the 3 companies will invite other automakers like Fiat Chrysler Automobiles NV, Renault SA, PSA Peugot Citroën, Ford Motor Co, Toyota Motor Corp and General Motors to invest in the mapping service.
Uber was looking to buy HERE: In May, The Verge reported that Uber was looking to acquire Nokia HERE for $3 billion. Uber was reportedly among Facebook, Baidu and a consortium of German automakers looking to buy HERE. Nokia allegedly refused the offer from Uber, instead concentrating on negotiations with the German consortium, as indicated by this CNET report.
However, after the rebuff by Nokia, Uber bought a part of Bing Maps technology from Microsoft for an undisclosed amount last month. Microsoft would stop allegedly collecting map data and instead depend on data licensed from partners like Nokia to continue offering its Bing Maps service and instead focus on the user experience of Bing Maps.
The WSJ report claims that over half of Nokia HERE’s $1 billion plus revenues came last year came from the auto industry, while the rest came from location based services. Nokia had bought mapping service Navteq for $8.1 billion in 2008 and built its maps business from it.
Alcatel-Lucent acquisition: In April, Nokia bought French telecommunications equipment company Alcatel-Lucent for $16.58 billion in an all share deal. The deal is expected to close in the first half of 2016. Alcatel-Lucent shareholders would own 33.5% of the fully diluted share capital of the combined company, while Nokia shareholders would own 66.5%, assuming full acceptance of the public exchange offer.
Looking to sell HERE: At that time, Nokia had also said that it had initiated a review of strategic options for its HERE business. In the December 2014 quarter, HERE achieved 15% year-on-year growth in net sales at over $300 million in Q4 2014. HERE also had an agreement with Baidu, the Chinese Internet search provider, to power its new desktop and mobile map services outside of China. TechCrunch pointed out that HERE was the last consumer-facing business Nokia retained following the $7.2 billion sale of its devices and services business to Microsoft in April.
Nokia Maps rebrands to Nokia HERE, Earthmine acquisition: In November 2012, Nokia rebranded its Nokia Maps service to Nokia HERE, making it a cloud based mapping and location service, accessible across multiple operating systems and devices. It also announced the acquisition of Berkeley based 3D mobile mapping solutions company, Earthmine for an undisclosed amount. Nokia said that Earthmine’s reality capture and processing technologies would become integral parts of HERE’s 3D map making capabilities.
We’d pointed out at that time that Nokia would compete directly with Google and Apple on their own turfs, through native apps and the SDK. While Google’s maps are richer and widely used, Apple’s maps were new and had inaccuracies but were expected to evolve gradually.
Dependence of self drive cars on the car’s navigation: The WSJ report claims that the automakers were worried about HERE falling into the hands of Google, Uber or Apple, which would mean the loss of car information systems. These systems, the report states, are vital for self-driving cars and future automotive safety systems. It adds that despite Google Maps’ popularity for navigation, it won’t be Google Maps but the car’s computer which will eventually provide road and traffic details for self drive cars, stressing on the importance of the digital mapping business.
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