Nokia's Acquisition Of Navteq Makes It A Major Player In Both Navigaton And The Web

So far 2007 has been about the smartphone, and in particular, one smartphone: the iPhone. But if Nokia's deal for Navteq is any indicator, 2008 could be the year of location.In case you didn't know, Nokia today agreed to acquire digital map maker Navteq for $8.1 billion in cash. The deal will have big implications for the navigation market. This deal could kill the popular navigation device, the Garmin, whose manufacturer relied on Navteq for mapping data. Many insiders think Nokia will likely launch its own navigation devices designed to compete with the Garmin, including navigation-enabled smartphones.

But let's take a step back from the immediate details of the deal itself. What does this deal mean? And why did Nokia pay this much money for a mapping company?

On the macrotrend side of things, this deal will likely put the fast-growing digital navigation space squarely in the mobile handset market. Nokia is the world's largest handset maker. If any company has the global scale needed to make GPS an affordable feature for cell phones and handhelds, it's Nokia.

Nokia has been trying to evolve from being a handset maker to being a Web services company that is optimized for mobility. Nokia's deal for Navteq could help transform the cell phone maker into a global powerhouse for navigation services. Combined with Nokia's interest in Symbian and its Intellisync mobile business platforms, Navteq's services could make Nokia's smartphones more attractive to both prosumers and the enterprise. Navteq's technology also could enable Nokia to launch a new class of location-enabled applications for both the consumer and enterprise markets, including location-enabled content sharing, mobile asset management, and fleet management.

Finally, this deal gives Nokia leverage over Google, Yahoo, and MSN. Navteq supplies some of the mapping information for Google Maps (just this weekend, I ran a mobile search for a museum in Manhattan and, low and behold, the Navteq logo popped up on my Google Maps search). Navteq also supplies mapping data to Yahoo Maps, MSN Maps, and even that Web 1.0 standard of navigation, MapQuest. Now Nokia will control these relationships and be able to dictate to the three powerhouses of the desktop Web. That's right, thanks to this deal, Nokia is now a major player on the desktop Web, too.

By buying Navteq, Nokia also keeps Google from buying another Web company with lots of promise. Earlier this summer, rumors floated that Google was looking to buy Navteq. It looks like Google is forcing everyone, including mobile handset makers, to make acquisitions these days.

Now all Nokia has to do is to be able to leverage this acquisition intelligently. That's the hard part.

What do you think? Will Nokia be able to leverage its deal for Navteq and develop cool new location applications?