Back in early April Nokia made it clear to several large companies, notably Uber and unspecified German car makers, that it was interested in unloading its mapping business. Since then a bidding war for Nokia's HERE Maps has erupted between some of the biggest names in the automotive and technology industries; Google, Audi, BMW, Mercedes-Benz, Baidu, and Facebook, to name a few, are all interested. The latest bid for Nokia's service comes in from transport company Uber at $3 billion, who stands to benefit from the purchase in numerous ways. For a service that has proven to be unprofitable for its parent the recent surge of companies clamoring at Nokia's door for the chance to take a losing service off their hands is somewhat puzzling. Which begs the question: why exactly is HERE Maps so valuable?
To answer this question we must look past the numbers. Despite losing money HERE Maps is incredibly valuable because of three main factors: data, market share, and self-driving cars. Let's focus on data to begin with. Nokia's HERE mapping business is far more than just HERE Maps, the app users may be familiar with. Nokia has spent millions of dollars a year to update the data that comprise their maps. Nokia's efforts have created an enormous database of location and business data; a source close to the Wall Street Journal has stated HERE is the most advanced digital mapping service in the world from a technical standpoint. The database HERE has built is incredibly difficult to amass; it takes a lot of time, investment, and technical expertise. Other than Google, HERE is one of a few companies that can offer an extensive database of location data.
Uber sees itself becoming one of the premier logistics companies in the world, the one company you turn to when you, or an object, need to be transported within a city as quickly as possible for a reasonable price. If Uber hopes to realize this vision they will need very accurate and extensive mapping data. Up until now Uber has relied on a mix of their own data and Google maps, with an emphasis on the latter. If Uber were to acquire HERE they would no longer need to license data from Google Maps; all the data they could ever need would be accessible in-house. This would greatly aid their Uber Pool service, a ride sharing program that pairs multiple riders with a driver. In order to complete matches quickly and effectively Uber needs to have access to extensive mapping data. Uber could also leverage HERE's database by licensing it to other companies, such as Facebook, who have recently began using HERE for all of their services that rely on location data.
The next big factor is market share. HERE is the only mapping database and application that can compete with Google Maps and Apple Maps on a global scale. Thus, if Google or Apple were to acquire HERE, they would dominate the mapping market, which would give them complete control over a key technology that is increasingly becoming more essential for modern services. This possibility has encouraged many companies to enter the battle for HERE, particularly automobile manufacturers, who fear losing control over the mapping service that currently powers over 80% of car navigation systems.
Self-driving cars are possibly the main reason so many companies are interested in HERE Maps. Incredibly accurate and extensive geospatial maps are a vital ingredient for any successful self-driving car. Considering Uber announced a partnership with Carnegie Mellon University to develop autonomous vehicle technology in February. Between HERE's massive database of location data and the advanced technologies they have developed in order to gather it, Uber's efforts to develop self-driving cars would benefit immensely if they acquired HERE Maps. Google's market share also plays an important role in this factor as well. It is no secret that Google has been developing their own autonomous vehicle; what would happen if they had a monopoly with respect to geospatial mapping? Sure, Google could make their mapping database and services accessible to other firms, which would not be surprising given how Google tends to favor opening up rather than walling themselves off. However, nothing would prevent Google from holding back and leveraging their dominance over mapping data and services to hinder the efforts of other technology firms and automobile manufacturers.
Uber certainly has a good shot at acquiring HERE based on its latest bid; investors estimate HERE's market value is between $2 billion and $4 billion. However, it will be interesting to see how other companies counter their offer. Nokia could end up doing much better than expected from the sale seeing as many companies have a vested interest in preventing Google from acquiring HERE, not to mention HERE has many valuable assets on offer. Regardless who acquires HERE it would be great to see them share data with others for a reasonable cost considering how vital mapping tech and data is for the future of autonomous vehicles.