The joint BMW, Audi and Daimler-Benz acquisition of Nokia’s Here mapping business seems odd when you consider that Apple, Uber, Amazon, Alibaba, Microsoft, and Facebook also kicked the tires on the mapping tech company.
Why do the premium German automakers want to own Here when it would be so much easier to buy from it as an independent automotive supplier?
The answer lies in the fact that these three companies, BMW in particular, are too impatient to wait for the Apples and Microsofts of the world to establish standards and interfaces for mapping, telematics, and smartphone connectivity. Here is said to have more than 300 key patents for mapping. Tech-news website Techcrunch called “Nokia’s trove of driving directions and maps, as well as related location technology and patents, one of the biggest and more valuable mapping assets to come to the market in years.”
Moreover, BMW, Mercedes, and Audi already use Here in their systems and have all their future autonomous development hooked to the platform. The three automakers do not want to risk that investment by allowing, for example, an Uber or Alibaba to buy the company and then hope the new owner keeps the system open.
But the auto industry is not known for blissful joint ventures. Volkswagen and Suzuki. GM and Fiat. GM and Fuji Heavy Industries. The list goes on. Back in 2000, Ford, GM, and DaimlerChrysler (remember that company?) collaborated to form the information-technology firm Covisint. That lasted four years before it was sold off to Compuware.
The Germans seem to have a better knack for these things when they keep the alliances Euro-centric. Consider the Daimler-Renault alliance, which is on its way to finally making Smart profitable.
Nokia has made Here a quality operation. The brightest tech people at all three companies, along with their outside counsels at McKinsey, SAP, and others, reached that conclusion prior to the purchase. The only glitch is Here’s overstaffing, with 6,500 employees. That will change in a hurry to brighten the bottom line.
The comical footnote is that Microsoft passed on acquiring Here because it already has Bing mapping. Is anyone clamoring to use Bing anything?
Now the question is: Who else beside Mercedes-Benz, BMW, and Audi will use Here mapping? Look for Uber and probably Facebook to license HERE’s maps, and of course Renault and Nissan, owing to the alliance relationship with Mercedes. Naturally, the maps would also extend to VW, Porsche, and other Volkswagen Group brands, plus Mini, and Daimler’s Freightliner and Smart.
The Here system is especially good, company insiders say, at meshing with real-time vehicle data to enhance driving safety and working with applications that Internet companies are developing for location-based marketing services that will be piped through the car’s telematics system. As we drive down the road looking for a hotel or some place to eat or grab a cup of coffee, appropriate businesses will pay to make us a specific offer. This represents a huge future revenue stream for the automakers and telematics companies.
BMW, Mercedes, and Audi will continue to develop their own proprietary interfaces and apps. But we might look at their purchase of Here as three cattle ranches combining to secure the supply of hay that their respective cattle like best.
For BMW, Audi, and Mercedes, there is a lot riding on Here—applications that are in development but may not surface for a few years yet. It will be interesting to see if all three companies can be congenial co-owners.
If they can’t, no problem. Some German entrepreneur will be happy to buy it from them and spin it off after signing long-term contracts binding the automakers to Here.