What Is Nokia Thinking? Navteq Bid Makes No Sense

From the beginning I was confused about Nokia's (NOK) bid for Navteq (NVT). I am still confused.

From a pure technology standpoint, it makes no sense. NVT is a company that provides high quality content and content services for other applications, like Google (GOOG) Maps, Virtual Earth and Yahoo (YHOO). Why does Nokia think this fits in their business strategy? If NOK had decided to bid for Garmin (GRMN), I could at least see a roadmap to success.

Nokia is the market leader in the consumer level mobile phone market. Most of us have owned a Nokia phone at some point in our cell phone lives. For years Nokia has been trying to expand into the PDA/Smartphone market. Remember the N-GAGE – huge failure? Yes the new generation from NOK is supposed to be the "cat's meow", but the reality is the Smartphone market is driven by corporations. Are Corporate IT departments really going to support RIM's (RIMM) Blackberry, Palm's (PALM) Treo, Apple's (AAPL) iPhone, plus a Nokia alternative? Not a chance. And the handheld market is owned by Nintendo with its Game Boy and Nintendo DS – not a place where NOK can win.

NOK needs a wakeup call. The NVT bid is foolish. This continued push into computers/handheld devices, is still failing. They need to stick to what they know. If they really want to bid for a company, try GRMN or Amsterdam based Tom Tom, the primary GRMN competitor.

Can anyone give me a reason not to sell NOK?

Comments

[samij]

just one clue to help you: cell phones is a global business...

[Tom B]

Your point is not clear; ALL the companies mentioned are global companies.

[samij]

in the us, the smartphone market might be business driven, at global scale, it's not.

besides, of the other companies mentioned, only palm has something that could be called global cell phone business, others have some presence in some other markets than the us, but selling your stuff also in canada doesn't make your company a "global".

[Tom B]

OK, that helps. That explains why RIMM is disproportionately a US thing; elsewhere people have more critical needs than how well a phone integrates with MSFT's Junkware Exchange server.

[Tom B]

I think Nokia believes they can sell Navigational data to GOOG, etc. They are mistaken. The kind of data Navteq sells can be easily cloned, and is pretty easy to come by in the first place.

I see this deal as a good thing, because it will shake out doomed companies like Nokia faster, which could somewhat accelerate iPhone adoption.

[Nom De Plum]

"Pretty Easily Cloned" Not sure what basis you have to make that comment. There is a reason TomTom and Nokia paid top dollar for TeleAtlas and Navteq, it's becuase there massive mapping databases are not easily cloneable. Navteq was started 20 years ago within Phillips and has hundreds of millions of dollars invested in its content, do you see any startups raising that much money to build the same database...didn't think so.

[Tom B]

Umm-- because the data that already exists, already exists? Thus; you only need to add new. And that could be done folksonomically.

[contreras]

Are you serious? well, then I guess Nokia and TomTom just had spare 10billion and wanted to spend on something... this is ridiculous

[User 32214]

I can give you three reasons not to sell Nokia - China, India and Africa.

[Tom B]

I'm not convinced. They can buy cheap junk from MOT, which has a plant in China, or LG.

[Burns]

Nokia is quickly losing its North American market to Samsung. Maybe they figured they could use some back channels to make a deal www.newsvisual.com/new... and then this would allow them to get some of that market share back. I also agree with User 32214, China, India, and Africa are unbelievably huge markets. And yes, customers there could buy cheaper products from other companies, but they could also buy pre-owned Nokia phones as well (most phones in the developing world are bought pre-owned).

[contreras]

"China, India, and Africa are unbelievably huge markets. And yes, customers there could buy cheaper products from other companies, but they could also buy pre-owned Nokia phones as well (most phones in the developing world are bought pre-owned)."

pre-owned phones? where? what are you taking about? If you are talking about black market, how do you know how many they sell? the sales in "developing" markets as China and India does not mean that they are all poor... they have big markets... don't you get it? Nokia has 39% market share in the world, and not thanks to low-end handsets... it is by far number 1... and in US it is 3rd? 4th?... Motorola is number 1 in the US... and 3rd in the world (behind Samsung)... there are reasons for that, and that is not only Europe, but LatAm, China and India...

[User 114576]

companies that "stick to what they know" forever, die. nok is changing its business towards internet/services and smart phones (instead of manufacturing cheap phones), and they are making the right strategic moves. your perspective is very short sighted.

[Baxter]

Dan, your position makes no sense to anyone who's paid any attention to Nokia's recent moves. Nokia bought gate5 for their smart2go navigation application for phones. They have the 6110 navigator phone. They have a tablet navigator. Now they'll own the maps and keep a lot of NVT's customers which, by the way, have made it a very profitable business.

Check your facts or just do a little research. It's easy these days, eh?

[Baxter]

Dan, your position makes no sense to anyone who's paid any attention to Nokia's recent moves. Nokia bought gate5 for their smart2go navigation application for phones. They have the 6110 navigator phone. They have a tablet navigator. Now they'll own the maps and keep a lot of NVT's customers which, by the way, have made it a very profitable business.

Check your facts or just do a little research. It's easy these days, eh?

[heterocedastico]

What d'ont you get? Nokia has the tecnologie to incorporate GPS in its phones. It needs the maps. Navteq provides them. Simple!

I'm loving their services expansion. Do you think people will carry a phone, a music player and a GPS? People will want all in one machine. Nokia is the best positioned company for this integration because its simply the world leader in handsets, which will be the base aggregator for all this tecnologies...

[contreras]

Do you really get paid to write something like this? Do you think the iPhone is an smartphone and compare it with RIMM and Palm? a big player? They sold 1+ million this far... Nokia sells 1+ million SMARTphones every week... what are you talking about??? or are you referring to California market only? amazing!!!...

Check the Q3 results from Nokia released today...

[eltractor67]

I like American commentators talking about Nokia based on their miniscule 5% market share in the U.S. market, while Nokia is a global powerhouse in the rest of the world. Nokia has successfully cornered the markets in Asia and Europe building on different strategies. In India and China they offer ultracheap devices because disposable income is low but, figure what, do you know than in Asia people spend 3-4 times their monthly salaries on a mobile phone. And Nokia is the iconic handset manufacturer just the way Apple is the iconic manufacturer in the U.S. (and elsewhere.) So people are buying cheap Nokia phones and not the domestic copycats.
Perhaps it is a lot of money to invest on a maps company, but guess what if companies are spending tons of money for Navteq and TeleAtlas is because a) these two maps companies have cornered the market (sorry it is a little more complicated than scanning a world atlas and selling maps), b) navigation tools are huge business with all related applications, c) Nokia is sitting on so much cash that their CEO is finally acquiring some interesting companies.
Lets just wait and see what Nokia is going to do on their ovi website, cos thats going to be interesting.