Why Microsoft Should Enter the GPS Space

The GPS device and GPS content space needs consolidation to survive. You have device makers Timble (TRMB), Garmin (GRMN) and Tom Tom and you have content providers Navteq (NVT) and Tele Atlas (TLATF.PK). As more handheld devices utilize GPS, the opportunities for device makers shrink while content becomes more of a commodity. In the end, some of these companies have to be absorbed to survive.

The events of the past month seem more like musical chairs than calculated strategic decision making. eBay's (EBAY) Skype quickly comes to mind.

• Nokia (NOK) does not need Navteq – As I wrote before, this is a marriage headed for divorce. Nokia is the market leader. They need to stick to expanding their global market share.
• Garmin does not need to be a cell phone maker – As I wrote before, this is not a core competency.
• Garmin does not need Tele Atlas – Tele Atlas is the market leader, but why buy content when it is fast becoming a commodity?

Who can step up, bring the pieces together and build the next generation? Microsoft (MSFT). Garmin and competitor Trimble need a suitor and Microsoft would be a great fit for either company.

Why is Microsoft a good fit?

• Microsoft wants and needs to expand their lines of business
• Microsoft has the Microsoft Mobile Smartphone
• Microsoft has a GIS/Mapping platform with the Virtual Earth and MapPoint products
• Garmin’s software can run on the Microsoft Mobile Smartphone platform
• Trimble already runs on the Microsoft Mobile Smartphone platform

Microsoft is hitting on all cylinders and the time is right. Does this seem too simple and logical? Yes.

Disclosure: Author holds a position in MSFT

Comments

[Nigel Cheffers-Heard]

<<Microsoft has the Microsoft Mobile Smartphone>>
IF that is such a good start and a big deal, how come its market credibility is near zero? The thought of a mobile version of Vista, playing the typical MSFT "me-too" with features already implemented in the iPhone, fills me with horror! Apple would be a much more logical suitor.
N

[Tom B]

"Microsoft has a GIS/Mapping platform with the Virtual Earth and MapPoint products"

Who needs Virtual Earth when you have the superior Google Earth and Google Maps? Value of this asset = zero.

The trouble with GPS units is two-fold 1) Standalone GPS devices won't be with us forever; they'll be incorporated with wireless devices 2) The User Interfaces on GPS units suck horribly. Does this sound like something Microsoft would be able to fix? They have NEVER put together a decent UI in 20 years of trying-- why would they succeed now?

[LeoNel]

I thought there was a rumor last year regarding Microsoft potentially purchasing TomTom. I definitely agree with all your points. Microsoft needs to enter this space.

[GISJim]

Your position on TeleAtlas and Navteq are totally off base. They are not commodities they are plants. It is more like an automaker buying the steel mill so they can get the products they want from the plant and sell the excess to the market. This may or not make sense as a business decision, Im just a techie in the industry.
I see them being able to leverage the production facilities to generate a more advanced feature set for themselves and sell less advanced sets to everyone else.