You see, Apple has several ways to improve its Maps:
- It can recruit an army of maps specialists and get to work much like Google (GOOG) did, which should produce results in a few years;
- It can try to improve its algorithms, buy more data, and rely on its users to keep on reporting on Maps' problems, though this hardly seems enough when internationally Apple's offering is simply too bad to keep on the market;
- Or finally, and this is the speculative angle, it can go out and buy an established mapping company with a worldwide presence.
So who might be a target?
The first name that comes to mind is Garmin (GRMN). It's quoted in the US and carries a $8.2 billion market cap. It would give Apple an instant and decent worldwide presence if Apple chooses to buy it. With Apple's cash hoard, spending a bit over $8 billion wouldn't break the bank, either.
However, Garmin is not alone. Another possible name would be TomTom (OTCPK:TMOAF). Apple is already using some of its data. TomTom has a market capitalization of just around $1.1 billion, which would make for an easier acquisition for Apple. It would probably also allow Apple to offload the entire development of the Maps app over time, simplifying its involvement in what promises to be a very labor intensive endeavor.
Finally, among other possibilities, Apple could perhaps also find a decent Map supplier in Thales (OTCPK:THLEF), which is Paris-quoted and has a market cap of around $7 billion. Of course, were Apple to be interested, it would be interested only on Thales' mapping expertise, and not its aerospace defense components.
Apple's mapping travails might well produce some speculation in these and other names. Still, the most likely path will still be for Apple to slug it out, trying to push up its Maps offering up to parity with Google's and Nokia's (NOK) through a lot of in-house effort.
Still, for those more speculatively inclined, this thesis cannot be dismissed, especially if the stocks in question show any kind of upward movement.
A bit of caution
As Apple and others encroach more and more into the navigation market, these companies - which can now be acquisition targets - will see their markets being eaten away by the free Maps offerings in smartphones and tablets. So longer term, these mapping companies face huge headwinds from this trend.
Some of the headwinds might be mitigated by the migration of these companies towards integrated solutions (in automobiles, etc), but still, this negative trend cannot be ignored. Any long speculation on these acquisition rumors is nothing but temporary.