Amazon Reportedly Eyes A Stake In A Mapping Leader, With AWS In Mind

| About: Amazon.com, Inc. (AMZN)

Summary

This Seeking Alpha Eye on Tech column looks at a report Amazon is in talks to buy a stake in mapping provider HERE, which was recently acquired by German automakers.

The report indicates HERE would adopt AWS as part of a deal, and also notes potential synergies with Amazon's local delivery efforts.

Among other things, the report appears to highlight AWS's strategic importance to AMZN.

Citing two auto industry sources, Reuters reports Amazon (NASDAQ:AMZN) is in talks with BMW (OTCPK:BAMXY), Audi (OTCPK:AUDVF), and Mercedes (OTCPK:DDAIF) to buy a stake in digital mapping and navigation software/services provider HERE, which the German automakers acquired last year from Nokia (NYSE:NOK) for $2.8B.

Though declining to comment on whether it's talking with Amazon, BMW reiterates HERE's willingness to add partners:

"We have noticed that there is lots of interest not only from potential partners from within the automotive industry, but also from other sectors."

Notably, one of the sources states Amazon "would take a stake as part of a broader deal to lock them in as a provider of cloud computing services." Meanwhile, Reuters notes having access to HERE's offerings could aid the company's efforts to roll out one- and two-hour delivery services in the U.S. and Europe, given its need for accurate real-time maps.

Uber (Private:UBER), which currently relies on Google (NASDAQ:GOOG) (NASDAQ:GOOGL) Maps and is expanding into package delivery, was rumored to be interested in buying HERE last year before a deal was reached with the German automakers. HERE's maps have been built into navigation systems deployed by numerous automakers, and also power Microsoft's (NASDAQ:MSFT) Bing Maps.

HERE's Android app.

Source: Google Play

There might also be synergies with Amazon's hardware ops: Since Amazon's Kindle Fire tablets and Fire TV devices rely on a forked version of Android known as Fire OS, Amazon can't integrate Google Maps or other apps/services that are typically bundled with Google's version of Android. Taking a stake in HERE would guarantee access to its maps on Amazon hardware; the maps app built into the failed Fire Phone relied on HERE.

The report appears to demonstrate just how important Amazon Web Services ("AWS") has become to AMZN, following several years of meteoric growth. A HERE deal that involves moving the mapping provider's server infrastructure to AWS would have much in common with the investments Intel (NASDAQ:INTC) has made in hardware firms that later released products powered by Intel CPUs. Amazon's AWS revenue rose 69% Y/Y in Q4 to $2.4B, and 70% over the whole of 2015 to $7.9B.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

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