The GPS device and GPS content space needs consolidation to survive. You have device makers Timble (NASDAQ:TRMB), Garmin (NASDAQ:GRMN) and Tom Tom and you have content providers Navteq (NYSE:NVT) and Tele Atlas (OTC:TLATF). 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 (NASDAQ:EBAY) Skype quickly comes to mind.
- Nokia (NYSE: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 (NASDAQ: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