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HERE Acquisition: An Interesting Look at a Sharing of a Collective Strategy Resource

04 August 2015

The acquisition of HERE, Nokia’s global map service, by German automotive OEMs is an interesting play for a number of reasons.

The deal is a significant bonus for Audi, BMW and Daimler as it keeps the strategy map making resource out of the hands of newcomers to the automotive market such as Google, Facebook, Uber and Chinese search engine giant Baidu. However, it also shows that automotive OEMs are willing to bend traditional rules of competition to share a strategic resource as a collective, according to IHS.

Mapping services such as HERE are viewed as a key component toward progressing autonomous driving as it will require real-time availability and location information in order for it to work. This is true for not just traditional players in the automotive market, but for the challengers that have entered the fray and are already working on proprietary self-driving vehicles {Read: Deep Learning: Automotive Industry Takes a Giant Leap Forward).

A comparison of global map providers by country penetration. Source: IHSA comparison of global map providers by country penetration. Source: IHSAcquiring HERE reduces the number of global providers of mapping information, meaning it will likely result in a higher price point and force companies on the outside to invest in their own systems—slowing development and deployment of new technologies, IHS says. With HERE in the hands of three automotive OEMs, it will likely be offered in a consortium supported by an initial fee, as well as annual fee for both membership and to support ongoing costs in R&D, collection and maintenance of high-definition maps in exchange for open access to the maps provided by the consortium. Those not part of the consortium would have to pay a normal licensing fee.

By providing HERE in a consortium, it also allows for the ability to combine resources and to secure and continue developing a long-term strategic resource, IHS says.

Jeremy Carlson, senior analyst for automotive technology at IHSJeremy Carlson, senior analyst for automotive technology at IHS“By acquiring a global platform in HERE, it also may establish a de facto standard, giving the industry a unique opportunity to rally around specifications or processes that could in fact hasten the onset of a connected and automated future mobility ecosystem,” says Jeremy Carlson, senior analyst for automotive technology at IHS. “Possibly the most important aspect is that the consortium will also own their own data, thus not having to figure out who controls customer data; the service provider or the OEM.”

Mobility impact

HERE is just one of two companies that is supplying navigable maps on a global scale as an alternative to Google and Apple on mobile devices. Many mobile vendors such as Facebook, Amazon, Microsoft, Baidu and Samsung rely on an independent mapping solution as a critical component to compete against Apple and Google.

If HERE is removed from the equation, these mobile providers will either have to turn completely to TomTom (the other company in the mobile space providing mapping services) or come up with an alternative or proprietary solution. Thus, TomTom may see some significant growth opportunities as a result of the HERE acquisition as it finds its licensing revenue increasing, IHS says.

The HERE acquisition could encourage other mapping services to transition to mobile such as OpenStreetMaps (OSM) and Telenav, which are both open-source map solutions. Another alternative for mobile vendors would be to engage regional players individually, which requires more work and is a clear drawback to developing global platforms.

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Related links:

IHS Automotive & Transportation

News articles:

Deep Learning: Automotive Industry Takes a Giant Leap Forward

Robots and Autonomous Vehicles Meet Evolving Sensor Trends

IHS: Chinese Automotive Semi to Reach $6.2 Billion This Year

‘Outsiders’ Make Inroads in ADAS Market

Ceva Has Vision For Neural Network Processing

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