As Strategy Analytics anticipated
, the market for digital maps has quickly shifted in the wake of Google’s entrance into turn by turn navigation.
In the contrast to Google’s recent announcement to pull away from Tele Atlas as its primary map supplier, Microsoft (MSFT) and Navteq have entered into a “new chapter” in their ongoing partnership in what has been deemed as “a true 'win- win' for both companies” as stated in a recent press release
. While by no means a merger, the implications of this partnership could prove to be extremely far reaching. Microsoft and Navteq/Nokia have technologies which extend into computer software, computer operating systems, mobile software operating systems, search engines, mobile hardware, and automotive platforms as well as the wealth of location-based data owned by Navteq. This may prove even more significant as Google has recently leaked its intention to expand into the mobile hardware market
The most immediate benefit will be the use of Microsoft technology to create 3-dimensional, street level maps, which MSFT calls Streetside, for its Bing Beta Maps. As more PNDs become connected
, the ability to house 2D/3D maps onboard while storing street level maps off board will be an important selling point and help to differentiate PNDs from mobile phone navigation. Street view maps are a fun application, but lack the accuracy for reliable automotive navigation. Developing a seamless way to switch from street views to more accurate 2D/3D maps will help PNDs to better differentiate themselves from smartphones as PNDs provide better automotive usability.
The growth of the connected PND market and smartphone navigation solutions can be seen in Strategy Analytics’ recently updated database listed below:
Portable Navigation Multi-Feature Device Specification Database
In addition to achieving better quality maps, Navteq has strengthened its position by gaining greater access to consumer markets for smartphones and connected PNDs, and could benefit from Microsoft’s strong position in the automotive market, especially in terms of volume cars equipped with Ford SYNC or Fiat Blue&Me and a system that is currently in the works with Hyundai
. While Google is a company with massive resources and a proven ability to flawlessly execute plans, perhaps the strength of its position in automotive and LBS has been overstated by many in the industry.
Garmin should benefit from its close relationship with Navteq, while Tele Atlas/TomTom needs to evaluate its future and ponder potential strategic partnerships of its own. Although Tele Atlas/TomTom has said that it will continue to focus on accuracy and innovation, these words seem more like hollow executive speak than a signal that Tele Atlas/TomTom believes its business model is still functional. TomTom’s recent decision to slash the price of its iPhone application in half, from $99 to only $49, seems to belie assurances that everything is alright at the Dutch Company.
In terms of Microsoft, the partnership helps Bing better target the mobile and automotive search market that Google seeks to dominate. Strategy Analytics recently detailed Google’s competitive position in the report:
Competitive Position Analysis of Google in the Automotive Market
Google has not been shy about its wishes to dominate mobile and automotive search, in fact, at Navigation and Location 2009 in San Jose, CA, a representative from Google stated, “it is advertising, not navigation that we are after.” This makes search a vital component for deriving revenues from LBS solutions. Microsoft is prudently looking to bolster its position against Google’s rapid push into LBS by partnering with Nokia.
As reported here
, by Telematics Update, the new Bing Maps will include a free voice-enabled search application, allowing the driver to access maps, directions, and traffic without compromising the wheel of their car. The hands free application will cue the driver will visual signs rather than audio responses, thus giving Microsoft a potentially more powerful value proposition to potential advertisers as well as a solution that drivers may prefer.
Still, the battle for dominance in automotive and mobile phone search is just beginning and long battles often make for strange bedfellows. Google’s decision to pursue mobile phone hardware is certainly going to upset the likes of Motorola, who were relying heavily on the success of Android based phones. This comes on the heals of pulling away from Tele Atlas and offering free TbT on Android, a platform on which Garmin is building navigation-centric Nuvifones. While Google’s slogan, “don’t be evil”, may continue to resonate with consumers, these moves may have engendered distrust with potential strategic partners. With many major players have yet to weigh in including automotive OEMs, Google may be viewed as too ambitious for potential partnership. Meanwhile, Apple, a darling of many consumers, has yet to fully weigh in, but has not ignored LBS quietly acquiring Placebase