Got Maps?

Note: Originally published on 11/30/10 at

Last week’s announcement that Steve Coast, the founder of OpenStreetMap, had been hired by Microsoft’s Bing Map group was the latest move in the high-stakes play to own and control the digital map, and the underlying location-based services. In four years, the industry has moved from the seemingly unbreakable duopoly of NAVTEQ and Tele Atlas to a place where most of the major players want to control their destiny through proprietary map data, or, failing that, an open, free data set.

Digital maps are notoriously hard to build and expensive to maintain. NAVTEQ and Tele Atlas have invested billions building authoritative map databases. Until a couple years ago, the assumption was that they would remain unchallenged in a not-so-benevolent duopoly. The two rivals awkwardly mixed their desire to capture emerging business models with a in-bred conservatism and desire to maintain high margins in the automotive and PND markets. Since they controlled the eco-system, they decided which business models to support and consequently which services could be offered. This control led to high valuations: in 2007 NAVTEQ and TeleAtlas were acquired by Nokia and TomTom for $8B and $4B respectively.

But technology and markets have never favored the stodgy, and when the stakes become high enough, previously unreasonable alternatives become reasonable. Google led the disruption, using their StreetView assets and a major investment to build their own maps, first in North America and more recently in ten new countries. I was asked by a banker about Google’s Return on Investment in building their own map. My answer: “It is a meaningless question. Google never asked that.” They did it because they needed to control such a valuable asset. They didn’t want to wait for quarterly updates or ask a business affairs group if, pretty please, they could use a new business model or attach their own ads to the maps. So they are building their own and phasing out the incumbent (Tele Atlas).

So now Google’s competitors have a problem. Google will own their own maps and have the flexibility to further their dominance of the mapping business and the lucrative local search market.

Nokia has a solution (NAVTEQ) although they can’t be happy with the price paid. And the self-imposed Chinese Wall between Nokia’s Ovi business and NAVTEQ only inhibits Nokia’s ability to capitalize on that asset. My bet: that wall crumbles over the next year and Nokia combines its mobile assets to improve the mapping assets.

The other people who want to compete with Google have a problem. They can’t afford the investment to build their own maps, but equally can’t have their future paths held hostage to pricing strategies designed for the automotive industry. The answer: Look at crowd-sourcing options, with the leading candidate being OpenStreetMap.

OSM was started by Steve Coast five years ago as a wiki-style map alternative to the British Royal Ordnance Survey. When I first met Steve 5 years ago, I thought “Cute idea. It will never work.” Today, OSM has over 300,000 contributors and has mapped much of the world, often in much more detail that the commercial map vendors. An imperfect but useful analogy is to think of OSM:NAVTEQ and Wikipedia:Encyclopedia Brittanica. And all this was done with little funding by folks who just like mapping.

Last summer, OSM got a major boost from AOL/Mapquest when they announced that they would use OSM for some territories and would fund the community to accelerate the building of the map. Their goal is to develop an alternative map, possibly richer than the conventional ones and certainly less encumbered with restrictive business models. And last week, Bing entered the fray, hiring Coast and announcing material support for the project. What was once a small movement is getting powerful sponsorship from major brands who see it as a low cost way to neutralize the advantages Google and Nokia have achieved through massive investment.

Two big names aren’t in the fray yet: Apple and Facebook. Both have big ambitions in location. To date, Apple has relied on an uneasy partnership with Google Maps. At the same time, they have made two map-based acquisitions and clearly have work underway.

Facebook is a more recent entry with strong moves to launch a check-in service around Facebook Places and subsequently Facebook Deals associated with those Places. They may be making the strongest competitive move of all: basically asserting that maps aren’t that important after all. What really counts is a robust places directory and the ability to determine what is nearby. This is characteristic of the map-less location revolution that has been commented on by Tyler Bell and others. If that view prevails, the massive investments by Nokia and Google will look misplaced. But if Facebook thinks maps are important for local search, user context or any other reason, look for them to invest in a solution that will give equal independence from the map data suppliers.

The recent investments in OSM by AOL Mapquest and now Microsoft can fundamentally change the choke point that map data has had on the market. Other start-ups like Waze will also offer solutions. But these will need scale to succeed. They will also need to answer questions about accuracy, completeness, authority and licensing. But the market need is evolving quickly, and the bar for “Good Enough” may adjust to allow for many solutions not though possible a few years ago.