Today the sales of Nokia’s HERE division was officially announced ending a long running debate over who would buy them. The sale has been well covered by other folks. I’d recommend GPS Business News, Dominique Bonte of ABI and the official press release but I am sure I am missing some other insightful commentary.
There are a number of interesting details that have come out in the news. I’ve written on some of them in the past. The one I am still trying to wrap my head around is how HERE will continue to support the non-automotive mapping applications. I don’t think they can do both HD Auto maps and maintain their position in non-automotive markets.
In the in-house Q&A video with HERE President Sean Fernback, the question of support for non-auto markets is addressed explicitly: Mr. Fernback emphasizes that this is a key part of the future and is a priority both for the HERE management as well as the new owners. I assume that this was to address the concerns of their many non-automotive customers about continuity of supply.
The official press release has a different emphasis. After many paragraphs about the opportunities in new high definition automotive maps for autonomous driving, they address the other markets. The statement, in total is:
The company will continue to develop its position as a strong and independent provider of maps and location-based services, will expand its product offering and continue to make it available to all customers across industries.
That’s it. OK, so I’ve read enough press releases to know that you can’t always parse too much out of them but it is a cause for concern.
I remain skeptical that HERE can afford to pursue both the HD automotive map while at the same time supporting some very big, demanding customers on the commercial side. HERE has signed up big companies like Microsoft, Amazon, Baidu, Facebook and many others who use their map data or services to drive offerings competitive with maps from Apple or Google. While strategically important, this has never been a big profit generator. But the competition for map based services is every bit as intense. Further the pressure from OpenStreetMap based providers has only grown in the last three years.
It’s pretty obvious that maps are expensive beasts. It seems to cost $500M to $1B to maintain a commercial world-wide data base. That investment is typically along three axes:
- Expanding geographic coverage
- Updating and maintaining existing coverage
- Adding new features and capabilities to the map and compatible delivery pipeline.
The HD Map product is fundamentally different from the existing map product (call it a local search/navigation map) in each of those areas. The geographic focus initially will be on Western Europe and the US versus less developed countries. The update task will focus on latencies based in seconds, not months. And HD maps require a completely new set of technologies to collect data, new workflows to process the data and new pipelines to redistribute the data. The feature sets are also significantly different with local search maps caring more about POIs that precise lane geometries.
The new HERE (as sadly it will remain named) will have a hard time investing for the future HD map market while fending off competition from Google, Apple and critically, OpenStreetMap on the local search/navigation front. In all the excitement over HD maps, don’t forget that the “other” map is supporting a huge mobile application business that exists today, not in 2020.
What does that mean:
- Despite what the video says, I think non-automotive users of HERE map data and services will be worried. Rightly so. I think the press release accurately reflects the new HERE’s focus: 95% auto, 5% other.
- TomTom will have a similar dilemma. From public news, it seems like they will make the same choice and focus on the Auto opportunity. It will be interesting to see how TomTom plays out its M&A options.
- OpenStreetMap has a fantastic opportunity to become the obvious choice for local search applications. “Regular” navigation is close behind that with the dam holding back use by major automotive manufacturers beginning to crack. There is a lot of interest in an open, shared map data base since few companies really want to build their own.
Finally, congratulations to HERE and especially to my friends there. Though often critical of the company, I have great respect for the difficulty of the market, the tough choices and the great people there. I hope they thrive. The world needs more options. Not fewer.