October 2, 2007 4:00 AM PDT

For handset makers, it's all about location

A correction was made to this story. Read below for details.

news analysis The young market for so-called location-based services may have just found a shortcut to mainstream adoption.

Nokia's announcement Monday that it will purchase digital-map provider Navteq for $8.1 billion illustrates the premium that both mobile handset and services providers are placing on location-based services. It could also mean that budding market will briskly move from niche service to standard feature.

"Everyone's going to have to move in that direction. You'll be missing something if you don't have (location-based services)," said analyst Jack Gold of J. Gold Associates.

Location-based services (LBS) is a phrase used to describe the combination of the mobile Web and GPS data. It's a feature that will become even more in demand as portable gadgets become ubiquitous and staying connected assumes first priority. Add-on services are also one of the most surefire ways for manufacturers to make a few extra dollars in profit margin on consumer hardware. A side effect of the appeal of LBS on omnipresent devices like cell phones is that standalone GPS devices could go the way of the PDA.

Up to now, location-based services for most people meant getting directions from one place to another. But the vast database of location data that companies like Navteq can provide to mobile service providers, ad and marketing companies, and hardware makers opens some intriguing possibilities.

Giving directions is one thing, but when your device knows where you are, a slew of services can be tailored to your specific geographic needs. You could, for example, find the closest Starbucks, the locals' favorite Thai restaurant, or the gas station with the lowest prices. You could plan for inclement weather, reroute your commute around road closures or accidents, compare prices while shopping for gadgets or appliances, or keep tabs on friends or family members.

That Nokia would be the one to scoop up Navteq wasn't necessarily expected, but the Chicago-based map provider has been an acquisition target since navigation device maker TomTom offered to purchase Navteq rival Tele Atlas this summer for just over $2 billion. Navteq is one of the largest providers of digital mapping services, and Google was seen as a likely suitor. The world's No. 1 handset maker stepped in instead, leaving Google and any others fairly slim pickings in terms of acquisition targets now that the two biggest LBS companies have been snatched up.

LBS will be in higher demand by a whole host of industries beyond mobile phones, namely business that sell, well, anything, Gold said. Auction sites, like eBay for example, could find location services helpful in authenticating mobile purchases from its site. And companies such as Google, Yahoo and Microsoft that are targeting advertisements will always want more specific information about consumer characteristics, preferences and locations to tailor their messages.

The technology to do this is already available, but for the most part, it is not yet linked to an individual's specific location. The availability of GPS chips in devices is the main barrier in mainstream adoption. "We're very GPS-poor from a device standpoint," especially here in the U.S., said Gold.

CONTINUED: GPS chips getting cheape…
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11 comments

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Who is next??
To my opinion the takeovers of Navteq and TeleAtlas are very expensive. Would it not be more logical to buy small companies who are able to use produce these maps as well at much lower cost and with low cost productions technologies? Just look at what the opensource people from OpenStreetMap have already been doing.

I am thinking about companies like AND Automotive Navigation Data from the Netherlands or Europa Technologies from the UK.

Anyways, I would be surprised if neither Garmin, Microsoft, Google, Apple, etc would not respond in any way.
Posted by ScottD74 (2 comments )
Reply Link Flag
There is no "next".
TeleAtlas and Navteq are it.

Its very expensive to literally map the globe and get the details that they do.

From the news.com other stories, I don't believe that these are done deals and that in both the TomTom and Nokia acquisitions, there still could be a bidding war.
Posted by dargon19888 (412 comments )
Link Flag
AND is a customer of the big 2
So you won't buy much new date, except for some minimal local data.
Like the other poster said, there is no number 3 of worldwide significance. The investment to create a full blown worldwide database is simply too big in the current corporate culture (fast growth, minimal costs). It takes years to build a geographical database, with huge resources involved (both technological as human), no company is willing to pour money into creating a third provider...
I took a look at OpenStreetMap, and while I really like the OSS idea behind it, there is no way this will ever grow into a product comparable to what Navteq or TA are doing
Posted by Steven N (487 comments )
Link Flag
Wrong: Tom Tom did not buy Tele Atlas *YET*
<a class="jive-link-external" href="http://www.news.com/Dutch-TomTom-launches-formal-offer-for-Tele-Atlas/2110-1036_3-6211127.html?tag=item" target="_newWindow">http://www.news.com/Dutch-TomTom-launches-formal-offer-for-Tele-Atlas/2110-1036_3-6211127.html?tag=item</a>
Posted by TV James (680 comments )
Reply Link Flag
You are correct
Thanks for catching that! The error has been corrected.
Posted by ericaatnews (52 comments )
Link Flag
Device Poor? Not Really
"The availability of GPS chips in devices is the main barrier in mainstream adoption"

Not really...all mobile phones since 2002 have come location-enabled due to the FCC mandate around mobile e911. In fact all CDMA phones (Verizon, Sprint, Alltel) have AGPS chipsets allowing for very accurate location fixes. The barrier to entry as always is the business case. Out of any country in the world, the US is the farthest along regarding location-capable devices...Not always GPS, but AGPS and the like. More information on the FCC mandate is here: <a class="jive-link-external" href="http://www.fcc.gov/Bureaus/Wireless/News_Releases/2001/nwl0127a.pdf" target="_newWindow">http://www.fcc.gov/Bureaus/Wireless/News_Releases/2001/nwl0127a.pdf</a>
Posted by omahasandman (2 comments )
Reply Link Flag
New technologies around the corner
There are other companies out there to keep an eye on. GPSImaging.com might be next?
Posted by Manhattan2 (329 comments )
Reply Link Flag
ergonomic designs for LBS
The next phase of developments in LBS will likely be

1)how to measure the rate of mobile multimedia consumption and
2)whether mobile handsets are ergonomically suited for mobile multimedia
3)how to harness vehicle dashtop to synergize mobility and the speed of multimedia
4)how to identify a new generation of mobile devices that can cope with battery life, screen sizes and ergonomic features suitable for users on the go, particularly at the wheel.
Posted by Quemannn (76 comments )
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Impact on the Future of LBS
Nokia + NAVTEQ is a very important deal for the future of not only LBS, but mobile. Mobile and LBS will become so closely intertwined that it will be difficult to tell them apart. I am an LBS consultant and wrote an analysis on the deal and its future potential impact here: <a class="jive-link-external" href="http://www.gpsbusinessnews.com/index.php?action=article&#38;numero=408" target="_newWindow">http://www.gpsbusinessnews.com/index.php?action=article&#38;numero=408</a>
Posted by swedeeb (1 comment )
Reply Link Flag
AND
As far as I know AND is not a customer of the big 2. In the past they may have been customer of them, but not anymore. They are independent and deliver their date next to i.e. TeleAtlas en Navteq.

Look at some regions in the maps of Microsoft/Google.
Posted by ScottD74 (2 comments )
Reply Link Flag
 

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