Mobiles for mapping - Nokia's new initiative adds to the usability of the device

Nokia, the world's largest maker of mobile phones, made a huge play for this emerging technology by agreeing to buy Chicago-based digital mapmaker Navteq Corp. for $8.1 billion

Pretty soon, you're going to have to work a lot harder to get lost.

The emerging technology of digital mapping, once reserved for the likes of airline pilots and spies, already has caught on as a dashboard device and now is set to make getting detailed directions as routine as flipping open your cell phone.

On Monday, Nokia, the world's largest maker of mobile phones, made a huge play for this emerging technology by agreeing to buy Chicago-based digital mapmaker Navteq Corp. for $8.1 billion. It is a bet that the majority of consumers soon will expect their phones to not only make calls and take photographs but to lead the way to the nearest coffee shop.

"It's just in the infancy of what we think will ultimately take place," said Judson Green, chief executive of Navteq, which posted sales of $582 million last year.

The mobile phone, once a humble maker of calls, continues to add functions to a hand-held device that now frequently plays music, sends e-mail and provides Internet access.

Consumers, particularly in the U.S., have been cautious about adopting some of these functions. While 64 percent of cell phone owners have used a text-messaging service, only 2 percent have used their phone to find where they are going, according to JupiterResearch.

Nokia clearly believes the popularity will increase, which explains the rich premium it is paying for Navteq. Nokia already includes a mapping function on its higher-end phones that include a global positioning system, or GPS, along with access to a mapping database that shows up on the phone's screen in intricate detail.

In the next few years, that technology is expected to trickle down to lower-end phones, much like camera phones started out as high-priced gadgets and now are a commodity. To date, cell phones represent a small piece of Navteq's business, behind dashboard devices and other hand-held GPS units.

"It's all about context, how do people want to use their phones?" said Julie Ask, who covers the cell phone industry for JupiterResearch. "If I'm regularly driving to different places, I'll probably have an in-car device with me. But if I'm walking about and I want to find a restaurant, I'll always have my phone."

Navteq, formed in 1985, has seen its sales grow dramatically since 2001, when stand-alone mapping devices, those mounted on a car's dashboard, for instance, became more affordable. The company creates digital maps of cities and other locations worldwide for use on any number of gadgets, as well as Internet-based mapping services offered from MapQuest and Google. The company's mapping teams have completed 69 countries, from Chicago to Europe and beyond.

Navteq went public three years ago, in August 2004, and has seen its stock price triple. Nokia is buying the company, which employs 675 people in Chicago, for $78 a share in cash.

"Many people want a device that is all in one," said Jessica Myers, a spokeswoman for Garmin Ltd., which makes GPS devices that rely on Navteq's maps.

Garmin has seen year-over-year revenue grow for 17 straight years. But while the majority of the 70 GPS devices it is introducing this year while be stand-alone products, the company also has new products that work with mobile phones.

One, the Garmin Mobile 10, uses Bluetooth wireless technology to send map data and real-time traffic information from a dashboard-mounted device to a mobile phone. It costs $200, significantly less than many dashboard GPS units, and there are no monthly fees.

Myers said there is no "uncomfortable feeling" that Garmin's long-term map provider was bought by Nokia; the stock market thought otherwise, sending Garmin's shares down 10 percent.

Still, Nokia does not plan to sequester Navteq for its sole use. While the deal is a bet that cell phone navigation will be a must-have service for legions of consumers, it also is part of an attempt by the Finnish company to move beyond its core phone manufacturing business into a new frontier: software and services related to mobile phones.

For Navteq, the deal should allow faster growth at a firm that is the dominant force in digital mapmaking. The company will remain based in Chicago, where it has been one of the area's highest-profile tech-industry success stories.

The deal also marks, in a sense, the arrival of Nokia in the backyard of its archrival, Schaumburg-based Motorola Inc. The company's cell phone division has had a rough year and is expected to lose money. Analysts say Motorola, even if it wanted to, would have trouble doing such a deal for Navteq, given the shape of its phone business.

One reason mobile mapping is poised to take off is because of the U.S. government's enhanced 911 rules that govern mobile phones. Essentially, emergency services must be able to find people if they are calling from a wireless phone, so the chips used in new mobile phones have GPS capabilities.

This has enabled phonemakers and wireless carriers to start offering more mapping features as well as drive revenue for such services.

"They are all trying to figure out how to take advantage" of what the chips in phones can do, said Mark McKechnie, a telecommunications analyst with American Technology Research. "There's a whole plethora of advertising that can go with it too. You can get someone to drive to the Starbucks one mile away."

And then there's Apple. The impact the iPhone has had on mobility in such a short time should not be overlooked, McKechnie said, and may have played a role in this deal. With the iPhone, Apple came up with "a neat proof of concept, and the rest of the industry is trying to fight back."

One way Nokia is doing so is by offering more services directly on the phone and going straight to the consumers, like Apple. AT&T Inc., the iPhone's carrier, has very little say on the features to be included on Apple's phone, McKechnie said.

Likewise, "this is Nokia trying to compete" by putting services ranging from mapping to accessing music downloads (expected shortly in Europe) on its phone.

"They want to own the customer," he said.

Source : Chicagotribune.com