Nokia to take $6bn bath on Navteq following AlcaLuc purchase

Tells navigation business to get lost

Navteq vehicle in Oxford

When Nokia sold its handset business to Microsoft, one question which was asked was “why didn’t the mapping business go at the same time?” That echoes with the confirmation of rumours that a sale was in the offing.

The company has issued an announcement stating “Nokia has initiated a review of strategic options for its HERE business”, which means it’s looking to offload the division. HERE is what became of Navteq after Nokia bought the mapping company in 2007 for $8.1bn.

Even in the times of heady growth that was an astonishing amount of money, coming as Nokia shaped up to go head-to-head with TomTom - which at the same time bought TeleAtlas for $2bn.

The reason given for the change of heart is that having spent $15.6bn on Alcatel-Lucent, Nokia now needs to concentrate on the infrastructure business. You have to wonder why this was not the case before because the infrastructure business was always much bigger than mapping.

It also begs the question as to where Nokia's priorities lie with its telematics business, as it announced last May that it was re-entering the automotive telematics arena, something it had sold off in 2008. As the new telematics venture falls under Nokia Growth Partners it won’t be bundled in with HERE, but will lose some of the advantages of internal links.

The rumoured price tag is $2bn, which leaves the company looking at a massive loss. Depending on what Nokia gets for the business it could be a much bigger chunk of change than just the amount spent on Navteq. Nokia developed quite an appetite for mapping and location companies, swallowing Earthmine, Gate 5, Plazes and MetaCarta.

HERE has a good revenue stream from companies which licence the maps as technology. Likely candidates for the purchase include Uber, Private Equity – which was the route by which Nokia disposed of its Vertu brand – and to car manufacturers.

Given that Microsoft didn’t absorb the mapping last time around it would seem unlikely that Seattle is on the list of places for the sales people at Nokia to visit. ®

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