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Nokia's HERE Maps Sold For $3.2 Billion To Audi, BMW and Daimler
vivaoporto writes: Nokia announced an agreement to sell its HERE digital mapping and location services business to a consortium of leading automotive companies, comprising AUDI AG, BMW Group and Daimler AG (Mercedes brand owner). The transaction values HERE at €2.8 billion ($3.2 billion) with a normalized level of working capital, and is expected to close in the first quarter of 2016, subject to customary closing conditions and regulatory approvals. Once the mapping unit is sold, Nokia will consist of two businesses: Nokia Networks and Nokia Technologies. The first will continue to provide broadband services and infrastructure while the second will work on "advanced technology development and licensing."
Reader jppiiroinen notes that Nokia originally acquired digital mapping provider Navteq in 2007 for $8.1 billion. Once it merged with Nokia, it became the foundation of Nokia's HERE unit.
8.1 to 3.2
Sounds about right when it comes to Finnish business :)
Hopefully this doesn't mean the death of the Here Maps Android application which allows you to easily download and nav without an internet connection.
The auto giants are in their typical auto giant mentality. "Ha, ha, haa, this chump has plunked down 25, 35 or 45 K to buy our car right? Now we can squeeze him dry. Want a nicely integrated map/system with the car audio and built in screen? That is special-nav package 3200$ for you. And we will stick you up for 200$ a year for map upgrades".
Google on the other hand gives me traffic update that is so granular and so up to date it boggles ones mind how they do it. Google paints the highways yellow, green or red, each section between exits gets independent updates. Last week, there was an accident in a non freeway some three lights ahead of us. The google map clearly showed the backup exactly up to the point, told us there is an accident ahead. It seems to be using some real time data about the number of cell phones passing in and out cell towers to determine the backup. Against this, goes our European wonders who bought Chrysler for 36 billion dollars and then sold it to Fiat for 6 billion dollars!
Google/Android is working towards an integrated auto-infotainment system standard. Apple is muscling in. Once the standards are published by SAE it is curtains for the auto industry selling GPS system at 2000% markup.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
Against this, goes our European wonders who bought Chrysler for 36 billion dollars and then sold it to Fiat for 6 billion dollars!
Daimler did not sell Chrysler to Fiat. They bought Chrysler in 1998 for $38 billion. They sold Chrysler to Cerebus Capital Management in 2007. Fiat bought their interest in Chrysler in 2009 alongside the bankruptcy and they did not acquire a majority interest until fairly recently.
Google/Android is working towards an integrated auto-infotainment system standard. Apple is muscling in. Once the standards are published by SAE it is curtains for the auto industry selling GPS system at 2000% markup.
I can assure you that they've never managed to sell a GPS system "at 2000% markup" even though the price does seem outrageous. To understand why you have to understand product costing in the auto industry. The auto industry does not do huge volumes of consumer electronics like GPS systems. This means their unit prices are rather high. Furthermore each GPS system is to a non-trivial degree customized for the vehicle it is going into which makes the price quite a lot higher. This means that that $2000 GPS option actually probably costs a substantial percentage of that price because they don't sell enough of them to get the cost down lower.
My company makes parts that go into some of the custom wiring harnesses for things like this. Best case they are probably making about a 2-3X markup on the GPS option depending on the volume of the vehicle it goes on. Chances are good they are making less than that especially if it is standard equipment. Remember that even the most profitable auto manufacturer in the world (currently Porsche) has something like 10% net profit margins. So no they aren't making "2000% markup" on pretty much anything.
If you want to know what a part really costs to make, go to your automotive dealer and see what price they are selling it for as a service part. As a crude rule of thumb the markup from manufacturers cost is usually around 6-8X. So for example my company sells a wire harness to our OEM customer for about $2. If you could buy that harness from your GM dealer it would probably cost you about $35-55 retail. Basically the harness goes through somewhere between 2 and 5 suppliers and each one marks it up by around 10-30% along the way. Then when the dealer gets it they basically double whatever price they paid for it (sometimes more) which gets you to a roughly 6-8X the original cost to build.
When Nokia bought Navteq they bought one of two global mapping companies, for about US$ 7.5 billion. For that they got, almost immediately, free maps for every Nokia handset. Around the planet. Also data sets for some industry leading augmented reality. Those services were, and are, huge. They sold lots of handsets and led the way to lots of Microsoft collaboration (Windows Phone et al comes with Nokia Here built-in.) That eventually led to Microsoft buying the phone unit outright. Did Nokia lose money selling Here off? Maybe, maybe not. They sold lots of handsets around the world featuring Here. That augmented reality wowed lots of folks and sold some more, plus positioned Nokia products as forward looking. They sold some online mapping to websites, though that was probably not a big revenue stream. They eventually sold the failing phone unit (and kept Here!) So they got a lot of milage out of Here, maybe US$5 billion. Going forward, I hope the new owners keep the consumer editions of Here. I'm off to Glacier Nat'l Park next week, and have Here loaded on all my handsets. The iPhone has just the states I regularly visit preloaded. One of my Android handsets has all of North & Central Americas preloaded, for fast travel convenience. I'm used to sering legions of befuddled tourists wandering around national park attractions confused their smartphone maps (Google Maps & Apple Maps, both largely dependant on streaming maps) aren't working. I used to bring a Windows phone along explicitly for those situations, now I just load Here. Oh, and why not carry a dedicated GPS unit? They don't come with cameras, translators, phones, email, etc. Their maps? Likely sourced from, yes, Here.
I don't read ACs: If a post isn't worth so much as a nom de plume to its author then I wont bother either.
GM engineers are famous for their complete incompetence. Just look at the ignition-key fiasco. There's no way in hell I'd buy a GM. I even thought about it once; I thought that a few decades was enough to forgive them for their past atrocities in automobiles, and that their new cars were worth taking a look at again, and then the ignition-key fiasco came up in the news. That was the end of that idea.