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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 $8.1 billion. Once it merged with Nokia, it became the foundation of Nokia's HERE unit.
Hopefully this doesn't mean the death of the Here Maps Android application which allows you to easily download and nav without an internet connection.
The auto giants are in their typical auto giant mentality. "Ha, ha, haa, this chump has plunked down 25, 35 or 45 K to buy our car right? Now we can squeeze him dry. Want a nicely integrated map/system with the car audio and built in screen? That is special-nav package 3200$ 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.