Map-Making Firms Rumored to Sell for Billions

The latest hot segment of the technology business appears to be maps.

MapQuest, Yahoo! Maps and GPS (global positioning system) navigation in cars are very popular, and all of those maps came from one of just two mapmaking companies.

Both of those companies now are being snatched up by bigger companies for billions of dollars.

Creating a digital guide to the world's highways and street addresses may be the cutting edge of technology, but it is also just long hours on the road.

Jeremy Onysko's orange van has four digital cameras mounted on the roof. They are snapping pictures every 30 feet — recording road signs, lane markings and anything else a driver might need to know.

"All this different kind of signage, on ramp, off ramp; this is all something that you may want to know about as you drive up here," says Onysko.

Painted on the side of this van is the silhouette of a child riding on a flying goose. It is the logo of Tele Atlas, a company based in Belgium. It is also one of the two companies assembling a digital map covering most of the world. The other company is NAVTEQ, which is based in Chicago.

This mapmaking duopoly started to unravel last summer. The Dutch company, TomTom, which makes GPS navigation devices, offered to buy Tele Atlas for more than $2 billion.

And, last week, the world's biggest cell phone maker — the Finnish company Nokia — announced that it was ready to pay $8 billion for NAVTEQ.

"I was very surprised by it," says David Niederman, a senior research analyst with Pacific Crest Securities in Portland, Ore.

He thought an offer for NAVTEQ might come from a company that uses maps right now — like a GPS device maker or an Internet player like Google or Yahoo!.

Nokia represents a huge potential market down the road: hundreds of millions of cell phone users.

"So, if you're lost, your cell phone can tell you where you are, and how to get where you want to go," says Niederman.

It could also tell you where your cell phone-carrying friends are, or lots of other things about what is nearby.

Since the Nokia announcement, officials in the mapmaking industry have been speculating about the shape of their future world if both these deals go through.

Many wonder whether Nokia and TomTom might restrict access to these maps, denying them to competitors.

Nokia says it will not do this, and Niederman agrees that is not likely.

But, he says, Nokia probably will push for a map that is most useful for its customers all around the world.

"Nokia may push NAVTEQ to invest more heavily in emerging markets, such as, Latin America or India, where they are more likely to use digital maps on their handsets, as opposed to in their cars," he says.

Others wonder whether Nokia will ever make much money on cell phone maps.

There are numerous obstacles, and some are technical. Niederman says a phone that does all the company envisions may be very expensive.

"If you're Nokia, you really need robust GPS, robust processing power," Niederman says. "So, it's a powerful minicomputer that you need, disguised as a cell phone."

There is also a business challenge. Companies that operate the cell phone networks — like Verizon and Cingular — are offering mapping services, too. And they may not want their customers using Nokia phones that do the same thing, perhaps more cheaply.

Those cellular carriers that want to provide maps, though, will have to buy them — perhaps from Nokia.

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