Navteq and other competitors
But the ruling of the European Commission is also good news for Navteq, because we can now expect a positive outcome from the EC with regards to its acquisition by Nokia; it would be surprising to see the Commission imposing conditions to Nokia when it did not to TomTom.

Additionally, these two deals will open a window of opportunity for smaller players on the digital map market. The fact no condition are imposed to TomTom by the EU regarding fair access to the map data, fair price and confidentiality will probably push some customers of digital map providers to consider alternative choices at a local or continental level.

These competitors to Tele Atlas and Navteq are essentially two types: the first type is made of local players in emerging markets that have often developed maps for one country; the second type, illustrated by AND and Facet Technology is developing continental-wide coverage in developed markets. Because the biggest part of the map data market revenue will continue to stay in North America and Western Europe in the short term, Facet Technology and AND are likely to be the main concern for Navteq and Tele Atlas.

Low cost map data?
Netherlands-based AND will have completed its turn-by-turn map coverage of Western Europe by the end of 2008 and expects to do the same in the United States in 2009. Maarten Oldenhof, CEO at AND is openly claiming he wants to sell his data at a rate “50% lower” than Tele Atlas and Navteq.

US-based Facet Technology will release this summer its first continental map of the United States (read more here) and intends to start mapping out Europe next year. Andrew Munyon, vice president business development at Facet technology also stated its map data would be at “a much more attractive rate” than the existing providers.

In the short term it is difficult to believe any major automotive OEM would switch to AND or Facet, both because they have long term contracts and product cycles and they are probably more sensitive on quality than on price. But on the PND market where margins are shrinking and on the cell phone navigation market where the map data is a large part of the cost, a “much more attractive rate” means a lot.

In consequence we can expect these new digital map providers to help further fuel the price drop in the PND market, if not in 2008, in 2009. Low cost PND manufacturers will be the first to jump on this opportunity to make their prices even lower and save some margins. However, AND and Facet Technology are still today small companies with limited commercial and marketing reach. Facet Technology has less than 100 employees and AND has a staff of 250 people but most of them are mapping specialists based in India. In comparison Navteq headcount is 3,500 and Tele Atlas 2,500. Additionally, the quality of AND and Facet Technology map data has still to be proven in the field for turn by turn navigation.

The unconditional approval of the Tele Atlas acquisition by the Commission is definitively shuffling the cards of the digital map market. TomTom and Nokia will give a new face to their acquisitions while new entrants attack the market with two strong cards: independency and low cost.



To read a previous story on this topic click here: A third way beyond Navteq and Tele Atlas?