TomTom which started all this acquisition frenzy is obviously winning Tele Atlas and, despite a higher price, will implement its strategy to improve Tele Atlas maps with its user-generated map update technology. Tele Atlas shareholders are obviously smiling, the valutation of the company has almost doubled since the beginning of July. So are Navteq shareholders who have seen the same fate happened to their stocks which climbed from less than US$45 in July to US$76 today (Nokia offer is $78 per share). Nokia is paying a high tag for Navteq, but the financial situation of the company is excellent and with the long term agreement signed with Garmin (until 2015 with an option until 2019) the future looks even brighter.
At first sight Garmin could be seen as a loser in the game. But it is not. First it pushed TomTom to raise its offer for Tele Atlas by €1.1 billion. Second its bid on Tele Atlas surely allowed the negotiation of good conditions with Navteq for its long term contract. Third the company is left with many options. Indeed, now that the bidding war on tele Atlas is over it is time to get back to reality. For sure the map data is a critical part of a navigation device, but over estimating its value is showing little understanding about the market. What makes TomTom and Garmin the companies they are today? Is it the map data? No, it is not. Superior software, hardware, sales and marketing have made what these companies are today while some others have failed using exactly the same maps.
How is it going to be tomorrow? We guess more or less the same. TomTom was willing to diversify and buying Tele Atlas allows to leverage the data collected actively or passively by its customers. This is fine but this is not - by far - the only way to diversify from the PND market. They are still a lot of opportunities opened for Garmin. Many commentators argue that Garmin will be left apart from the cell phone market. This is to forget Garmin has 1 billion dollar cash in the bank and many investors in cell phone navigation companies such as TeleNav, Networks in Motion (NIM), Jentro, Telmap or Wayfinder might be interested to cash in now that the market is taking off.
Owning a map data provider might be an attribute of power, but is it an attribute of success? Only the future will tell…