MotoringFile Most liked posts in thread: AUDI, BMW & Daimler Agree to Buy Nokiaâ€™s HERE Digital Mapping Business

Nathan · Aug 4, 2015

Here is the why...

SAN FRANCISCO -- If the global supply of steel, rubber or oil was about to fall into the wrong hands, car companies would be awfully scared.

It’s the reason the OPEC oil embargo of the 1970s sent the auto industry on a scramble for alternatives. It’s the reason that Henry Ford, sick of doing business with a British monopoly, tried setting up his own rubber plantation, Fordlandia, in the Amazon rainforest. It’s the reason China’s control of the global supply of rare earth minerals, which are crucial to electric cars, is seen as a new geopolitical risk.

And it is the exact same reason that Audi AG, BMW AG and Daimler AG, which compete against one another so fiercely in selling cars, were willing to set aside their differences and build a consortium to acquire HERE, the mapping unit of Finnish telecom company Nokia.

High-quality digital maps, which will play a crucial role in the connected, automated cars of the future, have basically become a critical resource to the auto industry -- the new oil.

There are a few map suppliers, but none are as big as HERE, which claims to provide maps for 80 percent of cars with in-dash navigation systems. Along with TomTom and Open Street Map, a new alternative that relies on public contributions the way Wikipedia does, HERE is the only real alternative to doing business with Google Inc.

Under the acquisition proposal, announced Monday, the German automakers would pay 2.8 billion euros ($3.1 billion) for control of HERE, which would continue to be run by independent management.

They say they aren’t trying to keep the company’s maps for themselves or raise prices to competitors to extract profit. Instead, they say, they are treating maps like a public utility for the industry’s common good.

“With the joint acquisition of HERE, we want to secure the independence of this central service for all vehicle manufacturers, suppliers and customers in other industries,” Daimler CEO Dieter Zetsche was quoted as saying in a joint statement.

To be sure, digital maps aren’t a physical commodity like oil. They are hardly tied to geopolitics. There is no danger of a hostile nation pinching off the world’s map supply.

Yet maps are a scarce resource.

Building a map database that is sufficiently detailed and reliable to be useful is a hugely expensive endeavor, which sets up enormous barriers to entry for anyone who might wish to compete against the owners of existing map databases.

If the world’s entire supply of roadway maps were to be owned by companies that do not share automakers’ core interests -- say, by Apple and Google -- it could have huge consequences for the evolution of the auto industry.

The strategists at Audi, BMW and Daimler deserve credit for recognizing this risk and mobilizing the resources to neutralize it. Now the rest of the industry must hope that the German automakers will make good on their word and sell HERE’s maps to the rest of the industry as a public good, rather than becoming monopolists themselves.
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http://www.autonews.com/article/20150803/BLOG06/150809974/here-acquisition-shows-maps-are-the-new-oil?cciid=email-autonews-daily

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MotoringFile Most liked posts in thread: AUDI, BMW & Daimler Agree to Buy Nokiaâ€™s HERE Digital Mapping Business

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