I’ve long been impressed with the data collection efforts of TeleAtlas and NAVTEQ, but the latest bidding war over TeleAtlas between Garmin and TomTom has me thinking a few things. Is it necessary to own the data, and couldn’t you build the data for under $3 Billion?
Owning the data provider gets rid of licensing fees, but:
- By owning the provider, you run the risk of sharply curtailing the licensing model that these companies have been built on. Case in point in Garmin’s interest in TeleAtlas when faced with licensing data from a rival.
- Licensing the data gives you a third party to blame if there are inaccuracies or omissions, shielding your brand from repercussions if users find fault with the data.
- New data companies are highly likely to enter the game, creating a competitive market that could quickly devalue the investment.
- Ongoing investments in data collection and content draw away from core device manufacturing business.
I realize that a global data set would take considerable time and effort, but investing in a data creation effort from scratch might be worthwhile because:
- Technologies to capture geospatial data and automate the data validation and attribute information are far more advanced than when these two companies started.
- A great deal of local high-accuracy data is available for purchase or license through various public and private sources.
- Amalgamating data from many different smaller partners might give you adequate accuracy and coverage, particularly when traditional paper map companies are increasingly likely to license their data. Case in point is Magellan’s deals with National Geographic for their TOPO maps and AAA for their TourBook traveler information.
- The purchasers of NAVTEQ and TeleAtlas will need to continue licensing their data for some time to come, giving at least a few year’s worth of time for a device manufacturer to build their own data set.
I don’t question the device manufacturers interest in data providers, given the mobile aspirations of Google and Microsoft, who both have considerable map data holdings. I do question the valuation and business case for these purchases. Regardless of outcome, the purchase of the two leading geospatial data companies for huge sums is a beneficial signal of the increasing value of the geospatial industry.
{ 1 trackback }