Nokia exits consumer space with €2.8bn sale of HERE maps

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Consortium of German car manufacturers AUDI AG, BMW Group and Daimler AG snap up Finnish firm’s mapping arm 

Nokia has agreed to sell its mapping arm HERE for €2.8 billion (£1.9 billion) to a consortium of German car manufacturers including Audi, BMW and Daimler.

The Finnish manufacturer confirmed the sale after months of rumours around the HD mapping and location services division following a strategic review announced in April.

The review was part of Nokia’s proposed merger with Alcatel Lucent and the sale marks the Finnish firm’s departure from the consumer space altogether. HERE screenshot

HERE, formerly Ovi Maps (2007-11) and then Nokia Maps (2011-12) was formed following Nokia’s £5.5 billion acquisition of Navtel.

It had revenues of €969 million £681 million) in 2014, accounting for around 10 per cent of Nokia’s entire business.

Nokia CEO Rajeev Suri said: “With this step we complete the latest stage of Nokia’s transformation. We integrated the former Nokia Siemens Networks, divested our Devices & Services business, and have now reached agreement on a transaction for HERE that we believe is the best path forward for our shareholders, as well as the customers and employees of HERE.

“Going forward, we will focus on our planned combination with Alcatel-Lucent. Once that is complete, Nokia will be a renewed company, with a world-leading network technology and services business, as well as the licensing and innovation engine of Nokia Technologies.”

The mapping system competes directly with Google Maps and already has a strong presence in the automative industry. According to Nokia, 13 million cars shipped with HERE navigation technology in 2014. Nokia claimed HERE maps could be found in four out of five cars manufactured in the UK and the US that year.

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HERE has existing agreements with with a number of top car manufacturers including BMW, who will now own a third of the company, Toyota and Mercedes.

The HERE deal is expected to be completed by the first quarter of 2016 and will see 6,500 employees transferred from the Finnish firm.

“I believe today’s announcement is a very good outcome for HERE, its customers and employees,” said HERE president Sean Fernback.

“The new ownership structure of HERE will allow us to accelerate our strategy, further scale our business and fulfill our intent to become the leading location cloud company across industries.”

Where does Nokia go from Here?

The deal means Nokia no longer has any direct consumer operations. The manufacturer, best known for building some of the most popular handsets before the dawn of the smartphone, sold its device-making business to Microsoft for £4.6 billion last year.

The planned Here divestment would leave the company with only two business units: Networks, and the much smaller Nokia Technologies group (which licenses and develops new technologies).

CCS Insight analyst Peter Bryer said in a blog on the companies website: “Nokia’s decision to invest so much in location assets seems misguided in hindsight, but it’s worth noting that the company controlled about half the global market for smartphones when it acquired Navteq. The acquisition might have now appeared astute had Nokia maintained its dominance, given the cost of licensing maps per device, the forecast volume surge of smartphone sales and the lack of other options.

“Few companies have reinvented themselves as Nokia has. It’s a new heightened level of focus for the Finnish company that, at least for the time being, is leaving the mobile devices industry behind it.

“Nokia will take on a very different business structure to the one it had just a few years ago. The company morphed from a wide conglomerate to a mobile enterprise, and is funnelling itself down further to one main area.

“Its concentration on the infrastructure business leaves Nokia a larger but more focused company — more narrowly focused than it’s been in many years. The mobile industry’s transition to 5G is the next big area of opportunity, and the company has options to make use of its extensive IP portfolio and product expertise as a smaller but interesting aspect. This is where Nokia goes from here.”

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