The digital taxi-ordering service Uber has announced its intention to buy Nokia’s mapping service, HERE, from the phone maker. While some have questioned the move, Uber is continuing unabated and has so far put $3 billion on the table for Nokia to drool over. While not confirmed as of yet, Nokia is expected to accept, since it is eyeing a $16 billion bid for French global telecommunications equipment company, Alcatel-Lucent.
“It’s an unusual and huge acquisition, but everything about this company is outsized and unusual,” said Max Wolff, chief economist at Manhattan Venture Partners (via MarketWatch). Indeed, although Uber has only been around as a firm for six years, it’s already worth around $41 billion due to its huge international expansion and continued heavy investment from venture capital firms and individuals around the world.
The big reason Uber is gunning for Nokia’s HERE mapping system though, is to give it some independence. Despite being an enormous organisation in its own right, with a successful business at its core, it’s still very dependant on Google for much of its tracking technology. If the Nokia bid is successful, it will be able to stand alone, which considering Google’s interest in developing automated vehicles and its own taxi system in the future, is likely to be a good idea. How helpful would Google be likely to be if it was competing with Uber’s flagship service?
It could also promote new business options for Uber, as it could then sub-contract its mapping system to other companies and there is some suggestion it is already doing so. Uber has announced a deal with Carnegie Mellon, to develop its own driverless vehicles, so one day it may compete directly with Google and the many other automotive companies that are pursuing a driverless future.
Another reason Uber is considering the Nokia purchase though is beyond specific business ventures and instead a way to further legitimise the company. With a stockpile of data and a more versatile corporate image, Uber would do better if/when it is floated on the stock exchange.
It may not become that company though, as other firms including industry heavy-hitters like BMW are also ready to throw billions Nokia’s way if is willing to give up its HERE service. We know it is, so it’s only a matter of time now before some company gets given the go ahead, the question is, which one?