Amazon Gives Nokia Investors a Huge Shot in the Arm
Sep 4th 2012 12:39PM
Updated Sep 4th 2012 12:46PM
Amazon.com (NAS: AMZN) continues to make moves in the mobile space, with a big one set for this Thursday when it will unveil its second-generation Kindle Fire. Mobile devices began disrupting the GPS industry long ago by including map functionalities and services. Most recently, the two most dominant players in the industry -- Google (NAS: GOOG) and Apple (NAS: AAPL) -- took this to the next level when each unveiled new 3-D rendered maps for their respective platforms.
Amazon's first Kindle Fire had no native first-party maps apps integrated directly into the device, a potential disadvantage relative to its Android and iOS rivals. Earlier this summer, the company acquired 3-D mapping start-up UpNext, which has apps on numerous platforms, so you know maps are on its radar figuratively and literally.
Source: UpNext. Screen shot of UpNext HD Maps Tablets on Android.
That deal just happened, so it will take time to bear fruit. In the meantime, Amazon needs someone to fill that gap. Instead of going with Google's mapping service, Reuters reports that the e-tail giant has picked Nokia (NYS: NOK) and its Navteq division. Even though Amazon uses Android, it has hijacked the OS for its own purposes, so tapping Google Maps isn't a viable option. It's possible that this deal may even resemble the one between Apple and Google from so long ago (before the pair's relationship turned sour).
When the iPhone first launched, Apple tapped the backend of Google Maps while creating the app frontend in-house. Only recently has Apple ditched Google Maps behind the scenes in favor of its own offering. Amazon has already created numerous other native first-party apps, so it could easily muster up an app if only it had the backend service. That's where Nokia could come in.
But don't expect this deal to translate too meaningfully for Nokia. At just 3% of sales, Navteq is relatively insignificant compared to its device and network businesses.
This deal makes plenty of sense for Amazon. Tap Nokia in the short term for the backend, build up the frontend app, and then substitute Nokia when a fully integrated in-house offering is ready for prime time.
Good move, Mr. Bezos.
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The article Amazon Gives Nokia Investors a Huge Shot in the Arm originally appeared on Fool.com.Fool contributor Evan Niu owns shares of Apple, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Amazon.com and Apple. Motley Fool newsletter services have recommended buying shares of Google, Apple, and Amazon.com. Motley Fool newsletter services have also recommended creating a bull call spread position in Apple. The Motley Fool has a disclosure policy.
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