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iSuppli: TomTom/Tele Atlas Is Takeover Target

10/18/2007 08:39:00 AM Eastern

El Segundo, Calif. — GPS supplier TomTom is a prime takeover target for Microsoft or Google, said research firm iSuppli.

TomTom’s allure is that it’s in the process of buying Tele Atlas, one of only two key GPS map makers.

iSuppli “believes that Google has a greater motivation to buy TomTom/Tele Atlas than Microsoft due to its desire to offer mobile location-based services.”

In the past 90 days, map makers have been thrust into the spotlight when TomTom placed its bid for Tele Atlas for 2 billion Euros in July, followed by Nokia’s bid for Navteq for $8.1 billion, announced October 1.

“Nokia’s $8 billion bid to buy Naveteq Corp. illustrates the critical position that the two independent holders of map IP with broad geographic coverage now occupy in the global navigation market — and may presage even larger acquisitions in this area,” said iSuppli.

The stakes in navigation are high, with 40 companies now offering navigation in the form of personal navigation devices (PNDs), in-dash automotive devices, smartphones, etc., said iSuppli.

Worldwide PND shipments will rise to 50.4 million units in 2010, up from 12.7 million in 2006, it said.

But while there are many GPS suppliers, there are only two map makers and PND device makers seeking to differentiate their products, have found it difficult when all are using one of two map companies. This realization “changed the status of map IP companies from wallflowers to the belles of the ball,” said iSuppli, claiming this it the key reason TomTom sought to buy TeleAtlas, which then placed the spotlight on Navteq.

Google needs maps to become a key provider of location-based services, particularly as it seeks to send advertising to cellular phones. Google would therefore need to “know” the location of those phones, said the research firm. Microsoft, to a lesser extent, would also gain from such an acquisition, iSuppli added.