Vodafone to Acquire Wayfinder for $29.4 Million

Vodafone’s acquisition of Wayfinder is highly interesting, especially as it comes in the middle of an economic downturn. It represents another move towards vertical integration in the wireless and location industries following earlier moves by TomTom and Nokia to acquire digital map providers though the size of this deal is dwarfed by the previous ones.  

 

If anything, this announcement shows that market leader Vodafone has no intentions to become a dumb data pipe just yet, positioning itself as a service and content provider. It also represents a clear move from a European carrier towards an aggressive LBS strategy after years of waiting and seeing. In fact, carriers acquiring off-board navigation providers makes a lot of sense as there are clear possibilities for synergies such as including navigation in data bundles, providing network-based location assistance services and offering flat fee roaming tariffs. 

 

From Wayfinder’s point of view the acquisition is certainly also good news. With only 294 000 paying subscribers at the end of September 2008, the road to profitability was always going to be long and hard. Backed by Vodafone, there are now more realistic opportunities for its off-board navigation to reach higher penetration levels. Wayfinder’s recent move beyond navigation to offer search and outdoor applications makes it a perfect acquisition target for Vodafone as it will strengthen its LBS strategy.

 

This acquisition prompts questions about how the off-board navigation space will evolve in the future. Will other carriers follow in the footsteps of Vodafone? Will Orange, Telefonica/O2 or Deutsche Telekom snap up any of the remaining providers such as Appello, Webraska, Locationet, Telmap….? And will Wayfinder be able to continue its existing partnerships with other carriers such as Telefonica, Mobilkom Austria, Telenor, Tele 2, O2, and 3? Probably not. It certainly means bad news for Telmap which had secured strategic partnerships with Vodafone in the UK and Germany. It remains to be seen whether there will be any consequences for NIM’s partnership with Verizon.  And what about TomTom who recently announced plans to launch off-board navigation in 2009? At the same time an increasing number of free ad-funded solutions are becoming available powered by companies such as Jentro and Locationet which should limit any revenue expectations Vodafone might have.  In any case, it seems that after years of lingering on, off-board navigation all of a sudden has jumped to life in Europe.

 

However, the most significant dimension of this partnership – despite the small size of the deal – is that it represents a reaction against Nokia’s aggressive moves into the navigation and LBS space. While Nokia still holds the best cards in owning NAVTEQ, the assets of Vodafone should not be underestimated and should allow them to provide tough opposition to Nokia. One move might be to offer cheap roaming rates for navigation users, something Nokia would not be able to match. This acquisition symbolizes the battle between handset manufacturers and carriers to take control of the mobile data value chain. It will be most apparent to end users when a Vodafone customer will buy a Nokia phone.