HERE & Autos – Ejector seat.

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HERE will be key to ejecting Apple and Google from the car.

• The three German automakers (Audi, BMW and Daimler) have closed the deal with Nokia and are now masters of the 6,500 strong mapping organisation HERE.
• The new owners are committed to HERE remaining an open and independent company and do not intend to have any operational influence over the running of HERE.
• Furthermore, the new owners are open to expanding the shareholder base to other partners and not just those from the automotive industry.
• Consequently, I think that the shareholder base will expand to include many other members of the automotive industry and I think all members will benefit from wider ownership.
• This is because, the more automakers there are as shareholders, the more data is likely to be contributed back to HERE to make the map and the overall service better.
• Furthermore, if car makers can incentivise the consumers to allow their data to be anonymously fed back into the map, the cost of maintaining the overall map will become much lower.
• This does not have to be limited to roads but could also include driving conditions, fuel consumption as well as data from the engine management system of the car itself.
• This would provide significant differentiation from Google Maps and make up for the fact that Google Maps currently is far better than HERE when it comes to search and for points of interest.
• However, this data will only really improve the map that can be sold to enterprises and used by the consumer.
• For autonomous driving, a much more precise and higher resolution map as well as a 3D representation of the road and its hazards needs to be created.
• For this, HERE will need to deploy its vehicles with new equipment capable of collecting 700,000 data points per second.
• Consequently, the three sixes rule of having a global map (6,000 people, $600m in cost and 6 years) is likely to still apply.
• Furthermore, I think that this will see the end of Tom Tom’s ability to compete in maps as I do not believe that it has the resources to create a global map of this quality.
• The most important aspect of this acquisition is that mapping and location is the most important Digital Life service in the automobile.
• While users spend only 3% of their time on smartphones and tablets using mapping, that figure is far higher in the automobile.
• Just as telephony and SMS was the starting point for smartphones, so I think that location is the starting point for the Digital Life services in the automobile.
• Consequently, with HERE safely in the hands of the automotive industry, it has taken an important step to ensuring that Google and Apple do not turn cars into commoditised smartphones.
• The key to this is for the automakers to:
  • First, allow Google and Apple to come into the car such that smartphone users are kept happy.
  • Second, at the same time ensure that the location based services and data generated by the automobile are the back bone to their own differentiating services that are both useful and fun for the user.
• This is a huge ask for the automakers many of whom are just beginning to realise how important software is but it is one they must conquer at all costs.
• Failure to do so will result in the users demanding Apple, Google etc. being allowed in which will be a disaster for long term differentiation and profitability.
• Taking the helm of HERE is a first and critical step in this journey.