Garmin Outbids TomTom in TeleAtlas Acquisition

Garmin Ltd, one of the top manufacturers of GPS products, has announced an offer for Dutch mapping company Teleatlas NV in a move which outbids an existing offer from TomTom by some 3.25 Euros per share. Garmin’s offer is due to launch prior to December 4th, before the expiry date of TomTom’s offer.

Currently, TeleAtlas and Navteq are the only suppliers of mapping data for consumer GPS devices. With maps accounting for up to 20% of the cost of a GPS device, the victor in the bidding war stands to make significant gains. TomTom, powered exclusively by Teleatlas, should benefit from a reduced price of mapping data, thus allowing them to reduce the prices of their devices and undercut their competitors. Garmin, on the other hand, powered by Navteq maps, can avert a potential stronghold by TomTom by preventing them from aquiring TeleAtlas. Garmin however, may feel the strain of this strategy and stand more to lose according to some analysts.

The acquisition of Teleatlas by a specific GPS company may cause secondary issues in that competitors may no longer wish to use the maps if owned by a rival company. In this scenario, Navteq may stand to make significant gains if rival companies choose to switch to Navteq as their  map supplier. Rival GPS companies may also follow suit from the TeleAtlas deal, and we may see a similar acquisition of Navteq in the future.

What is clear from this latest development is that mapping data has become an important factor in the GPS market, and with further developments such as TomTom’s MapShare system, the issue continues to be a complicated one.