Digital Maps, Source of Apple’s Anguish and Google’s Smugness, Might Be a Crummy Business
A piece in Fast Company magazine about the rush among major tech companies to dominate the mapping business – Google (GOOG), Apple (AAPL), Amazon (AMZN), Microsoft (MSFT) and Nokia (NOK) are all involved – smartly asks whether the prize is worth the competition.
These companies have such vast financial resources and huge earnings streams from existing businesses, for the most part, that they’re able to chase opportunities with iffy returns.
(Remember, Apple holds most of its cash in long-term investments and if those were included above its total would be more like $137 billion.)
Most compelling in the Fast Company article is a discussion of Nokia. Remember that it bought Navteq for $8.1 billion in 2007? Well, Farhad Manjoo, author of the Fast Company piece, tells us, Nokia had map sales of $1.4 billion in 2011. But the unit steadily loses money, and that contributes to an ugly stock chart.
As smart phone wielding consumers, it’s great to have so many brilliant minds working on map applications, and installing them for free, often. But it doesn’t make the digital map business a business.
Jeff Bailey, The Editor of YCharts, is a former reporter, editor and columnist at the Wall Street Journal and New York Times. He can be reached at firstname.lastname@example.org.