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Location, location, location

THE world’s oldest map, etched into the wall of a cave in Spain 14,000 years ago, charted the best locations to hunt for food. Today companies are competing to control the future of mapping technology. Nokia, a telecoms-equipment maker, is looking to sell its digital-mapping division, Here, for up to $4 billion, according to reports, and may announce within weeks which of several bidders has won.

Here is coveted prey because it is one of only three firms—the other two are TomTom of the Netherlands and Google—that have mapped the world’s streets extensively, at a time when mapping is becoming more important to the future of commerce and transport. Four-fifths of new cars with a built-in mapping system in North America and Europe use Here.

Many smartphone apps rely on mapping technology to locate nearby shops and services, such as where to buy coffee or get a haircut. To build up reliable, usable maps takes a lot of time and money.

A coalition of carmakers, including Audi, BMW and Daimler of Germany, appear to be the favored purchasers of Here, though price is reportedly a sticking-point. Nonetheless, they are likely to drive ahead with the deal: they do not want to surrender the future of mapping to Google, which is investing heavily in self-driving cars and in an operating system for vehicles.

Uber, a taxi-hailing company, and Baidu, a Chinese internet giant, reportedly teamed up for their own bid (although the most recent whispers suggest they may be out of the running).

Whichever buyer wins will pay much less than the $8.1 billion that Nokia paid for Navteq, the mapping business that became Here, in 2008, just before the peak of the financial crisis. One reason is that now the technology to draw digital maps is better and cheaper. Google, too, is pushing down prices: it makes its maps free to consumers and cheap to other companies, because this helps to feed it with the data it needs to sell location-based ads and enhances loyalty to its products. Digital-mapping services may be increasingly important for all sorts of businesses, but with Google acting as a strong deflationary force in the short term, it is not clear that mapmaking in itself is a very profitable business.

Nonetheless, demand for mapping keeps expanding, as online commerce grows more reliant on precise location. “Every mile and minute now matters from a business standpoint,” says Shiva Shivakumar of Urban Engines, a startup that studies commuting patterns. On-demand companies, like Uber, thrive when they can accurately gauge a customer’s location and route a driver or package to them quickly. Recently Uber acquired engineers, cameras and mapping patents from Microsoft, to build up its own capabilities, in case Google stops making its maps available to firms that compete with it in some way. Uber may soon be in that category: on July 6th Waze, a mapping company from Israel owned by Google, announced a trial of a ride-sharing service in Tel Aviv.

Maps will become even more critical if self-driving cars make inroads. They will need to know every pothole and every obstacle in every street, down to the nearest inch. But as John Ristevski of Here points out, they will be packed with sensors that will generate huge amounts of data, in real time, that will help mapping companies keep their maps accurate. In the modern age, maps are “living things” that are constantly updated, says Martin Garner of CCS Insight, a research firm.

edited from The Economist