Nokia bid for Navteq could shake navigation market

By Franklin Paul and Niclas Mikas

NEW YORK/AMSTERDAM (Reuters) - Nokia's offer to buy digital map supplier Navteq NVT.N threatens to reshape the consumer navigation device market, putting pressure on market leader Garmin Ltd (GRMN.O) and perhaps opening the door for Google Inc's (GOOG.O) entry.

The $8.1 billion bid for Navteq, if successful, could make the world's largest cell phone manufacturer a leading player in the navigation business, which is one of the technology industry's fastest-growing segments.

Nokia's financial resources, wireless technology and carrier relationships may give it an edge in creating phone-based navigation devices, analysts said. What's more, it could damage Garmin's ability to influence design decisions at Navteq, Garmin's biggest map supplier.

"Should the deal go through ... it could have profound implications for the navigation and wireless markets," said CIBC World market analyst Yair Reiner.

Devices made by Garmin, TomTom (TOM2.AS) and others use signals from government satellites to pinpoint a user's exact location. Map makers like Navteq augment that with myriad data, such as traffic conditions, nearby hotels, and whether a highway exit is on the left or right.

Navteq had been seen as a takeover target since TomTom offered 1.8 billion euros ($2.6 billion) in July for Tele Atlas TA.AS, Navteq's only global rival.

Market watchers said Nokia's willingness to put down about $8 billion for Navteq showed it saw enormous market potential for navigation devices, which could see wider adoption this holiday season due to price cuts and cheaper models.

"It validates this market segment and it means that the combination of TomTom and Tele Atlas is maybe a takeover target in itself," Fortis analyst Felix Oberdorfer said. TomTom's market capitalisation is about 6.5 billion euros.