Navteq Charts Growth of Digital Maps

Getting lost is getting rarer nowadays, and any yahoo with a keyboard or a GPS device can find precise directions or pinpoint the location of an out-of-town landmark. Now drivers hooked on digital maps are looking for more than just streets and turns. They want ever more accurate and up-to-date points of interest such as restaurants, gas stations, hotels, theme parks and more. For digital mapmakers like Navteq Corp., it's up to road teams like Ann McNeil and Rich Joyce to deliver.
Like luxury-class explorers, the geographic analysts cruise streets and roads in a tech-laden SUV outfitted with a satellite tracking computer, electronic clipboard and rooftop cameras.
'Our customers are wanting more and more information,' said McNeil, who has driven hundreds of thousands of miles in a decade at Navteq. 'We're expanding all the time.'
It's all part of a race with Dutch rival Tele Atlas NV to not only chart the world more accurately but combine the maps with other relevant data.
A pioneer of the digital map business, Navteq produces the maps and software found in automobile navigation systems, portable navigation devices made by Garmin Ltd. and other companies, and Internet map sites like AOL's Mapquest, Google Inc.'s Google Maps and Yahoo Inc.'s Yahoo Maps.
Navteq is the Rand McNally of the 21st century, according to Colorado-based map industry consultant Henry Poirot. And the rapid growth may be just beginning.
Thanks to global positioning systems and recent technology advancements, Navteq is fine-tuning ways to let consumers use a phone or other handheld device to track their dogs, find where to jog in another city, learn how many calories they will burn doing it, learn where the nearest 24-hour gas stations are and see current traffic and weather conditions. Tele Atlas has its own projects under way.
'There's a lot of competition going on,' said Thilo Koslowski, an analyst for Gartner Inc. 'Both companies are trying to show that their data is better, by being innovative in gathering more detailed information.'
The mapping duel heated up this week with the announcement that Tele Atlas agreed to a $2.6 billion acquisition by TomTom NV, the world's largest maker of personal navigation devices.
While that should make the combined European company a more formidable foe, Navteq's stock also soared. Analysts said TomTom's competitors such as Garmin may now go to the Chicago-based company for their maps rather than buy from a rival.
Navteq would like to improve its current share, which already includes most of the Internet mapping market and a split of the handheld device market with Tele Atlas. Its European rival drives the roads, too - the two companies' teams even sometimes spotting one another covering the same turf.
The biggest threat facing the two competitors in the future may be user-generated map content - a mapping equivalent of YouTube, as it were.
Google also could be a rival. The Internet search leader is deep into research, development and even acquisitions related to its mapping services, which include Google Earth as well as Google Maps.
Navteq has shown a knack for adapting to changing technology.
The company was born in 1985 as Navigation Technologies, focusing on kiosks at car rental agencies and hotels where patrons could print out directions and maps for chosen addresses. Dutch conglomerate Philips Electronics became its primary investor starting in 1989, a role it held until recently.
Navteq finally became profitable in 2002 thanks to global positioning systems, a boom in car-based navigation guides and its increasing grip on the exploding Internet mapping market. An initial public offering in 2004 helped ignite fast growth, and today it has more than 3,000 employees in 30 countries and a new headquarters in Chicago.
The company made $110 million on $582 million in sales last year and posted big gains in both categories in the first quarter. It reports second-quarter results Tuesday.
A heavy reliance on the slowing auto market, which accounted for nearly all its sales in 2000 and still brings in about 60 percent, has sent its stock price on a bumpy ride. Hoping to smooth things out, CEO Judson Green, who headed Disney's theme parks division until coming to Navteq in 2000, has steered the company into more diversification.
A pair of acquisitions for a combined $216 million in the past nine months underscore that effort: Traffic.com, which produces live traffic reports for cities around the country, and Map Network, producer of special maps for travel destinations, major hotels and big events like the Super Bowl.
In a swiftly moving business, it's not clear if that will be enough to stave off Tele Atlas and any nascent competitors.
'They're not moving fast enough,' said Koslowski. 'It's not just a question of acquiring companies like Traffic.com. ... The company needs to focus more on emerging markets.'
To map 12 million miles and 69 countries, Navteq has used an estimated 100,000 different sources, from satellite images and aerial photography to maps issued by local governments and commercial companies.
But to Green, the 'secret sauce' keeping the company on top of the mapping world is the 700 employees who spend half their work time behind the wheel or in the passenger seat.
'I would say that 80 to 85 percent of the effort that we put into making a digital map is from that very labor-intensive driving that we do,' he said. 'We cannot find the quality, accuracy or richness of the information from all these other sources unless we go do it our way.'
The road teams capture 225 different attributes for every link or block of road - one-way signs, turn restrictions, lane information, obstacles in the road and points of interest that may include a hardware store, park or hotel. Every year, the list grows based on customer demands.
Teams ride in the specially outfitted SUVs and rely on sophisticated monitors displaying moving maps and icons while live video from the multi-camera system is shown on separate screens. Among the recent additions: six tiny high-resolution cameras concealed under a glass dome on the roof.
On one recent mapping run, Joyce made sketch pen notations on the electronic clipboard while he and McNeil watched both sides of the street for discrepancies or updates from the existing data.
They quickly spotted a cafe in Chicago's West Loop that had changed its name. This is familiar territory; based on customer requests, they may drive the same streets as often as every three months to check for errors or gather new categories of information, such as bookstores and coffee shops.
'The real world is constantly changing and our challenge is to keep up with that change,' said Navteq spokeswoman Kelly Smith.
Tele Atlas has fewer drivers and road testers than Navteq but claims a bigger database covering over 200 countries and territories worldwide. Its business is more balanced between devices and maps.
For its part, Navteq has a new product in use in Europe called Advanced Driver Assistance Systems that Green says effectively puts the map in the engine to help drive the car. For example, it turns headlights to match the road's curves, changes the transmission as the car approaches a large hill and warns the driver when a lane line is crossed without a turn signal.
The company also is pushing aggressively into information for pedestrians and is eyeing mobile phones as a huge developing market.
'The next wave of location-enabled devices will be cell phones, and there we're penetrating less than 1 percent,' he said. 'That opens up all kinds of opportunities if you know where you are.'
It's clear, in other words, that the digital map world now is about much more than getting from Point A to Point B.
'The whole array of location-based services - we're just at the beginning of what's going to be possible,' said Green. 'It'll be pervasive in your life.'
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On the Net:
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