HERE – Street of dreams.

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Data sharing and governance must be overcome to realise the dream.

  • It looks as if HERE is already looking beyond BMW, VW and Daimler as discussions regarding increasing the shareholder base have already been confirmed by Daimler.
  • Microsoft and Amazon are the latest two to be confirmed but RFM research indicates that Renault, Ford and Continental are also considering making an investment in HERE.
  • I also think that Facebook will be looking at HERE very closely as it is now using HERE maps exclusively within its services.
  • This comes hot on the heels of BMW and Toyota selecting Microsoft’s Azure as the cloud platform upon which to run their connected car services.
  • Hence, I suspect that Microsoft and Amazon are interested both from the perspective of their cloud offerings and also in using HERE for their own ecosystems.
  • HERE is shaping up as the meeting point for all of Google’s rivals who have competitive and strategic reasons for not using Google Maps.
  • I have long believed that HERE is the only company capable of offering a real challenge to Google Maps on a global basis and the high level of interest from the technology and automotive industries is an excellent sign.
  • However there are two big caveats.
    • First. Data Sharing.
    • While all of these companies are very wary of Google, they also compete with each other at many levels.
    • For HERE to fulfil its potential, the data that the users of its maps generate needs to be openly shared with all participants.
    • This data will need to be anonymised and some aspects of it removed.
    • For example VW will need to be able to see where BMW and Daimler cars are going and have access to the map and traffic data they generate, although it will not be able to know who these drivers are or even what car they are driving.
    • I think that this level of sharing is essential for the promise of HERE to be fulfilled.
    • This is because the opportunity for all users of HERE data will be orders of magnitude greater with shared data than if everyone keeps their data to themselves.
    • This creates the classic prisoner’s dilemma for the stake holders and users of HERE.
    • HERE’s management must do everything it can to solve this dilemma as I believe that its success and the success of its owners depend on it.
    • Second. Governance.
    • Although the governance structure of HERE is not yet fully clear, there is already great risk of repeating the mistakes of the past.
    • Symbian was a smartphone software company jointly owned by a number of handset manufacturers that used its software.
    • Although Symbian was nominally independent, the major decisions on roadmap, strategy and investments were made by the supervisory board made up from its owners.
    • Because Nokia was the largest shareholder, most of the key decisions were made in its favour and the other shareholders constantly felt that they were being unfairly treated.
    • The end result was a lack of trust and commitment leaving Nokia as the only credible vendor of Symbian smartphones.
    • Symbian should serve as an example to HERE of some of the pitfalls that exist in the governance structure it is adopting that it will need to avoid.
    • Again this comes down to the management of HERE ensuring that the correct structure is in place so that all players feel fairly treated and remain committed to the proposition.
    • Like data sharing, I believe that HERE’s long term success depends on getting the governance structure right.
  • Google Maps faces none of these issues as users of Google Maps tend to agree to share their data with Google and there is only one stake holder in the operation.
  • HERE has an opportunity to be every bit as good (or even better) than Google Maps but without openness, trust and commitment between its owners, the end result will fall far short of the dream.

RICHARD WINDSOR

Richard is founder, owner of research company, Radio Free Mobile. He has 16 years of experience working in sell side equity research. During his 11 year tenure at Nomura Securities, he focused on the equity coverage of the Global Technology sector.

Blog Comments

Tomasz Jamroszczak

HERE was owned by Nokia/Microsoft but sold, so why would Microsoft buy part of that back?

It was only owned by Nokia. Microsoft wanted to buy it as art of the deal but Nokia refused.

Jimmy Joe Meeker

HERE was never owned by Microsoft. Microsoft Licensed HERE Maps and Mapping technology for use in their Bing maps and later in their Mobile Phones which we purchased from Nokia.