Industry Trend Analysis - HERE Maps Out Autonomous Driving Future - APR 2017

BMI View: The digital mapping service, HERE, has taken up the role of industry leader in the traffic and road mapping space after announcing strategically valuable partnerships with key tech companies. The company's strongest challenger is TomTom, which has gained a strong advantage through its recently announced cloud-computing partnership with Microsoft.

Much as we had anticipated, there has been a flurry of partnerships, acquisitions and other announcements in the digital mapping space as carmakers, key suppliers and tech companies all scramble to secure themselves a role as key players in time for the age of autonomous cars. Previously, we highlighted the strategic importance of digital mapping for providing a competitive autonomous driving product in the future ( see 'Mapping Acquisition Helping Automakers Challenge Tech Giants', August 4 2015). Here we analyse the key players and trends that are emerging in this space.

HERE Enhancing Capabilities Through Valuable Partnerships

Over late 2016 and early 2017, the open location service provider, HERE, in which the majority stake is held by a consortium of Audi, BMW and Daimler, announced its new product development goals. In particular, the company announced its Electronic Horizon product, which allows connected cars to gather real-time information on obstacles, traffic and road conditions up to several kilometres ahead of the vehicle. This product represents a valuable tool for carmakers aiming to have semi-autonomous and autonomous products on the roads given that the Advanced Driver Assist Systems (ADAS) that underpin these vehicles require this kind of information.

Several recent developments appear to be key to developing this kind of product. Most importantly, HERE announced in December 2016, it was partnering with automotive sensor company, Mobileye, to allow vehicles fitted with Mobileye's cameras, other sensors, and microchips to share real-time data with HERE in order to create high definition maps of the roads where changes to conditions are updated in real time. Mobileye will act as a valuable partner given that its sensor products are already a strong favourite for automakers and demand for sensors is set to increase further ( see 'Sensor Acquisitions Attracting Bullish Investors', March 16 2016). Adding to this, the company announced a partnership with microchip maker, NVIDIA, with similar goals of improving its high definition maps using NVIDIA's expertise as a major supplier of microchips for ADAS systems, and its artificial intelligence experience.

Finally, in late 2016, it was announced that the tech conglomerate Intel will take a 15% stake in HERE while Chinese tech company Tencent, the Asian mapping company NavInfo and Singapore's largest sovereign wealth fund took up a combined 10% stake in the company as well. Intel and HERE have not announced how, or if, they will partner in terms of product development and delivery but we believe there is a strong possibility of cooperation with the ownership tie-up acting as the first step towards this.

Intel would be a valuable partner to have when it comes to developing data processing, cloud computing and electronic hardware products that are critical to creating the high definition maps that HERE aims to develop. The addition of Tencent and NavInfo as investment partners is also positive given NavInfo's wealth of mapping data in China, a market where foreign mapping companies have struggled against local incumbents, while Tencent's digital prowess in the country will also be valuable.

List Of Announced And Expected Partnerships
Source: BMI
Cloud Computing and Data Processing Partners Intel (expected), Tencent (expected) Microsoft Azure
Sensor Input Partners Mobileye, NVIDIA NVIDIA
Automaker and Supplier Partners VW Group (via Audi), BMW, Daimler, Continental Bosch

Competitors Chasing After HERE

As a key challenger to HERE, mapping service provider TomTom has also secured its own partnerships in pursuit of developing high definition, real-time maps. Like HERE, TomTom has partnered with NVIDIA in order to access the data generated by the company's in-car microchips that gather and process data from a cars many sensors. Like HERE, TomTom has also secured valuable partnerships with key automotive industry players, namely Robert Bosch, the largest global automotive supplier.

However, a clear difference between HERE and TomTom is TomTom's partnership with Microsoft to develop its cloud-computing services using Microsoft Azure's cloud computing platform. High definition maps are essentially a cloud-based product where an efficient cloud computing platform is needed for gathering, processing and communicating location data between cars and the cloud. This makes a partner like Microsoft extremely valuable and separates TomTom from HERE, which is yet to announce a strategic partnership with Microsoft or any other cloud service providers like Amazon, Google or IBM.