Vodafone & Wayfinder

Vodafone announced thisweek a recommended cash offer to acquire Wayfinder Systems AB. This is not a done deal yet but my first take is:

- Wayfinder like other software vendors really pioneered the market for navigation on mobile phones. Initially, the Swedish company (at that time named Itinerary systems) started in as a R&D project in the mobile phone division of Ericsson in the 90s! It is thus no surprise that Wayfinder recently announced an intensification of its global collaboration on GPS handsets with Sony Ericsson, one of its main clients. Back in July 2007, the company acquired Finnish application provider Navicore.

- According to its interim report (ending September 30th 2008), Wayfinder wanted to focus on a small number of global partners and to planned to reduce costs by 30% in 2009. The company reported close to 2,5M activated user accounts but only 294,000 paying users, who had activated a paid for application in the past 18 months. Vodafone's offering value Wayfinder at around €23M. I am not a financial analyst so I won't comment the cash offer in detail but from an industry perspective, it seems to me:

* this is a small amount of money for a global operator like Vodafone

* most competitors are also small players (Telenav, Route 66, TCS, Apello, Webraska, Jentro and NIM). Some of them have already been acquired (remember Gate 5?), some others seem to perform well (NIM in the States) but most of them will struggle remaining independent and going directly to consumers since it implies significant marketing budgets and that they need operators' support due to large bills of mobile data consumption when accessing navigation services from your mobile phone.

* I would not be surprised to hear other players get acquired or at least signed deep strategic partnerships. Between Nokia/Navteq and Google Maps, operators will struggle differentiating and maintaining competitive advantages.

- Vodafone will benefit from Wayfinder's expertise, technology capabilities and team and provide resources and scale to distribute Wayfinder products.

Wayfinder had launch Locate Mate, a service integrating into social networks such as Facebook.

I am currently undertaking some research on LBS, so do not hesitate to contact me to discuss this topic.

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