In an unusual bit of dealmaking, Nokia bought geo-tagging vendor MetaCarta in April and then turned around and sold it three months later. The recent divestiture might appear to be a botched acquisition. However, as we look closer at the deal, it turns out that Nokia actually got what it wanted out of the purchase. It is retaining MetaCarta’s engineering team while shedding its enterprise accounts to Qbase. (Nokia didn’t really have any use for the startup’s enterprise business, which was largely oil and gas industry as well as government installations.)
Cambridge, Massachusetts-based MetaCarta employed approximately 20 development engineers, plus 15 enterprise sales and support staff. Although terms of the deal weren’t disclosed, we understand that Nokia paid about $30m for MetaCarta. If we look at the price in terms of what assets Nokia actually wanted to obtain, we pencil it out at about $1.5m per engineer. This is obviously an expensive way to recruit personnel, and underscores the increasing pressure that Nokia is seeing in the mobile-mapping space.
Nokia ‘hired’ MetaCarta’s engineers to reinforce the search feature in Ovi Maps, Nokia’s most popular application. MetaCarta is a specialist in geo-tagging unstructured text such as websites and emails. While mapping competitor Google does the same, MetaCarta’s information will be layered on NAVTEQ’s mapping data, which is arguably more detailed than Google’s maps.
The transaction is another in the long line of acquisitions that Nokia has made in its move toward mobile advertising. However, Nokia’s rivals have also been active in the mobile M&A space. Research In Motion reached for GPS vendor Dash Navigation in June 2009. In November 2009, Google outbid Apple and bought AdMob for $750m. In response, two months later, Apple picked up Quattro Wireless for an estimated $275m. Nokia hasn’t made a purchase of this magnitude, but we still believe it could be on the hunt for additional mobile providers. The company could build on its MetaCarta acquisition by buying location-based advertising vendor 1020 Placecast. The San Francisco-based firm is a major strategic partner of Nokia’s NAVTEQ, and would supplement MetaCarta’s geo-tagging capabilities.