Map apps, and applications built around map data, are probably the mostly widely used software on both smartphones and PC desktops. Searching for directions is one of the most common features on smartphones, and Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) Maps app is at the top of the list. According to GlobalWebIndex, in the third quarter of 2013, 54% of global smartphone users used Google Maps.
Map are used for everything these days
Today, maps are used for a variety of things, and smartphone users simply can't live without them. From getting walking directions to a neighborhood store, using GPS software to track a fleet of trucks, or simply driving from one place to another in the city, map apps are an integral part of today's smartphone user experience. Maps are even an integral part of many small businesses; many reservation systems utilize maps and give directions to the restaurant.
Control maps and you control the world, sort of
Maps are so important that all of the major players who are part of the "Internet of Things" have their own offering. Nokia (NYSE:NOK) paid over $8 to acquire NAVTEQ in 2007 (later to become HERE), and made other map-related acquisitions along the way. Recently, it acquired Desti and, just last week, it acquired Medio Systems, a leader in predictive analytics technology, mapping, and location experiences.
Apple (NASDAQ:AAPL) has been a latecomer to the map space. After a horrible start in 2012, Apple has caught on, even if Google Maps is still considered a better choice. According to ComScore, Apple Maps gained 35 million regular users from September 2012 to September 2013, while Google Maps users across iOS and Android dropped from 81 million in 2012 to 58.7 million in 2013.
With the introduction iOS 8, Apple might not only catch Google, but could surpass it. Apple has made a number of map-related acquisitions like Locationary, HopStop, Embark, WiFiSLAM, and BroadMap.
Things are about to get very hot in the map kitchen
OpenStreetMap, or OSM, is the Wikipedia of maps, supported by more than 1.5 million registered editors globally. Active users regularly contribute updates via phones and computers. Unlike Google Maps, OSM is based on open principles and is community-driven on a global scale.
Telenav, which makes the popular Scout GPS app, announced it will use data from OSM. Scout is nowhere near as popular as Google Maps, however as OSM becomes better and more accurate, chances are that more companies will turn to OSM because it is free.
More importantly, Telenav announced the First Global Navigation SDK, based on OpenStreetMap, that lets developers build applications to power their own mobile and desktop products for a fraction of what Google charges.
OpenStreetMap is disruptive
How can Google, Nokia, Apple, or any other company compete with millions of individuals all over the world that crowdsource map data and make it better and more accurate over the years?
The answer is they probably can't, which is exactly why OSM is disruptive. Not only does OSM create an alternative to Google, but Telenav's Global Navigation SDK will pave the way for map products and services that we can't even imagine today. Strava, which makes a popular GPS cycling and running mobile app, will be one of the first companies to use the new OSM-based developer solution, and plans to integrate the Scout Maps API into its apps soon.
Nokia, Apple and Google each have an armada of people who update and improve their respective map offerings. But, they can't compete with millions of people around the world who continually update and improve OSM.
Why would companies who, today, use Google's map services pay Google in the future when they could pay almost nothing by using OSM and Telenav's Global Navigation SDK?
Nokia's HERE has about 80% of the automotive map market, but if companies can get the same (if not better) automotive map data without paying anything, why wouldn't they? Microsoft is about to become Nokia HERE's biggest customer, but several years from now, what's to stop Microsoft from using OSM as opposed to HERE?
Again, open-source and crowdsourcing is changing the way we do things, and will probably change the way many companies use map data from now on. While it's unlikely that OSM will overtake Google Maps, or even Nokia, any time soon, it's likely that OSM will become a major player in the map space.
If that happens, chances are that map data will become a very low-end commodity business, which is something that investors should keep in mind the next time they hear of another acquisition in the map space. Unless companies are able to bring to market map apps that offer value-added services to users, map data by itself will not be enough to pay the bills.
George Kesarios has no position in any stocks mentioned. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.