Nokia Acquires Navteq for $8.1 Billion

Nokia said Monday that it had agreed to acquire navigation software company Navteq in an $8.1 billion acquisition, one of its largest in company history.

The move is likely aimed at giving Nokia a strong presence in the increasingly lucrative mobile navigation market. The mobile phone maker would also gain an instant customer base, which it said it would continue to support after the acquisition.

However, at the same time the move is likely to strengthen the navigation capabilities of its own phones that could prove to be a competitive edge in the market. The merger still needs to be approved by Navteq shareholders and will close in the first quarter of 2008.

"Location based services are one of the cornerstones of Nokia's Internet services strategy," Nokia president and CEO Olli-Pekka Kallasvuo said. "The acquisition of NAVTEQ is another step toward Nokia becoming a leading player in this space."

Nokia has made big moves into the Internet services business in recent months, launching "Ovi" in late August. The company provided a mapping application with the initial launch: it's likely the Navteq offering will replace Nokia's own product in a future update.

As a whole, the mobile phone industry seems to feel that services over the actual devices itself is where the money is to be made in the future. With consumers demanding ever cheaper and ever more feature-intensive phones, these companies need to find new avenues to generate revenue.

One of Kallasvuo's goals is to capitalize on this growing industry, and acquisitions -- including Monday's buy of Navteq -- are part of that effort.