The biggest buzz coming out of this year’s Consumer Electronics Show boils down to Intel Corporation (NASDAQ:INTC) putting its money where its mouth is on transforming the global transportation landscape.
It takes big bucks to go toe-to-toe with the likes of Apple Inc. (NASDAQ:AAPL) on smart cars, but INTC clearly wants to find its niche in the mix before this trend really takes off.
The major piece of news is that Intel is buying 15% of mapping startup company Here from a consortium of German carmakers, including BMW (OTCMKTS:BMWYY). The Germans paid $3.1 billion to buy Here a year ago, so I have a hunch that that the car companies are flipping for a profit and INTC is paying a premium.
But that’s okay for two reasons.
Why Buying Here Is Good for INTC Stock
First, the market took INTC’s decision to commit $250 million to autonomous cars back in November as a bit of a joke.
In a world where AAPL can blithely spend $1 billion to buy into a Chinese fleet management company and Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) has probably blown at least that much cash getting its cars on the road, the initial ante from INTC looked relatively unimpressive.
You’ve got to be serious about this market as it emerges and companies pick their partners. Spending this much money on Here proves INTC is very serious and creates a space for its hardware under the hood of some of the world’s leading car brands — including BMW, which will be testing self-driving systems powered by INTC in its prototype cars late this year.
Second, this is more than just another copycat mapping system; this is the platform originally pioneered for Nokia Corp (ADR) (NYSE:NOK) phones, which a lot of people still consider superior to anything that’s hit Android or iOS mobile devices. Buying a piece of Here guarantees that INTC will be relevant to any discussion around how cars, drones and everything else navigates across the Internet of Things.