The real reason why Amazon wants to map the world

Jeff bezos
Amazon CEO Jeff Bezos David Ryder/Getty Images

Amazon is reported to be interested in buying a minority stake in HERE, the digital mapping service Nokia sold for $2.8 billion to a group of German automakers last year.

The investment makes sense given the massive amounts of mapping data HERE generates. It will make it easier for HERE to store and process its data in Amazon’s cloud computing service, Amazon Web Services, while Amazon gets a big cloud customer in return.

But the real reason may have to do with Amazon’s broader ambition to build its own delivery network, according to Morgan Stanley analyst Brian Nowak.

“…a move to acquire mapping technology would be another sign that Amazon is taking steps to build out its own logistics network,” Nowak wrote in a note published last week.

While Nowak admits locking in HERE as a cloud customer is a big benefit of this deal, he gave the following two reasons for why he thinks Amazon’s real intention is in the parcels and transportaion space:

  • Access to high quality mapping data: HERE generates tons of real-time data around things like traffic and weather conditions. Amazon has already bought thousands of its own trailer trucks and is reported to be expanding its own in-house delivery network. If Amazon could leverage HERE’s mapping data and technology to make its delivery more efficient, it could potentially save a lot more, on top of the hundreds of millions it’s already expected to save by delivering its own packages.
  • Help building autonomous delivery trucks and drones: One of Amazon’s long-term goals is to make autonomous delivery possible through drones or self-driving cars. HERE’s mapping technology is critical for both initiatives. In fact, part of the reason the German automakers initially bought HERE was to get help building fully autonomous vehicles, Nowak writes.

Nowak’s note only adds to recent speculation about Amazon building a much bigger logistics network of its own that could possibly compete against current delivery partners, like DHL or FedEx. Baird Equity Research analyst Colin Sebastian pegs the market opportunity at $400 billion, based on the array of moves Amazon has been taking lately.

Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.

NOW WATCH: Here’s how to see how much you’ve spent on Amazon in your lifetime