The world's biggest mobile-phone company, Nokia Oyj, has announced it is to buy Navteq Corp. for about $8.1 billion in cash. Navteq, based in Chicago, is the largest maker of maps used in car-navigation equipment and has rights to digital maps of 69 countries. To grab Navteq and boost its software and services business, Nokia agreed to pay $78 in cash for each Navteq share, 34 percent premium over Navteq's share price a month ago, but virtually no premium over Friday's closing price of $77.97. This happened because rumors of a takeover have boosted Navteq's shares over 80 percent since three months ago.

Nokia will have to compete with companies such as Apple, whose iPhone comes with navigational software from Google; Garmin Ltd., which makes a wide range of satellite navigation gear used in cars, boats, planes and handheld devices, and is a customer of Navteq; and TomTom, which agreed in July to buy Tele Atlas NV, the world's second-largest maker of maps.

Nokia said that the boards of both companies have approved the purchase, which is expected to close in the first quarter of 2008. Nokia will obtain the necessary financing through a mix of cash and debt.

"The acquisition of Navteq is another step toward Nokia becoming a leading player in this space," said Nokia’s president and chief executive, Olli-Pekka Kallasvuo, in an official statement. "By joining forces with Navteq, we will be able to bring context and geographical information to a number of our Internet services," Kallasvuo said.

Meanwhile, Garmin shares took a serious hit upon the announcement of the Nokia-Navteq deal, not only because of the inevitable competition but because the first is Navteq's customer. However, most analysts think there are slim or no chances at all that Nokia would sever Garmin's access to its soon-to-be-aquired maps. Either way, Garmin shares dropped 10 percent under fears of competition from Nokia's financial and technological muscle.

In October 2006, Nokia bought gate5, a small Berlin-based company which makes navigational software applications for cellphones, for an undisclosed price. Its newly unveiled Ovi portal, which will not only feature the N-Gage service, but also the Nokia Music Store and a slew of other unannounced services, all Web-oriented. Ovi, which in Finnish means “door”, is Nokia’s new Internet services brand name which allegedly enables consumers to easily access their existing social network, communities and content, as well as acting as a gateway to Nokia services.

Customers will be able to play on their N-Gage phones content ranging from music to games specifically designed for Nokia’s platform. They will be able to either try or buy that content, which Nokia said it will be available from diverse and consecrated artists and publishers. Ovi fans will also benefit from the previously launched Nokia Maps (now available by default on the high-end N95 model, but also on other phones too) a navigation service that offers maps, city guides and more.