Baidu Invests $10M in IndoorAtlas for Mapping Services - Analyst Blog

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Shares of Baidu, Inc. ( BIDU ) rose 4.8% yesterday, following the news that it had invested $10 million in IndoorAtlas Ltd., a Finnish developer of indoor mapping software to bolster its own mapping services. Its agreement with IndoorAtlas makes Baidu the sole user of IndoorAtlas' technology in China.

This means that Baidu can incorporate IndoorAtlas' accurate (up to 3 meters) and scalable technology into its Location Based Services (LBS) and mapping platform. IndoorAtlas' intellectual property portfolio could also help Baidu in international markets other than China.

Indoor mapping technologies have assumed importance as mobile devices have changed the way people shop. It is easier for a customer to select a product online and then search for the nearest location where he/she can physically verify and make the purchase (or simply pick up). Indoor mapping adds a flavor to this practice by making it possible for ad servers (like Google) to push promos to people when they are located close to or event inside the relevant store. This greatly increases the chances of a sale.   

IndoorAtlas, spun off from the University of Oulu, Finland in 2012, develops mapping technology to trace real-time movement indoors by using magnetic positioning. As per IndoorAtlas, its technology uses earth's geomagnetic field to enable people to navigate and locate themselves inside buildings to a precision of three meters. It works similar to the Global Positioning System (GPS), which allows navigation outdoors.

IndoorAtlas' software is patented and is available as an application for Apple's ( APPL ) iOS and Google's ( GOOGL ) Android smart devices. With a smartphone's built-in magnetometer, the app generates data that sellers can use to trace the movements of the smartphone user. Apple also has iBeacon, which enables similar indoor tracking using Bluetooth Low Energy (BLE) technology.

Baidu's agreement with IndoorAtlas therefore enables it to further strengthen its offerings in China where it is pitted against  China's biggest e-commerce operator Alibaba, which recently acquired AutoNavi Holdings Ltd. to ramp up its Internet mapping tools.

The investment will take IndoorAtlas' value from around $40 million to $50 million. The company will reportedly use the capital for research and development activities, manufacturing and business development as it plans to extend its footprint in the U.S., Asia and Europe.

Baidu currently holds a Zacks Rank #1 (Strong Buy).  Another stock worth considering is Silicon Motion Technology Corp. ( SIMO ) with the same rank as Baidu.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: GPS , BLE , BIDU , SIMO , GOOGL

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