Rumors Run Rampant – MapQuest on the Outside – another map engine on the inside?
I heard what I will call a “rumor” this morning, but suspect that it was a statement of fact. If I am wrong, I apologize in advance. As you know, there are shades of rumors, so I will add some color where I have additional information.
It appears that AOL has quietly begun the shutdown of parts of the MapQuest operation. A few weeks ago the announcement was made at MapQuest’s back-end operation hub for MapQuest located in Lancaster, PA. Some members of the engineering staff were let go then, more will be released in November, and the operation in Lancaster is scheduled to close in March of 2015. Perhaps most important here is the fact that Lancaster is the back-end mapping operation for MapQuest. One would think that if they were moving the engineering operation to Denver (where the rest of the MapQuest group operates) that they would have moved the engineering team there, as well. It is my opinion that AOL intends to contract with another service to provide the mapping engine for MapQuest. Well, whatever the case, this is a rumor, but, I think, specific timing notwithstanding, the strategy of the story has been in the oven at AOL for some quite some time.
As some of you may know, MapQuest was once the leading provider of online maps and routes. Its historical trail involved a number of companies headed by Barry Glick and culminated in the property that eventually became MapQuest being acquired by Donnelley Cartographic Services, an organization that made maps for print publishers, but was wise enough to see the future of online mapping. Though the future was unclear, Barry and his successors navigated the road ahead and took MapQuest to a successful IPO, followed by the acquisition of the company by AOL.
MapQuest was the King of the Road in online mapping until it began to encounter a headwind from Google Maps. Of course, there were other earlier competitors than Google, but one-by-one these pretenders became irrelevant, fell into decline and ceased operations. The few that survived continue in business, but remain minor footnotes in the market.
It is somewhat interesting to note that the demographic that was attracted to MapQuest on the Internet was an older than average, mature audience. It is thought by many that the original audience for MapQuest continues with the service even today, with some of those loyal customers still printing out routing instructions rather than using route guidance through smart phones or other personal navigation devices.
The problem that nagged MapQuest’s planned IPO was a lack of revenue. Suffering from a real world case of the “Innovator’s Dilemma” MapQuest was a product that no one requested. When launched it was a “give-away”, a status that it could not escape once the genie was out of the bottle. Indeed, the numerous map-making companies littering the roadsides today are a result of “free-Internet maps.” Unfortunately, while MapQuest was able to overcome the perception of the “operating at a loss,” problem by up-selling its popularity when the stock market for Internet properties was “incandescent”, the problem did not disappear. The lack of revenue issue was knowingly acquired by AOL, whose executives were sure they could monetize the product line. Unfortunately, the strategies they implemented to cure the revenue problem failed and, when altered, failed again.
Those of you who read this blog may have noted that on several occasions I have indicated that Google is in the advertising business and that mapping, a side-line, was integrated into their strategy as a method of selling more advertising, especially location-based advertising. While MapQuest tried the advertising gambit, even Google advertising, it could not generate enough revenue to cover operating expenses. It’s likely that even Google has made its investment in mapping with little hope of recovering its map compilation and serving expenses. However, its map base provides advantages to the company in advertising and beyond that prompt it to continue its massive investment, at least for a while.
The important note here is that online maps have produced a state of disequilibrium in the market for online maps– one in which the revenue results not from the sale or the use of maps, but results from the advantages that maps can bring to other product lines over long periods of time. I think you all know the budget battles that must ensue at Google about who is paying for what and why this new mapping initiative deserves to be funded. If Google has not had these arguments yet, I guarantee you that they will in the future
What we are left with is an unbalanced market where Google, HERE (Nokia) and Apple will remain the major players. I suspect that AOL will replace MapQuest with either HERE maps or Google Maps, but in any event, MapQuest, an American original, will be soon be no more than a shell of its past glories.
My hat is off to the stalwarts that created, popularized and polished MapQuest. You did your profession and your company a great service. AOL? Well, they never seemed to understand mapping, or the use of spatial data. Perhaps more importantly, it appears that the executives did not understand how to manage MapQuest to success. I understand that both MapQuest and AOL Search report to the AOL Chief Analytics Officer. I am sure that monetizing spatial data is not one of his competencies. After all, map data and map engines are generic – at least to those who know nothing about either!
It is likely that switching the MapQuest engine is “merely” a matter of expense for AOL. Too bad they did not see the promise of MapQuest, but “buyer’s remorse” is a terrible thing and usually leads, as it did in this case, to limited investment for new product development. Speaking of “buyer’s remorse” it is an issue that may be endemic in the mapping industry, as HERE continues to muddle making a success of the former Navteq and TomTom is rumored to be in a dither about mapping expenses from the former Tele Atlas.
One more thing – there are some highly talented software engineers from MapQuest now available. I found a few of them on LinkedIn – take a look if interested.
I hope your Labor Day Holiday was relaxing and rewarding,