NAVTEQ was recently acquired by cell phone giant Nokia, leaving many to wonder what Garmin would do if NAVTEQ's new owner, eager to enter the GPS market, decided to withhold the critical mapping data Garmin needs (Garmin currently uses NAVTEQ's mapping data on all its popular nuvi models).

Soon thereafter, TomTom announced its intent to acquire mapping provider Tele Atlas for $2.7 billion. With Tele Atlas and NAVTEQ representing virtually 100% of all available electronic maps, Garmin's future was in jeopardy; what if both Nokia and TomTom denied Garmin access to the mapping data? Garmin responded by offering $3.3 billion to outbid TomTom's offer for Tele Atlas. TomTom countered again, this time offering $3.57 billion.

Garmin's response? A cancelled bid for Tele Atlas and a 6 year contract with NAVTEQ that guarantees Garmin continued use of NAVTEQ's mapping data, with an option to renew for an additional 4 years. The Garmin/NAVTEQ agreement is more than a simple licensing contract; the deal establishes a technology-sharing agreement between Garmin and NAVTEQ that will permit Garmin to create "made by Garmin" maps.

It's not all good news for Garmin, however. Including the Tele Atlas acquisition, TomTom's year-over-year revenue growth will shoot up to 50% (vs 29% without Tele Atlas). Garmin's projected revenue growth is just 37%.

Financially speaking, Garmin is currently on more solid footing than TomTom. Long term, however, the outlook could be rosier for TomTom than Garmin, as Garmin will not own any proprietary map data. Details of the NAVTEQ deal are still vague, but Garmin will need to seriously invest in R&D to develop proprietary mapping content in order to stay competitive. We'll know more once the specifics of the Garmin/NAVTEQ agreement are revealed.