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Amazon Buys Mapping Startup

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Online retailing giant Inc. (AMZN - Free Report) has purchased a 3D mapping startup, UpNext for an undisclosed sum, GigaOm reports.

The five-year old, New York-based UpNext offers interactive, detailed, three-dimensional maps of cities and venues. UpNext has launched apps for iPads, iPhones and Android devices. It covers 50 cities nationwide and offers complete details for 23 cities.

The acquisition will open up a new revenue stream for Amazon, which does not have a mapping service of its own. The deal will help Amazon to build its presence in the mapping business and compete against major tech giants Apple Inc. (AAPL - Free Report) and Google Inc. .  

Gradually, competition is building up in the mapping business. Apple has been using Google Maps since the release of the first iPhone in 2007, but recently announced that it will replace Google Maps with its own in-house map service.

GigaOm reported that Amazon’s tablet, Kindle Fire, does not have a global positioning system receiver and so users have to download third-party Android mapping apps or access online mapping services. We believe the acquisition could bring in a more comprehensive device which will include native mapping capabilities, thus making the product more competitive.

In the first quarter, Amazon’s revenue was $13.19 billion, which was on the higher end of the guidance range for the quarter and above the Consensus expectation by around 2.2%. Management attributed the increase in revenue to the growing consumption of digital content across different categories because of the advantageous value proposition that Amazon was able to provide to its customers.

Meanwhile, competition from eBay Inc. (EBAY - Free Report) , Applethrough its iBooks app, Barnes & Noble, Inc. and Google remains strong.

Amazon shares currently carry a Zacks #3 Rank, which translates to a Hold recommendation for the short term (1–3 months).

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