Updated from 10:09 a.m. EDT

Nokia ( NOK) jumped into the navigation game Monday with an $8.1 billion cash deal for digital map maker Navteq ( NVT).

The deal calls for Nokia to pay $78 in cash for each Navteq share, a slight premium to the Friday closing price of $77.97.

The acquisition gives Nokia a host of mapping and navigation services including Navteq's traffic.com site, a live traffic report system. The move adds to pressure building on Navteq customer Garmin ( GRMN). But shares in both Nokia and Navteq fell in early trading Monday as well.

Phone companies like Verizon ( VZ) and AT&T ( T) have targeted navigation services as a key new growth market and another source of mobile data sales. Phones equipped with global positioning system chips use mapping software from outfits like Navteq to give users turn-by-turn driving directions.

"Location based services are one of the cornerstones of Nokia's Internet services strategy. The acquisition of Navteq is another step toward Nokia becoming a leading player in this space," said Nokia chief Olli-Pekka Kallasvuo.

GPS device maker Garmin, one of Navteq's largest customers, saw its shares tank 12% with the announcement of the Nokia deal.

Investors say Garmin is suddenly looking at a squeeze among its map data suppliers. In July, Garmin rival TomTom offered to pay $2.5 billion for Tele Atlas, the map maker for outlets like BlackBerry maker Research In Motion ( RIMM), MapQuest and Google ( GOOG).

RIMM uses mapping data from closely held TeleNav, a Navteq rival.

Nokia has steadily been expanding beyond handsets into software. The Finnish tech shop owns 47% of Symbian, a developer of mobile phone operating systems. Two years ago Nokia moved into the mobile email market with the acquisition of Intellisync.

Nokia shares dropped $1 to $36.93, Navteq sank $1.30 to $76.65 and Garmin slid $15.40 to $104.