Location-Based Services Pinpoint Success
Can you find me now?
Consumers are using GPS-enabled mobile devices to navigate their worlds with applications to find local businesses, one another and even family pets.
Gartner is predicting huge gains for mobile location-based services (LBS) in 2009. The firm estimates that total LBS subscribers will more than double worldwide this year, to 95.7 million.
“The LBS industry has matured rapidly in recent months through a mixture of consolidation, improved price/performance of the enabling technologies and compelling location applications,” said Annette Zimmermann, Gartner analyst.
Worldwide revenues from consumer location-based services were under $1 billion in 2008, but Gartner projects they will top $2.2 billion this year. North America’s share will be the largest, at $713.7 million.
“Subscriber growth will hinge on ‘free,’” said Ms. Zimmermann. “The competitive landscape will change and most mobile carriers need to alter their approach toward offering LBS and dealing with developers.”
Currently, about 10% to 15% of users in North America and Western Europe take advantage of free services. The researcher expects that share to climb to between 40% and 50% by 2013.
The rise of mobile applications and availability of a wider variety of location-based services will continue to fuel popularity—and new mobile marketing opportunities. Locally tailored digital coupons, for example, will go hand in hand with local search.
For now, good old-fashioned navigation applications are still popular in Europe and North America.
“We’ll continue to see good growth in a lot of the navigation services,” said Alex Bloom, CEO of mobile app creator Handango. “Now instead of having to have two devices, a navigation device and a phone, navigation apps on these GPS-enabled devices might be the catalyst to attract a whole group of people that had stayed away before.” [eMarketer]
LBS Value Chains and Ecosystems are Gearing up for Increased Growth
The growth of the location based services (LBS) market is driven by the emergence of connected navigation devices, the development of new device form factors with advanced user interfaces such as the iPhone, the expected pervasiveness of GPS-enabled phones, and the availability of affordable data plans, with both converged and dedicated navigation and telematics solutions vying for dominance.
“While location-industry value chains have long remained fragmented, the ongoing trend towards consolidation is finally moving the location based services industry into a mature stage,” says ABI Research principal analyst Dominique Bonte. “The expected growth of the LBS and navigation applications and services market and the necessity of improving profitability through economies of scale are the main drivers behind these vertical integration trends. These forces are demonstrated by the acquisition of digital map providers by PND vendor TomTom and handset manufacturer Nokia, the increasing dominance of a limited number of major brands, and recent efforts by carriers to enter the LBS market in Europe and the US.
While the LBS market has been characterized by a large number of services, the industry is now increasingly focused on a limited number of applications such as off-board navigation and social networking, around which features such as location-based search and friend finders are centered. [ABI Research]
Samsung and GyPSii Sign Multi-year Agreement for LBS and Social Networking
GeoSentric Oyj's, GeoSolutions BV Business Unit (GyPSii), the market-leading mobile digital lifestyle application and geo-mobility social networking platform, today announced it has entered into a multi-year worldwide agreement with Samsung Electronics Co., LTD, a world leading provider of telecommunication network systems and handsets.
Under the terms of the agreement, GyPSii will provide technology, products, worldwide data center infrastructure, and GyPSii branding rights to Samsung, on a worldwide non-exclusive basis for a range of Samsung products. GyPSii's leading mobility digital lifestyle application will be initially be bundled on Samsung's Omnia (SGH-i900) and SGH-i780 as an embedded application.
Samsung's customers will be able to take full advantage of the location-based social networking digital lifestyle features of the GyPSii suite and create and share user generated content (UGC) with GyPSii's global user community, and other interoperable socialnetworks such as Facebook. The agreement has provisions for revenue sharing between GyPSii and Samsung, utilizing the business models enabled by GyPSii.
"This is an industry-defining event for mobile social networking and geo-location based services." said Dan Harple, CEO at GyPSii. "Our Distribution and partnership agreement with Samsung is further validation of our business model, our technology and our go-to-market distribution model. We continue to build momentum, and are rapidly giving millions of users access to GyPSii, worldwide, across an increasing array of mobile and Internet-connected devices.
He added, "This distribution and partnership agreement brings GyPSii to millions of new users, enabling us to penetrate new markets, expand our global footprint and leverage the strength of the Samsung brand to drive marketing, distribution and new revenue streams."
As the world's second largest mobile manufacturer, Samsung will provide the new GyPSii enabled handsets on a global basis. The application will be made available to users in numerous local languages, with GyPSii providing the global infrastructure and operating platform to Samsung customers. GyPSii's PlaceRank technology will be utilized to deliver highly contextual and personally relevant user generated content, regional POI (points ofinterest) and location-targeted advertising to users.
"Social networking and location-based services on the mobile phone are now mainstream, so we looked to emerging innovators in the industry to support and deliver these value-added services," said WS Lee, Vice President of R&D, at Samsung Electronics Mobile Business.
GyPSii currently interoperates on Symbian, Windows Mobile, and BlackBerry devices, as well as the Apple iPhone, along with browser-based Internet connected devices. It can be accessed on the web at www.gypsii.com or a compatible phone's mobile browser at www.gypsii.com/m. [FierceWireless]
Location Based Platforms and Infrastructure Licensing Revenues Will Reach $2.2B by 2013
Strong growth in Location-Based Services represents an important opportunity for LBS platforms and infrastructure vendors. While until recently the LBS infrastructure market was mainly driven by the E911 emergency call requirements in the US, the expected global deployment of commercial LBS applications by carriers will grow LBS infrastructure licensing revenue from $111 million in 2008 to $2.2 billion in 2013.
“Several trends are driving the growth of LBS services and platform revenues,” says ABI Research principal analyst Dominique Bonte. “Decreasing costs for the integration of GPS receivers in handsets, the increasing number of Secure User Plane Location (SUPL) server deployments by carriers investing in LBS infrastructure, the availability of A-GPS/SUPL-compatible handsets, and the commercialization of a growing number of LBS applications are all contributing to increasing sales of LBS-infrastructure systems such as Mobile Location Centers (MLCs), Position Determining Equipment (PDE) and Location Enabling Servers (LES).”
The LBS infrastructure market is currently dominated by Ericsson, Telecommunications Systems (TCS) and Nokia Siemens Networks with respective market shares of 31%, 24% and 18%. Smaller independent MLC vendors such as Redknee are also making inroads into the market.
Business models are reflected in a range of flexible payment options based on volume (per transaction or per LBS subscriber), flat fees, outright purchase, and even advertising-subsidized schemes with price levels dependent on the size of the carrier, the functionality, and the solution type (hosted or installed). Monthly per subscriber platform license fees typically amount to $0.71.
However, despite the expected growth in LBS services, a major threat is posed by the emergence of direct-to-consumer provisioning of remotely hosted third-party LBS applications which bypass the carrier network infrastructure, reducing carriers to the status of bandwidth providers and making LBS platforms obsolete. The challenge for platform vendors will be to focus on unique functionalities that can only be offered via carriers, such as spatial triggers, anonymous bulk location, control plane-based services, and LBS-enabled advertising as well as multi-access network solutions. [ABI Research]
Trend: Location Based Services “On the Move” in Asia and Europe
In 2007, North America generated 81% of the world’s Location Based Services (LBS) revenue. In 2013, that percentage will be just 32%. In the same period, Western and Eastern Europe’s combined LBS revenues will jump from just 5% to 31%. The Asia-Pacific region, meanwhile, will see a rise from a 2007 share of 11%, to 27%.
“Location based services are not a zero-sum game,” says ABI Research principal analyst Dominique Bonte. “It’s not that Americans will lose enthusiasm for LBS. These changing shares of global LBS revenue just reflect the fact that a market which for technical reasons has been largely restricted to North America, will finally grow strongly in other world regions.”
LBS’s slow uptake outside North America has had everything to do with the fact that unlike the CDMA phones so prevalent there, which have utilized GPS to comply with the United States’ E911 regulatory mandate, the GSM handsets owned by most users in Europe and Asia have not generally offered native GPS support.
However with the broader proliferation of GPS-enabled GSM handsets in those other regions, and with the quickening rollout of 3G services worldwide, the opportunities for LBS service offerings will grow quickly.
That’s not to say that the same applications will be adopted at the same rate everywhere, or that LBS revenues will be uniform. “Since most LBS application developers sell to the world, and most of their products are platform-agnostic, the cost per service for users is likely to be similar in all regions,” says Bonte.
“However, a navigation service can cost as much as $9.99/month, whereas friend-finder services might only be $2.99. On that basis, as well as via cultural preferences, particular services will be popular to differing degrees in different regions. That can affect the total revenue to be generated from a particular region.” [ABI Research]
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