HomeMobile EuropeLocation Based Services - On the right path?

    Location Based Services – On the right path?


    Will mobile advertising and social networking turn location into a money maker for operators? It seems directions are still needed, says David Adams

    Might 2008 be remembered as the year when location-based services (LBS) finally started to take off? Until now, LBS technology has inspired more admiring remarks from gadget lovers than serious interest from business strategists. But according to research published by Gartner in February, the number of LBS subscribers worldwide will be 43.2 million at the end of this year, up from 16 million in 2007, and is set to reach an eyebrow-raising 300 million in three years' time. Revenues from LBS were expected to rise by 169 per cent this year, up from $485.1 million in 2007 to $1,307.3 million. Gartner predicts they could be worth more than $8 billion in 2011. Other research organisations have made even more striking forecasts: Berg Insight calculates that there will be more than 100 million mobile LBS users in Europe by 2012; and an ABI Research suggests worldwide mobile LBS revenues will reach $13.3 billion by 2012.

    Well, we'll see. But after years when consumers and operators just didn't seem interested it does look like LBS has finally started to gain momentum. The in-car SatNav, has familiarised consumers around the world with electronic navigation and mapping, while various factors including the US government ruling that mobile phones should always be able to call 911 and competitive mobile and telco markets around the world, have led to the proliferation and refinement of GPS and other handset location technologies, just as 3G services and mobile internet use have also both been spreading at speed. At the same time, the focus of social networking has moved from the computer to the mobile in many markets.

    These changes have stimulated huge growth in LBS application development. LBS applications being developed by software developers on a range of platforms including APIs developed by Google and Yahoo include some obvious ideas, such as restaurant or taxi finders, user review websites, and, which points users towards Wikipedia articles relevant to their location. Then there are also some useful applications of LBS for business users, such as fleet management, with LBS used as the basis for automated vehicle tracking, or Proxpro Prompt, software available to users of some BlackBerry devices in the US and Canada, which is integrated with the user's calendar and with traffic and public transport monitoring services, tells them when they should leave their current location and alerts them if a traffic or weather problem suggests they should leave early.

    There are an increasing number of LBS social networking applications, including ‘find your friends'-type technologies like Twinkle and Whereboutz, along with potentially more complex technologies like GyPSii, developed by LBS specialist GeoSentric. The latter enables mobile users to interact with existing social networking sites like FaceBook and MySpace and local information sources, alongside geotagging for user-generated photos, video, audio and text, a friend-finding application, and mapping and navigation capabilities. It is now available for more than 480 million China Mobile subscribers, following an agreement signed in the summer.

    Mapping and navigation software continues to improve. GPS and navigation specialist Telmap has been working in this area for eight years. "It has been a very long road for us, given that we tried to imitate what you can do when you buy your new Mercedes, and you get an embedded [SatNav]" says CEO Oren Nissim. "Apart from screen size, which is obviously not in our control, we've done everything to reach that aim. We have got the software to the same quality level using only GPS – where in the car you have three or four sensors that will show the car's position." Telmap technology is being used by Vodafone users in Spain, Germany, France and Italy, as well as the UK, and Nissim says more announcements in relation to other operators will follow in 2009.

    Google offers a geolocation API as part of its Gears software development technology, which adds new capabilities to web browsers – whether that browser is used on a computer or a mobile device.
    Charles Wiles, product manager for mobile browser strategy at Google, envisages a wide range of potential uses. "At the obvious end, one of the companies we've worked with on the geolocation API is we have done a really nice restaurant-finding application with them," he says. "So you could be using your mobile, go to, press find your location and it will just tell you the restaurants nearby. It's incredibly easy; better than typing in your location if your device doesn't have a qwerty keyboard – and often you don't know exactly where you are to start with."

    There are other, more subtle ways of using location. Wiles says ITV News is considering using LBS provide mobile users with a certain amount of local news, content determined by knowledge of the user's location, even if the user is not actually conscious of this information being passed to the service provider.

    Google's strategy is not driven by a desire to compete directly with the most accurate LBS. "Any operator can, in principle, implement a more accurate solution provider, and there's no reason they can't charge for that," says Wiles. "The important point is we're making it easy for users and developers to use location."

    But still the mobile operators refuse to get swept away by all this enthusiasm. There have been some interesting developments over the last 18 months, including Vodafone's Telmap-based Sat Nav application, launched in the UK for users of the BlackBerry Curve 8310 at the end of 2007, but in the main they have remained cautious.

    Fergal Walker, director of product management at 3, outlines a fairly typical operator's perspective. "There are two main reasons why LBS hasn't taken off as quickly as people expected," he says. "Firstly the GPS model – people are interested in navigation and specialist applications so there hasn't been a demand for LBS. The second is around privacy. People are very concerned about revealing their location. Unless the industry can find a way to reassure people that the customer can remain in control of information about their location it is going to remain a barrier to uptake."
    But consumer preferences may yet be influenced by handset manufacturers. Nokia Maps, version 2.0 of which was launched in May, is available on a subscription basis, and incorporates a new user interface and multimedia city guides (including video and audio content, and editorial content from the Lonely Planet guidebooks). Maps covering 200 countries are available, with navigation services available for 70. Users of more than 40 handsets loaded with the S40 and S60 software can access at least some of the Nokia Maps services, and Nokia Maps can even function without GPS, using operator-positioning technology instead. There is also a social networking angle, in that users can share tips about places they have enjoyed with friends via email, mobile messaging formats or Bluetooth.

    "Location-based services are popular because people are real, they are moving around, and they want to share information," says Christof Hellmis, director, navigation and routing solutions, at Nokia. He says the company's aim is that Nokia Maps will evolve as a platform, with more services added as they become available. It is also a hybrid solution, in as much as users can choose to download maps in advance of use, or to download directly from the remote server at the time. "This is a key differentiator: if somebody goes on vacation and doesn't want to have to pay high roaming charges, they can download maps before they go." Other handset players are also investigating the various routes into the market and will be competing with Nokia on subscription prices and terms.

    But the effectiveness of LBS as a means of revenue generation for mobile operators is still far from certain. A growing number of players have expended a great deal of time and effort in trying to work out an advertising-based business model. The key, says Oren Nissim, will be in the way ads are targeted. "What we want to do is represent what ads can be shown to a user in a specific time and location," he explains. "If we could bring relevant information to the user he probably doesn't see it as an ad, but as a helpful tip." He gives the example of information about distances to petrol stations being passed to in-car, perhaps with some kind of discount offer incorporated in the message.
    Bill Barnes, general manager for location products at middleware provider Openwave, believes it might be worth considering some slightly more abstract ways that mobile operators could seek to monetise some aspects of the data that handset tracking offers. "Where [operators] can track their subscribers in an anonymous way and offer some of the data they get about mass user behaviour to somebody else they'll have a set of data that is current or accurate at the time, as opposed to predictive or historical," says Barnes. "I'm sure there will be some creative things coming through connected to that. It's not going to generate millions, but it will be something they can use to generate a return from the investment they've made."

    He is more sceptical about the monetisation of some other LBS applications. "I think some will have longer-term revenue applications," he says. "Clearly, turn by turn [navigation] is something people are prepared to pay for, particularly when you combine that with traffic information. When you get to services like ‘where's my friend? Where's my point of interest' – I'm not sure you're going to get people to pay for that."

    So, will LBS remain no more than a ‘nice to have' add-on for mobile users, or will it help operators (and other mobile and internet players) generate revenues? Ultimately, even if revenue generation remains difficult, everything we know about online consumer-led development suggests operators would be wise to keep a very close eye on this area over the next few months. "We don't have any commercial applications on our network at the moment but are constantly assessing its potential," says 3's Fergal Walker. "The immediate area of interest for us is monitoring the emergence of location based social networks." That sounds pretty sensible.