Market for Location Based Services and Technologies

Note:  IEEE ComSoc SCV had a great workshop on this topic June 19th at the SFO Crown Plaza Hotel.  The workshop summary report appears elsewhere on 

The following notes are a transcription from a Yankee Group LBS telebriefing I attended June 12, 2008:
Location Based Services (LBS):  The Final Destination

Navigation is a great first stop for location based services
– Highly compelling with a wide audience reach
– Consumers are willing to pay $10 per month
• Navigation prices will have to come down, and thus, margins
– Competition is heating up with new market entrants
– Low-cost alternatives are available
• Location information will enhance a wide variety of mobile internet applications
– Value added content for apps from community to transportation
Navigation is the only application on the horizon that warrants charging any more than an extra $1 or $2 per month
– Don’t fulfill a substantial need
– Don’t have a broad addressable market
– More ecosystem participation is needed to facilitate apps beyond navigation
LBS is not a subscription-based money maker for mobile operators but there will be financial opportunities through advertising, etc. that will be lucrative across the value chain
The Perfect LBS Storm of Events (a checklist)
• Mobile operators put marketing muscle behind LBS
– Wow…consumers will pay $10 a month???!$%$#%$#%$
• Handset vendors commit to LBS
– GPS is no longer just for CDMA
• Application providers rush to design cool apps
– Oink!
• Consumers embrace real-time local information
– Garmin has shown the way
• Content providers and local businesses want to widen their reach
– Does anyone sell gas for under $4 anymore???
• GPS is not the only answer to location information
– Triangulation, WiFi, and good ole’ zip code entry
The $10 Navigation Price Point Is Not Sustainable
The $10 monthly standalone subscription price of navigation will drop by 2009 at the latest
– Inexpensive entry-level PNDs
– The entrance of AT&T and T-mobile, Google and Yahoo, Samsung and LG
– Low-cost alternatives, such as the $99 Garmin Mobile XT
– Nuviphone and other navigation-optimized devices
– Complex value chain
• Nokia/NAVTEQ, TomTom/TeleAtlas, Google, Medio, who else?…
• Mobile operators must allow consumers to “snack” on location
– Daily, weekly, monthly? ($2/day, $4/week, $10/month)
• A lower price will kill the margins for the operator
– Has to share with the app provider, mapping data provider, content provider, infrastructure vendor, etc.
The bundle is coming
– Sprint Power Vision Navigation Pack for $20, Simply Everything for $99
– Partial ad subsidies: click to call, premium listings
Navigation is first successful application of LBS, but additional services are poised for mainstream adoption
•Transportation (traffic recognition, parking space finder)
•Community (dating, social networking, friend & family finder, photo geo-tagging)
•Local search (local POI, reviews,events, weather)
•Mobile commerce (shopping & product finder, real estate listing)
•Mobile marketing (coupons)
Location will enhance where, how and why consumers use their phones
  • Communications (tracking people and places)
  • Commerce
  • Marketing and couponing
Though LBS possibilities are many, few companies are capable and ready to integrate real time interactivity

• Companies with systems capable of utilizing location are much further along in the implementation cycle than companies with inadequate internal systems
• But even among those companies who’s systems are capable, less than half have implemented or are in the process of implementing mobile coupon and marketing
• This is significant because outside of simple navigation, most LBS applications share significant network effects
The above conclusions were documented in a Yankee Group Survey which asked:
Are your internal systems capable of utilizing location & real time interactivity?
312 respondents were split into 3 groups:
-We don’t know what’s required, 36.5%
-Our systems are not capable, 26.6%
-Yes, we are capable,  36.8%


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