Location Mobile Trends for 2009 LBSs

The Location Based Service (LBS) sector of Value Added Services (VAS) on mobile is evolving.

I see 3 key trends and a similiar number of challenges for the year ahead for companies within the expanding LBS ecosystem:

TRENDS:

1. COMPETITION

There is little doubt that this sector is heating up, with both the iPhone and the Android platforms spawning a plethora of applications. And the global start-up map for LBS indicates that new ventures are emerging outside of traditional hotbeds like the US and Western Europe. This means that differentiation is becoming key. Start-ups with the big budgets can choose to differentiate via advertising (though this is becoming unviable-see point 3 of Challenges below) while smaller companies need to think smart and go for whatever niche they think offers the best returns.

2. PREMIUM CHARGING

It is apparent that consumers are ready to pay a premium for some LBS services, though this is on a more pay-per-use model than a subscription model. Quick and easy services that everyone can understand and that add immediate value (place me on a map now and show me Points of Interest around me) can be charged successfully and it is looking increasingly likely that pedestrian navigation-type services will also meet with success.

3. CONVERGENCE

Convergence spans a wide spectrum of meaning. In terms of LBSs, it means that traditional LBS services are moving into the Portable Navigation Device (PND) space, and that the reverse is also happening. It also means that connected devices like the Playstation Portable (PSP) are also moving into the LBS space with the likelihood of new devices entering the market (including the rumoured launch of the National Geographic Explorer Device).The LBS landscape is liable to some tectonic shifts in the coming year.


The LBS sector has consistently offered some of the greatest opportunities but also some of the greatest challenges in mobile, some that I would highlight today are as follows:

CHALLENGES

1. OPERATOR RESTRICTIONS

Fortunately for the mobile ecosystem, walled gardens are crumbling and we are seeing what I have previously defined as 'Open Playgrounds' being created. This doesn't stop Mobile Network Operators (MNOs) from imposing limitations on accessing their location platforms. No MNO currently offers anything other than 'pull' mechanisms for location detection (the user has to request to be located) while it is the 'push' mechanisms (tell me automatically where I am and push relevant info to me) that would yield the greatest benefits to the user.

2. SEAMLESS LOCATION DETECTION

Locator technologies are in themselves converging as the need to deliver a seamless location detection service to the mobile user becomes more of an imperative. 2009 will see an acceleration of this trend and successful apps will be able to switch automatically from a GPS to a Wi-Fi to a CellID environment according to the criteria that deliver the best experience to the user (this could be related to location, so delivering Wi-Fi location indoors or battery life, switching to CellID to reduce battery exhaustion).

3. MONETISATION

The monetisation model for LBSs has not been proven.But it will. And even if it takes time, let's not forget how long it has taken YouTube to adopt a clear monetisation mechanism (it announced today that it will offer sponsored video search, 3 years after launch). However, there is a tiresome task pending for LBSs to continue educating brands and advertisers of the potential effectiveness of LBS advertising (particularly that which links place with context). However, we live in a period of retrenchment-MNOS are retreating in their shells and curtailing infrastructure spend. Some, but not all, advertisers are cutting back on mobile and retreating to less effective media like TV.

Now is the time for LBS start-ups to redraw the lines of their monetisation models-to squeeze out revenues where they can be squeezed and cut costs in other areas. Highly funded start-ups with high burn rates will need to adapt more to the new low cost environment. The opportunities for small start-ups with smart monetisation ideas will peak next year-but their emphasis will have to be on easily addressing the true needs of the mobile user, requiring an understanding of the likely behaviour of this user in the new economic environment.

US Closing Mobile Usage Gap

I posted a piece back in January this year about the Rise of the Mobile Wallet and was pleased to see that it was quoted in an Experian Consumer Research Report about the US Mobile Usage Gap.

The report suggests that while only 2% of US consumers regularly make purchases via a mobile device, already 16% use mobile banking services, roughly equally distributed among different age groups.

Interestingly, the research shows that the age profile of GPS users is heavily skewed towards 18-24 year olds, with a severe drop off in usage rates in the age groups 45-54 and over.

Mobile advertising acceptance is confirmed as being higher than for traditional web, with over a third of consumers who are online for at least one hour a week rating themselves as interested in receiving ads via their mobile provided there is a tangible incentive.

You can read the full 9-page report by clicking on the title of this post.

uLocate announces deal with Garmin for Buddy Beacon

BOSTON-In line with a trend that has been developing this year, uLocate (well-known for its WHERE platform) is the latest LBS company to announce a deal with a device manufacturer. Today, the company has released a note stating that they will integrate their Buddy Beacon application into Garmin's connected devices and their Mobile XT Platform.

The full press release is as follows:

" August 19, 2008—uLocate Communications, the world’s leading developer of location enabled applications, announces an agreement with Garmin to add friend-finding capabilities to select current and future Garmin GPS devices. The partnership leverages APIs on uLocate’s WHERE™ platform to enable Garmin users to easily find and connect with friends nearby through the leading friend finding network, Buddy Beacon.

“The team over at uLocate continues to drive innovation with their open WHERE platform, enabling the broadest set of location based applications across the largest distribution network in wireless,” said Jeff Rath, vice president, global head of technology research of Canaccord Adams. “This represents a powerful combination – the largest PND manufacturer and the dominant platform in the market bringing together the universe of location enabled connected devices.”

With access to WHERE’s Buddy Beacon network, Garmin customers will be able to connect with their friends, share their location and update their status across a variety of online social networking sites including Facebook. Unlike other friend-finding applications, WHERE’s Buddy Beacon operates seamlessly across multiple networks, making it possible to connect with friends regardless of phone or carrier.

“We are delighted to team up with Garmin and through our WHERE platform, provide their users with access to Buddy Beacon,” said Walt Doyle, CEO of uLocate Communications. “The partnership connects two leaders in their industries that are committed to offering customers new and exciting interfaces."

Expect other companies in the LBS scene to come out with further announcements in the coming months, as new distribution and monetization models come to the fore.

Nokia Maps 2.0 -Location Detection without GPS

Nokia announced on May 12th at the Where 2.0 Conference in Burlingame, California, that they had released their Nokia Maps 2.0 beta, with a raft of upgraded features and web linkage to its Ovi.com site.

Ovi is a Nokia Web portal for Internet services such as content sharing. Maps on Ovi will let people use and mark up maps on the Web and then upload their changes to a cell phone. This is all part of Nokia new gambit into the world of software development and its desire to extend its reach beyond its own hardware.

However, the interesting part is a not-as-yet-reported initiative by Nokia to make Nokia Maps truly mainstream by eliminating both the need for GPS and the need for the Mobile Network Operator.

How? Simple...by investing over the last few years in building up its own database of cell IDs matched to geo-cordinates, and then building functionality in Nokia Maps that allows for an estimate of the user's location based only on cell ID.

Gone would be the days of waiting up to 5 minutes for GPS fixes, 'indoor blackspots' and battery drainage... Location Based Services would truly be able to achieve the ubiqitous status that both Navteq and Nokia are placing their strategic bets on.

The implications of this development are truly dramatic and it will not be long before the impact is noted by companies operating in this space...

Future of Location Based Services...according to Navteq

BARCELONA -I was at the Forum Nokia Camp in Barcelona today and attended the presentation by Tom Tierney, Developer Alliance Manager at Navteq, based in Chicago.

Here are some tidbits from his presentation:

• Referring to the difference between PNDs (Personal Navigational Devices) and mobiles, Tom described the mobile device as being the 'navigational ringtone' for the user and sees the PNDs and mobiles to be complimentary instead of competing for the same audience

• Some new technologies not everyone has heard of yet were discussed -namely P-Cell Technology (developed in Korea) and TV-GPS Hybrid Positioning...I will investigate and report back if there are interesting developments in these areas

• According to Tom, the use of audio, touch screens and voice interactivity will eliminate the need for banner ads in the future

• Unsurprisingly perhaps, Tom stated that LBS's will be ubiqitous in the future. Also, according to Navteq's own research, consumers principally want 3 things from them -for them to be cheap, accurate and easy-to-use

• According to Navteq, consumers will pay for navigation and gaming applications but not for social networks and search (in line with internet trends)

• To put figures to the growth opportunity we are talking about here, in Q1 2008, 43% of all downloads on mobile phones globally were for Location Based Services..accounting for 62% of total revenues...a sizeable pie which is clearly growing as we see LBS being demanded for Resource Management or Asset Tracking, Entertainment (including Location based dating) and Security (Child Finder features etc.)

uLocate-Latest Press Release on N-Series integration

Boston, MA - April 29, 2008 -- Latest Press Release from uLocate re:N-series integration

"uLocate Communications, Inc. announced today that WHERE is now available to users of the Nokia N95 8GB, Nokia N95 and Nokia N82 devices. As a result, users of these advanced smartphones will be able to customize their device with WHERE to unleash the full potential of their device’s embedded GPS technology. For Nokia N81 users, a self-reported location version of WHERE has also been made available.

WHERE offers users access to over 60 unique location-based applications. These applications deliver content that is based on a user’s current location and include options for local search, weather, news, shopping, events and friend finding. Every application on WHERE allows users to click-to-call, get directions to, or see a map of their selection. Users can also send the location, with a map and directions, to their friends via SMS.

Some of the applications on WHERE are location based versions of content from popular brands. Want to find the cheapest gas available based on your current location? Then choose the Gas Buddy application on WHERE. Wondering where the best place to eat is? Use Yelp on WHERE to get restaurant reviews, directions and more. Hear that your favorite sports team is in town? Find tickets to the game with StubHub on WHERE.

WHERE also gives users access to Buddy Beacon, the world’s largest mobile friend finding community. Buddy Beacon uses GPS technology to let users connect with their friends, share their location and update their status across a number of online social networking sites including Facebook. With Buddy Beacon, users can see their nearby friends on a map and connect with them directly through the application.

WHERE is free to Nokia Nseries users and is easy to access, and install, through the Nokia Download store’s GPS / Location section. This means that with just a few clicks, Nseries users can gain access to the application and begin exploring the world around them, and finding what matters, with WHERE."

Mobile World Congress 2008 -Summary

BARCELONA - I'm posting a good wrap-up for the MWC 08 a friend of mine passed on. It is by Dr. Mehmet Unsoy, Partner at Cartagena Capital and offers a good overall view of this year' show:

"Mobile World Congress (MWC) 2008 (aka 3GSM) was held for the third time in Barcelona, Spain, during Feb 11-14, 2008. Organizers claimed that there was a slight increase in the attendance (expected to be over 50,000) and 1,600 companies exhibiting, compared to 1,300 last year. But most of us felt that the attendance was about the same or even slightly lower, maybe because crowds and queues were better managed!

In this Industry Perspectives, I am giving my views and observations below. We also have Jane Zweig offering a rather different perspective on the overall direction of the industry [read article]. Finally, Alan Quayle, as a guest author, describes why he thinks the industry is at the crossroads [read article].

HSPA

The major theme of this congress was mobile broadband. HSPA deployments have really taken off, with 174 commercial HSDPA deployments, 36 of them delivering 7.2 Mbps download speeds. They are targeting 42 Mbps and 12 Mbps for downlink and uplink respectively, using HSPA+/ HSPA Evolved by 2009. These are outstanding data rates! Also significant is that there are currently 420 HSPA enabled mobile devices, including the USB dongles, for laptops. Speaking of laptops, the mobile broadband Notebook competition was won by Dell and ECS, with HSPA embedded notebooks, at $550 price points, which is rather impressive! This HSPA enabled notebook market is estimated to be a $50B global market.

There were lots of talk, presentations and demonstrations on LTE. With the recent uptake of the HSPA based mobile broadband, there seems to be genuine pressure to realize LTE as early as possible. Ericsson, with their strong LTE commitment, demonstrated a first end-to-end phone call using LTE. There were long line-ups to see this Ericsson demo! Ericsson claims that they will have first commercial deployments of LTE by end of 2009. Nortel was also demonstrating LTE, with a target of commercial deployment with Verizon by end of 2009. However, these all sound awfully optimistic. Also, Alcatel-Lucent and NEC announced a major partnership to jointly develop LTE, but a few people I talked to were quite skeptical of such partnerships!

WiMAX

WiMAX was a relatively low-key topic at this show with only a few high-profile demonstrations. Cisco was demonstrating their recently bought Navini gear, which targets primarily the developing markets. However, the most interesting were the discussions/presentations around the relative positioning of WiMAX Mobile and LTE. Several industry leaders, including Vodafone’s CEO Arun Sarin, pushed for LTE making room for WiMAX Mobile, as part of the TDD solution, thus, creating a convergence of WiMAX and LTE. One implication of this is that those operators that deploy WiMAX Mobile in the next 2-3 years, can evolve to be part of LTE by 2010 or later. However, this view is not shared by everyone. China Mobile is collaborating with Vodafone and Verizon on LTE trials, but seems to be pushing TD-SCDMA as the TDD portion of LTE.

A couple of very interesting WiMAX related developments were a “WiMAX on an SD card” by Mitsumi using Sequans chip, showing a high degree of integration and NXP’s dual-mode EDGE-WiMAX reference design. Both of these are important steps in launching WiMAX services. One of the topics we had touched on in a previous “Cartagena Industry Insights” was the possibility of mobile TV over WiMAX and at this congress UDcast announced a mobile TV platform for WiMAX with broadcast and multicast capabilities. Also interesting was the seamless WiMAX - Wi-Fi roaming/ hand-off demo by Alvarion, Comfone and Intel, showing the complementary positioning of these two technologies.

Huawei had an impressive presence at the congress this year with a recent string of European operator successes. I was particularly impressed with the emphasis on “IP transport infrastructure for mobile evolution” for mobile networks. With mobile broadband demanding significant bandwidth and networking, this looks like the right emphasis for Huawei and others.

FEMTOCELLS

I have observed a degree of maturing in the Femtocell companies understanding and responding to the requirements and challenges they are facing. Even though I had been somewhat critical of the Femtocell companies in the recent past, I think they are developing capabilities and solutions to tackle interference issues, remote management, as well as bringing down the unit cost. Several young companies worth to mention here are ip.access, picoChip and Ubiquisys. Also, some companies are looking at merging Femtocell units with other devices at home, such as residential or home gateways.

On the mobile device side, the first surprise of the congress was Microsoft’s announcement of the Danger acquisition for $160M. Lots of people expressed puzzlement around this acquisition and various theories around the motivation of Microsoft and whether it has anything to do with their intended Yahoo acquisition to compete more effectively with Google/ Android/ gPhone, etc. This probably is a separate topic of discussion!

Apple was not really present at the congress, but their presence was felt enormously. First, there were numerous (hundreds of) new handsets announced and most of them with significantly improved “user experience”, some with a touch screen, obviously showing some iPhone and iTouch influence. Nokia announced their Touch UI, but are not sure when it will be available on handsets. SonyEricsson had their first Windows Mobile handset, Xperia X1, which looked superb! It has 9 panels or screens, each catering for different environments. It is not tied to Windows and they could change it to another OS later! With numerous handset announcements, it seems that Sony Ericsson is trying very hard to improve their market-share, currently #4 with 8.8%, after Nokia (38.1%), Samsung (14.5%) and Motorola (13.1%). Also there were lots of rumors about Motorola and what they may do with their handset division.

Incidentally Nokia had one very impressive handset announced, the N96, with 5 Megapixel camera, recording videos at 30 fps, supporting MPEG-4 as well as DVB-H, 16GB memory and microSD slot. But you cannot get your hands on it until Q3 and it would cost you around 550 EUR.

LiMo Foundation announced the first wave of 18 new phones that are Mobile Linux based as well as their SDK strategy. These include handsets from LG, Samsung, Motorola, NEC and Panasonic and some prototypes from Aplix and PurpleLabs. This shows that LiMo can compete effectively with Google’s recently announced Open Handset Alliance (OHA), in offering an open operating system for mobile handsets that is hardware independent. LiMo Foundation needs to be taken more seriously thanks to increased membership recently including companies such as Access, AMD, Broadcom, Ericsson, Huawei, McAfee, Montavista, NXP, Open Plug, Softbank, ST, Trolltech and WindRiver.

Several OHA members such as Qualcomm, TI, ARM, NEC, ST and WindRiver also demonstrated some very early versions of the Android prototype platform. However, it will be late 2008 before any mobile handsets be available with such a platform. It is interesting to note that companies like Wind River are in both LiMo and OHA camps!

With the growing number of video and TV capable handsets, mobile TV is reaching a degree of maturity. There were solutions delivering mobile TV over 3G, HSPA, DVB-H, MediaFlo as well as over Wi-Fi. Alcatel-Lucent demonstrated the new satellite based DVB-HS system, together with DiBcom, Eutelsat, Sagem, SES Astra, TeamCast and UDcast. It was announced that Japan has reached the 20 Million mobile TV phone mark this month after only 2 years in service. New ABI research report predicts that by 2012 the mobile TV market will boast nearly half a billion subscribers. The growth of 3G/ HSPA will be a major factor in this growth.

GREEN ISSUES

Greening of the wireless industry was yet another theme at the congress. Most of the emphasis was in base-stations that used less power, less space, etc. But also, recycling of mobiles and batteries in China, for example, was noteworthy. Greening is particularly important since several countries are experiencing significant mobile penetration growth. China now has over 525M subs, with 39% penetration and 18% y/y growth, the USA has 254M subs, with 87% penetration, India has 237M subs, with 21% penetration and a whooping 60% y/y growth and Russia has 169M subs, with 120% penetration!! Interestingly enough, we observe several European countries with over 100% penetration, led by Italy (154%), followed by U.K. (122%) and Germany (117%).

Even though China and India attract lots of attention as key developing markets, the African market is experiencing the highest rate of growth these days. There are about 270M subs today in various African countries and most countries are experiencing over 60% annual growth with blended ARPU being around 10 EUR. We should expect all sorts of new solutions targeting such a growth market, but with a low ARPU.

MOBILE ADVERTISING

Mobile advertising was still a hot topic in this show, with over 30 companies (maybe more!) offering various solutions, some end-to-end, some partial, for this potentially explosive area. The global advertising market is considered to be about $640B and there is lots of debate as to what percentage of this can be expected to be shifted to mobile. Also, if X% is shifted from print or on-line to the mobile medium, it would be worth substantially more due to better targeting and higher response rates. Analysts estimate the mobile ad market as $12B by 2011. Several industry collaborations also announced during this congress, showing that the mobile operators are taking this more seriously and are attempting to regulate themselves. They are starting to realize that rich media mobile content delivery will have to rely on an advertising based business model as opposed to a simple subscription based model if it is going to succeed.

SOCIAL NETWORKING

Social Networking was also a hot topic at the congress, with Facebook’s and MySpace’s initiatives in the mobile area attracting lots of attention. But also RIM’s co-CEO Jim Balsillie emphasized that Blackberry’s future depends on business-oriented social networking. Mobile phones are becoming so much better tool for generating user generated content (UGC). Thus, mobile becomes such an important part of social networking. Analysts are expecting 600 Million active users for mobile social networks by 2012.

Mobile VoIP deployments have taken off partially due to mobile broadband deployments around the globe. Most of the mobile VoIP deployments are said to be mobile operator-friendly, i.e. conducted in collaboration with the mobile operators. VCC (Voice Call Continuity) solutions are now available for hand-offs between mobile and Wi-Fi networks. There is also a strong element of social networking in the XoIP service deployments.

GPS

Increased penetration of GPS integrated handsets is now enabling a series of interesting Location Based Services. Nokia and Navteq had various product announcements. Yahoo announced oneConnect that alerts you when friends are in town. It also aggregates social network connections from Facebook, MySpace, etc. and delivers your email!

There were a lot of interesting companies worth to mention at the show, but I can only highlight a few of them:

• Aepona – won the best service delivery platform award
• GestureTek – most innovative application with its gesture recognition technology for mobile gaming and navigational software
• Valimo Wireless – mobile signature and user authentication and one of the finalists for most innovative consumer applications
• myGamma.com – best mobile social networking service

Finally, the Mobile World Congress is becoming less and less mobile operator centric. However, there is a need for further openness. Google, Apple and other internet players are at the gate and they should be invited and given a more active role at the future MWCs."

Ipoki -one to watch #4

Ipoki, founded in Spain in 2006, believes users should have control over their location information and who can see it.

It is a GPS-based social network that uses Google Maps and Google Earth to track and locate friends and family.The system also allows you to record geolocated alerts and receive them in mobile terminals. It works via an Open Source plug-in compatible with a wide range of handsets. Mobile users without inbuilt GPS have the option of linking up via Bluetooth to their GPS terminal.

Ipoki is gaining fame for its 'Follow Me' killer ap, allowing users movements to be tracked or followed in real time.This allowed the company to win the Mashup of the Month Award last summer.The Ipoki widget is now also available on netvibes and igoogle with a future release planned for Facebook.

At the same time as a new improved beta version of the software is released, Ipoki is on the lookout for seed capital to finance its further expansion. Within one year of setting up, Ipoki had already received 100,000 visits and 20,000 downloads of its software. With their 'open' philosophy and global reach, this ambitious start-up has big plans for the future. I'll be covering their progress in the coming months -in the meantime, why not try their new release and feedback on your impressions?

POST-SCRIPT: I asked Andres (one of the Ipoki founders who was browsing my post earlier and whom I'd met at a Mobile Monday event) if he had a scoop for my blog readers. He announced that they were beta testing a new nifty feature for their plugin -a photo geotracker using Flickr. The idea is that as Ipoki tracks the user's position (at a point in time) it can also pinpoint photo locations by synchronising with the camera's clock and ta-dah! You have your photos automatically geo-tagged!

I also asked Andres how Ipoki's service differed to that of Plazes -he said that Ipoki is a true LBS, tracking people's position via GPS while you need to tell Plazes where you are all the time. This raises the question -if and when Plazes will shift to using GPS to automate its tracking process...

Snippets from First Tuesday Barcelona -08/01/08

BARCELONA 08/01/2008 - Interesting session yesterday night at FIRSTTUESDAY SPAIN where Bango CEO Ray Anderson gave some background to his entrepreneurial adventure at the company he founded in 1999 with €1.5m of his own money. He was very open in admitting that the venture required far more time and money to take off than he expected (he is still due to make an overall profit for the business) but that he was confident he would be in a position to exit via a buyout from a bigger group within 2 years should he wish to do so. The often repeated point about having to grow the company above all else in the first few years was backed up by Roberto Fernandez, founder of Spanish start-up Aztive Mobile (both Bango and Aztive will be exhibiting at the Mobile World Congress in Barcelona next month).

Ray voiced the opinion (that is being repeated by several commentators) that mobile operators are becoming less important, increasingly allowing new companies to enter the fray and offer services independently of the operator restrictions.As operators are more concerned with protecting their revenue streams than with competing between each other, they have traditionally adopted a 'wait-and-see' attitude and jumped on the bandwagon at the last moment.

He stated that it was an odd coincidence indeed that only once handsets were placed on the market with free wi-fi browsing capability that operators reduced their data transfer rates or how only once handsets with in-built GPS were launched that operators agreed to the release of location-related data for groups of customers.

He also stated that monetising revenues from the mobile web will remain an issue until operators are in a posiition to claim a substantial chunk of revenues from add-on services and he called for a Paypal-style new entrant to create a new global standard for payments that will stimulate new revenue models and open up new earning opportunities.

While talking about mobile site design, he stressed the need for developers to adapt web pages to the reality of the mobile screen (obvious but still not widely acknowledged!) with vertical navigation, simplified browsing, removal of flash-type graphics etc. Interestingly for me, he did not mention the whole dot.mobi movement spearheaded by the consortium of Nokia, Telefonica, GSMA etc. which is odd, as dot.mobi aims to do just what Ray preaches-viz.adapt web pages for mobile and create a 'gold standard' for mobile.

Ray also called for a simple and universally-accepted browser to be developed for mobile (i.e. Google for mobile) and circumvent some of the cumbersome browsers that are around today which reduce the quality of the user experience.