In search of LBS

Few mobile applications have been more highly anticipated, and so slow in coming, than location-based services. Or so it seems. LBS has been around for years in various forms, from early implementations like fleet tracking to recent emerging apps like in-car navigation and personal navigation devices (PNDs) from companies like Garmin, Navman, Trimble, Magellan, and TomTom.


Yet LBS has remained something of a niche - fleet tracking is chiefly a hit with vertical industries, while in-car navigation's heavy price tag has limited its appeal to the luxury car market. PNDs have been faring better as prices go down, and are partially responsible for the recent buzz over LBS' pending surge. In-Stat, for example, says there will be 56 million portable navigation devices in service by 2011, compared to 14 million in 2006.


However, that includes mobile phones fitted with GPS chips, and here's where the real excitement begins, because the mobile space is widely seen as LBS' ticket to the mass market bonanza. Again, this isn't new. Carriers in Japan and Korea have been offering A-GPS-based location services for years, while the US FCC's E911 mandate in 1999 (under which cellcos needed to support delivery of location information to emergency services operators) set the stage for the launch of commercial LBS services leveraging the same capabilities, which began in earnest in 2004 with Nextel's TeleNav service.


Four years later, however, mobile LBS is still in first gear even in markets like the US where it took a government mandate to convince cellcos to invest in the technology to enable their networks to support location-based services, and only now starting to realize its potential. There's a plethora of reasons for this, but the basic issue has been the lack of market incentive which cellcos preferred to be supplied by an ecosystem ready and able to make LBS a compelling service that users would actually want.


Which brings us back to the current buzz over LBS. It's just now coming out of the other end of the usual cycle that new mobile apps go through - hype, disappointment, reality check, nascent traction and steady growth. Telephia reports that revenue from the mobile LBS applications market tripled in the first three quarters of 2007, with no signs of slowing anytime soon. The digital mapping sector's two biggest players - Navteq and TeleAtlas - were snatched up last year by Nokia and TomTom, respectively, setting up an epic battle between handsets and PNDs for the hearts and minds of consumers. And many of the elements of the LBS ecosystem are finally poised to fall into place.


"The technology, handsets and high bandwidth networks now exist to deliver the accuracy to ensure the best possible user experience," says Robert Morrison, senior VP of market and business development at LBS technology firm TruePosition.


"This will pave the way for LBS to deliver the revenues they have always promised and drive demand for innovative services."


Device wars


The emergence of GPS-enabled handsets from players like Nokia, Samsung and Motorola is typically cited as a major game-changer for the LBS market - which is ironic, as infrastructure vendors developed LBS technologies such as U-TDOA and AOA (see sidebar, "LBS: a tech primer, at behind) that put the location intelligence in the network instead of the handset. Network-based LBS technology has the attraction of working with any handset, and also working indoors where GPS satellites can't see you. On the other hand, GPS is hard to beat for outdoor accuracy, which is why consumers are buying PNDs in the first place.


Handset makers already keen to make mobile phones everyone's default MP3 player and digital camera have similar ideas with GPS. And with annual mobile phone sales annually topping over one billion units, GPS handsets could well turn the PND market on its ear. In 2007, the PND market was still dominated by TomTom, Garmin and Mitac. But Nokia shifted an estimated five million GPS-equipped Nseries models last year, according to a report from Telematics Research Group. Before 2008 is over, the group says, GPS phones will start outselling PNDs and by 2015, the top four navigation device manufacturers will be Nokia, Samsung, Motorola and LG. That's not to say that pure PNDs will be history - PND sales will also rise in that time, just not nearly as much.


Part of the attraction of mobiles over PNDs is the user experience. PNDs are dedicated and relative expensive devices that only do one thing (albeit very well), and require the user to spend almost $100 a pop just to keep the software updated. For around the same price (or less if you count operator subsidies), a user can buy a mobile device with similar functionality with a built-in billing mechanism and downloadable updates.


Little wonder the news of Nokia's purchase of Navteq alone prompted Mike Ippoliti, telematics and automotive research director at ABI Research, to put PND players on notice. "Garmin, Magellan, and other smaller players had better be examining their business models," he said, adding that ABI spoke with a Wall Street analyst who asked - hopefully - "whether Garmin has a Plan B."


Then again, ABI also notes that less than 15% of phones will ship with GPS next year, and projections of rising sales for PNDs suggest they might not need a Plan B - at least not right away. One advantage of dedicated devices is that they're very good at what they do, often better than converged devices with the same function.


Between the relatively small selection of models, limited user awareness, reliability issues and, worst of all, the small screen size - as well as the toll GPS takes on battery life - GPS handsets will have a hard time putting a dent in PND market share - at least this year.


That could also depend on the market. Wireless device convergence has more appeal in developing markets, where consumers in developed markets still favor multiple devices. The rise of music-centric handsets hasn't stopped Apple from selling iPods, for example, even if handset makers have the scale to outsell them.


On the other hand, Apple's iPhone was designed in part to rectify one edge mobiles have over the iPod - wireless connectivity. And while it doesn't have a GPS chip in it - yet - it is in fact a handheld navigation device via its inclusion of Google Maps.


LBS 2.0


Which brings us to another tipping point in the LBS saga - the actual applications.


Traditional LBS is fine for finding out where you are and how to get somewhere, but little else. Meanwhile, digital mapping services on the Web from Google, Yahoo!, MSN and MapQuest can give you directions - and they're now becoming accessible via mobile Internet connections. Google and Yahoo in particular have been busy striking deals to embed their map services on the handset. Google's recently released My Location service is even designed to work without a GPS chip, leveraging the Cell ID capabilities of cellular networks to determine your location.


But the real attraction is the level of dynamic interactivity that today's digital maps can offer. The standard features of Web 2.0 - user generated content (UGC), social networking, content sharing, etc - are being applied to LBS apps as well, and it's opening up a universe of service possibilities, says Philippe Funcken, North Asia MD for TeleAtlas.


"For example, maybe you want to find a restaurant, but while you're doing that, you can also access a server to find your friends and family and see if they want to go as well," Funcken says. "You can look at the specials at the restaurant, read reviews, make a reservation, and see whether parking is available."


This also gives mobiles an edge over straight PNDs, he adds. "Dynamic information like that is easier to transmit on a mobile phone.


You can't do them with a dedicated device."


LBS apps can leverage the UGC aspects of Web 2.0 in other ways, from geotagging functionality that lets users put location metatags on uploaded content (perhaps a photo, video or review of that restaurant you were checking out) or even update maps wiki-style to report shops going out of business or roads being closed for construction.


A few specific trends are already starting to emerge from this - such as buddy-finder services, which actually emerged via another Web trend, instant messaging. IM gave us buddy lists and the concept of presence (i.e. knowing when your IM buddies are online and when they're not), and the rise of mobile-based IM and technologies like GPS are adding location to that mix. A recent service from Sprint in the US, powered by Loopt, automatically updates buddy locations every 15 minutes and plots them out on a map on the phone screen. It also sends the user proximity alerts when their friends are within a specified distance.


Meanwhile, all the major IM brands (Google, Yahoo, MSN, AIM) have mapping services on tap, and see mobile presence as a ticket to reach users directly with location-based services and viral advertising.


Ads wanted


By no coincidence, many of the same companies are also chasing mobile search with the idea of leveraging the location capabilities of handsets to generate location-based sponsored results. Google and Yahoo have been increasingly aggressive in Asia, striking deals with mobile operators in the region who see ad-funded mobile search as a potentially hot new revenue driver in the next couple of years. A study from by IDC on behalf TruePosition describes mobile local search as "the LBS low hanging fruit for the mobile operator community".


Which is good news because, by most indications, mobile users aren't very likely to pay for mobile search no matter how location-aware it is. The IDC/TruePosition study found that 70% of consumers would use local mobile search services - provided they were ad-sponsored, which is another way of saying that they'd prefer it to be free rather than pay for it.


"Customers are quite savvy about location, but you have to set expectations on how it should work," says Menji Paggao, Asia-Pacific sales VP at TruePosition. "A service like family monitoring, where parents are monitoring where their kids are, people will pay a monthly fee for that, but for local search, most people would rather it be ad-sponsored."



Network choices


Here's where the mobile LBS proposition gets a little shaky. Promises of new revenues are fine and well, but cellcos have been hearing that about plenty of other new mobile services, with mixed results.


Complicating things a bit more is that, even as handsets and applications come into the market, many operators in Asia still don't have their networks ready for LBS.


Part of the problem is terrain - specifically the urban canyons where mobile LBS would be particularly useful. The other problem is that operators are finding they need more than one LBS technology to cover both indoors and outdoors.


"Most operators are using either Cell ID or Enhanced Cell ID, which GSM supports already, or A-GPS deployments," says Paggao of TruePosition. "The downside is that A-GPS is dead indoors, and Cell ID is too broad a coverage area, so it's not as targeted as operators would like."


A readily available solution is U-TDOA, which has been a 3GPP standard since 2003, provides better accuracy than Cell ID, and doesn't require any changes in the handset to work. It's also expensive, though - U-TDOA requires LMUs to be installed in every base station, and full coverage gets harder to maintain in mountainous areas where BTSs are spread farther apart. The ideal solution would be a combination of two or more LBS technologies - such as U-TDOA and A-GPS - but that can add to the expense.


A related issue that can limit LBS' appeal is cross-carrier interoperability, says Paggao - not just for security or public safety services, but also consumer apps like friends-finders and ads. "If you're going to launch a friends finder, it has to work regardless of what mobile network your friends use," he says.


One potentially interesting twist to network support for LBS, as it happens, is what happens as 3G networks morph into OFDM-based all-IP wireless broadband systems - and as other broadband wireless networks like mobile Wimax come online - and other devices start connecting to them.


Like PNDs, for example. The emergence of post-3G wireless broadband could benefit PNDs because of the demand from PND users for delivery of real-time traffic information, road construction updates and weather-related data, as well as easier map updates.


Yes, mobile phones can do that now, but as wireless broadband becomes more ubiquitous, more devices will be fitted for wireless connectivity. PNDs are no exception, and once they become wireless broadband devices, it may come down - again - to whether users prefer multiple devices that do one thing well, or one device that does everything okay.


Over the next five years, as GPS becomes more accepted as a tool for consumers and business, it will be an interesting game to watch as the competitors duke it out. The market appears to be poised for significant growth, but with several categories of products and delivery methods vying for the consumer and business dollar, the landscape that emerges may well be much different from the world of navigation we know today.