A German driver last week followed his navigation system’s command to “Turn right now” and veered into a roadside bathroom 30 yards shy of his intended intersection.
Consider it a metaphor for the wireless location-based services industry.
In the wonderfully hyped world of wireless, no space has surrendered to hyperbole the way LBS has. Network operators have invested vast sums in location-aware technology, stoking the imagination of application developers and mobile marketers looking to deliver a wireless coupon to a user walking by a store, for instance, or offer dining information to an on-the-road salesman. But, like that overly obedient driver, the industry was a bit premature.
“In 2000, 2001, 2002, people thought, `Oh LBS services are great; the carriers could do that,”‘ said Oren Nissim, chief executive officer of Telmap Ltd., an Israel-based developer of navigational and mapping applications. “So the carriers went out and bought a lot of technology and placed it on their networks. But guess what? They didn’t know how … to operate it, plus the technology wasn’t really there at the time. They were left with large investments on one hand, and no revenues on the other hand.”
Operators are continuing to invest, and revenues finally may be around the corner. A recent study from In-Stat revealed surprisingly strong interest in location-based offerings, with 53 percent of the 1,000 mobile users polled saying they found navigation-type applications compelling. Meanwhile, only 15 percent expressed strong interest in mobile video, which-like LBS once did-seems to have captured the imagination of the industry, but not the public. And onlookers expect the interest in wireless navigation to grow as more sophisticated handsets and networks come to market.
“Expanding the number of GPS or Assisted GPS handsets from today’s levels will be an important step for 3G carriers to provide the applications their customers really want,” said In-Stat analyst David Chamberlain.
Cingular Wireless L.L.C. just jumped on the bandwagon, introducing a subscription-based offering for on-the-go business users and government workers. The carrier launched TeleNav Inc.’s GPS Navigator, a smart-phone application that provides turn-by-turn voice and onscreen directions as well as full-color moving maps. Verizon Wireless late last year launched its own offering, dubbed VZ Navigator.
Both services are targeted at on-the-go consumers and business users, and both are offered at about $10 a month. The operators are hoping to provide an alternative to dedicated GPS navigation systems, which can cost anywhere from $300 to more than $1,000, as they create stickiness with carrier-branded, subscription-based offerings.
“You’ve got the carriers generating $7 to $10 a month for these navigation applications,” said Mike Berger, senior manager of product and channel marketing at Xora, a Mountain View, Calif.-based developer that focuses on mobile enterprise applications. “You can go into a Best Buy and buy a navigation unit for $800. So that per-month (charge) is very appealing.”
Xora scored its first overseas win when Australian operator Telstra agreed to carry its offering, which is designed to allow businesses to track employee time sheets, job activity and physical location remotely via GPS. The company boasts thousands of business customers in the United States, where its service is offered exclusively by Sprint Nextel Corp., and scored its The Mountain View, Calif.-based outfit claims 160 full-time employees.
Indeed, Sprint Nextel appears to hold a substantial lead on the LBS playground, thanks largely to Nextel’s impressive success in recent years with construction crews, transportation companies and other mobile businesses. But the carriers aren’t competing only against each other: handset manufacturers are getting into the game, launching branded devices and services that can determine location without operator networks. Internet giants such as Google Inc. and Yahoo, meanwhile, are looking to woo casual wireless users with off-deck-and, often, free-applications.
The battle for network operators, then, isn’t limited to offering the best location-based applications. Carriers must figure out how to monetize such services, which will likely require deploying a wide range of both free and premium offerings. And, according to Telmap’s Nissim, they’re scrambling to find the best developer partners in the field.
“(Operators) want to offer such services on their deck; they also know they’re going to be the ones developing the technology going forward,” Nissim said. “They don’t want to deal with the content side of it. It’s an ongoing cycle, and carriers are saying, `It’s not really our business. Our business is to sell wireless service.”‘
