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The world of wireless location-based services is a marketplace in flux. In the early 1990s, when LBS first emerged as a commercial service, wireless carriers benefited from the success of in-car navigation, fleet management and personal location services. Today, however, with the rapid proliferation of smartphones, tablets and GPS units, free navigation and location applications are quickly drying up the LBS revenue stream. Some industry insiders see Asia – where smartphones are not subsidized – as still-fertile ground for LBS offerings because the devices are financially out of reach for most consumers, keeping market penetration low. However, Apple’s recent introduction of the cost-effective iPhone 5C is aimed directly at these emerging markets, potentially making the LBS opportunity short-lived. The hard truth is that, soon enough, personal digital tools will be nearly everywhere and traditional LBS strategies will not be profitable. A slight shift in strategy, however, may allow carriers to transform smartphones, tablets and GPS units from market competitors to revenue drivers by leveraging their capabilities as well as their ubiquity. Because of the innate advantages and increased accuracy of network-based location services, carriers can utilize the digital devices tucked away in every pocket, purse and dashboard to push relevant information to end users based upon pinpointed location. Studies conducted by New York-based ABI Research suggest that wireless carriers have significant LBS market opportunity in the areas of enterprise services, personal tracking/mobile health and proximity marketing/advertising.
Enterprise solutions
Traditionally, wireless carriers have focused their LBS enterprise offerings on dedicated in-vehicle GPS units, fleet management support and telematics applications. Today, carriers should look to the broader enterprise market as a place where location services can be profitable. Businesses with a decentralized labor force, in particular, want end-to-end mobile workforce management solutions that extend across vehicles, mobile phones and handheld devices. Services such as tracking, mapping/navigation, wireless time cards, mobile form completion and geo-fenced device management and alerts allow businesses to monitor and measure staff performance and behavior, streamline processes and improve customer experience.
Presently in the United States alone, there are more than 20 million enterprise vehicles with a current enterprise management penetration rates at less than 30%. ABI Research has forecast that by 2018 the enterprise sector could be the largest market opportunity for carriers prepared to offer network-based mobile applications as part of their overall enterprise solution.
Personal tracking/m-health
Personal tracking and m-health are significant areas of opportunity for carrier-based LBS offerings, as well. In fact, ABI Research has forecast this market to grow with a compound annual growth rate of 18.5%, reaching a market value in excess of $700 million by 2018.
It makes total sense. Mobile device sales are no longer limited to business executives. Smartphones, tablets and laptops are now popular devices for every age group and cross section of the mature-market population. Because network-based LBS solutions offer complete connected-device reach as well as remote, passive location across all device types and operating system platforms, family finder applications will continue to be deployed in increasing numbers in both mature and emerging markets for the foreseeable future.
Mobile health offers even greater promise for network-based solutions that utilize mobile devices as an information gathering and delivery tool. Handset-based solutions offer significant cost savings for end users over traditional personal emergency reporting solutions that rely upon remote devices and administrative support to collect medical data, deliver medical advice and dispatch help. Because these types of m-health solutions are designed to offer assistance in emergency situations, robust, accurate and time-sensitive service is an absolute prerequisite to success in this arena.
While m-health is becoming common in industrialized nations today, the consistent spread of smartphones into developing countries is creating a long-term opportunity for carriers. With an ever-increasing need for healthcare in remote regions, network-based m-health solutions improve the ability to diagnose and track diseases, increase the availability of public health information and expand access to ongoing medical education and training for health workers.
Proximity marketing/advertising
Perhaps the most lucrative market for the future of carrier-based LBS services lies in the location-based advertising, with specific focus on the retail environment. There are significant technological advancements taking place today to refine indoor location capabilities. ABI Research predicts that network-based solutions based on LTE, distributed antenna systems, small cells, carrier Wi-Fi and heterogeneous networks have significant growth opportunities if they can deliver fine-tuned accuracy and consistency. For carriers that can provide this level of service, the total indoor location market could reach nearly $6 billion by 2018, driven primarily by location technology provision, analytics and advertising.
The retail sector is ready and waiting for LBS solutions that will provide the ability to measure the delivery of advertisements directly to a subscriber over a wireless mobile device based upon their location within a retail environment. Unlike other competing location technologies, carriers can reach all types of handsets, combing indoor and outdoor location and analytics to support the delivery of rich and relevant product information and discounts. These solutions can also be extended to provide services such as indoor navigation, hyper-local product search and customer analytics. Carriers are in a unique position to offer retailers a level of message targeting that is not achievable by other means. To be successful, however, it will be essential for carriers to optimize their solutions to provide sub-5 meter accuracy when and where it is needed, across all devices and in varying environments.
Looking forward
There is no doubt that traditional location-based services are facing a real financial challenge. The consumer LBS market will continue to be dominated by personal digital devices that will make it increasingly difficult for carriers compete. However, the future is far from lost. As the world becomes increasingly dependent upon mobile devices, carriers have significant opportunities to monetize location service again if they understand that digital devices are not necessarily the market enemy. Carriers who prioritize location accuracy as the key market differentiator, similar to voice quality in the early years of wireless service, will realize that smartphones and other devices can actually become the delivery mechanisms of their revenue-generating LBS solutions.
