Insider: Location Finds Itself

Location applications for mobile phones are undergoing a resurgence because of the availability of cheap global positioning system (GPS) chips and an influx of new companies getting into the market, according to the latest edition of the Unstrung Insider.

In the new report, Mobile Location Services: Keys to Mass-Market Success, analyst Gabriel Brown surveys the companies involved -- from cellular operators to Web giants -- and examines what factors are making personal navigation, social networking, and local location services the flavor of the month.

Partly, he reports, the technology has caught up with the ambitions of the operators and other interested parties. GPS chips, for instance, may only add one dollar to the bill-of-materials for a cellphone in 2008; while the phones lend themselves more to mapping and other applications with bigger screens and more colorful displays.

Consumer interest in personal navigation devices (PNDs), which are typically used by drivers to map a route and find their location in real time, is also at an all-time high, Brown notes.

"In Western Europe, for example, PNDs are currently the fastest-growing consumer electronics segment after flat-screen TVs: More than 11 million units shipped in 2006, with projections for 17 million units in 2007. According to Navteq, the world's largest provider of digital map data, 2006 was a breakout year for GPS navigation in the U.S., with 3 million units sold -– up almost 300 percent from 2005."

In addition, the cellular carriers now face much more competition, with Web giants such as Google (Nasdaq: GOOG) and Yahoo Inc. (Nasdaq: YHOO) pushing location applications hard in the consumer market.

Brown gives this snapshot of current company activity around location applications:

Table 1: Location Services Activity by Mobile Telecom Companies
Company Sector Date What Comment
Boost / Loopt Operator & Developer Mar. 2007 "Social mapping" app hit 100K subs; rollout set for U.S. carriers The industry benchmark for Buddy Finder apps
Microsoft Web Feb. 2006 New Live Mobile Java app has local search/directions No auto-locate or operator tie-ins yet, but a good start
Motorola Handsets Feb. 2007 Launch of MotoNav mapping and navigation software for handsets, GPS by Bluetooth Interesting that one version works on competitors' phones
Nokia Handsets Feb. 2006 Free mapping service, low-cost navigation via Web download; announced GPS-enabled 3G handsets An aggressive, disruptive move; will benefit users and advance the overall market
Nokia / Wave-market Networks & Developer Feb. 2007 Nokia to OEM Wavemarket applications and integrate with own LBS systems Nokia's belief in its apps will boost the startup
Orange UK Operator Nov. 2006 New Orange Local Java app with mapping, search, and automated location One of the best consumer location apps in Europe; a good attempt at innovation
RIM Handsets Feb. 2006 New BlackBerry with GPS and TeleNav software Heralds GPS integration with mainstream GSM/UMTS
Samsung / Google Handsets & Web Jan. 2006 Will ship handsets with embedded Mobile Maps Pre-installed apps for mass-market users; expect more
Vodafone / Google Operator & Web Feb. 2007 Agreement to preinstall Google Maps on handsets Big win for Google, but what is its revenue share?
Yahoo! Web Feb. 2006 New Yahoo Go! App includes new mapping and locally relevant content No auto-locate features or operator tie-ins; the app just doesn't succeed
Source: Unstrung Insider

"The reason that location is so important to search providers is that, even on the fixed Internet, a large proportion of searches are for locally-related content, and knowing where the searcher is can obviously add some contextual value," Brown explains. "When search transfers to mobile, the importance of location data clearly increases."

For Google and Yahoo especially, knowing more about a user's location can help them to serve up more specific Web ads. At the moment, however, the mobile search applications from Google and the other Web players lack an "auto-locate" feature, limiting their convenience by forcing users to manually input their location via the phone keypad.

"This is due in part to the reluctance of operators to open up their location APIs to the Internet players, for fear of jeopardizing customer relationships," says Brown, noting that the partnership struck between Google and Vodafone Group plc (NYSE: VOD) to collaborate on location apps this February could be a key sign of things to come.

— Dan Jones, Site Editor, Unstrung

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