Mobile Location-Based Services - 7th Edition

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Mobile Location-Based Services – 7th Edition
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Executive summary

Mobile location-based services (LBS) are gradually achieving mainstream market
acceptance. Berg Insight estimates that the number of active users of location-based services
and apps grew 80 percent in 2012. At the end of the year, about 40 percent of mobile
subscribers in Europe were frequent users of at least one location-based service. In North
America where adoption of smartphones and GPS-enabled handsets is higher, an estimated
50 percent of all handset users now access location-based services regularly. However, the
significant growth in usage and number of active LBS users have not yet resulted in
substantial growth in revenues. Total LBS service revenues in the EU 27+2 reached € 325
million in 2012 and Berg Insight forecasts LBS revenues to grow to about € 825 million by
2017. In North America, revenues are forecasted to grow from US$ 835 million in 2012 to
about US$ 1,295 million by 2017.

There are many alternative ways to categorise various LBS. In this report, LBS are divided into
eight service categories based on primary function: mapping and navigation, local search
and information, social networking and entertainment, recreation and fitness, family and
people locator services, mobile resource management, mobile advertising and marketing,
and other services. Mapping and navigation is the leading segment in terms of revenues and
the second largest in terms of number of active users. Although the number of active users of
mapping and navigation services is still growing, revenues are only increasing slowly as
competition from free and low cost services has intensified. White-label developers are now
working with mobile operators to create localised offerings and attractive service bundles.

Some navigation service providers are focusing on freemium apps where the core navigation
service is free and users have the option to purchase additional content and features. Local
search and information services is now the leading LBS category in terms of unique users,
driven by the adoption of handsets with improved capabilities and changing user habits. Most
leading social networking services are now focusing more on their mobile offerings as users
increasingly access services from mobile devices. Many of these services have various forms
of location support ranging from sharing geo-tagged content to location sharing and check-in
features. A growing number of outdoor and sports enthusiasts are downloading recreation
and fitness apps that turn smartphones into convenient substitutes for GPS devices and
sports watches. Family locator services have been part of mobile operators' LBS portfolios for
many years – especially in the US – but are now facing competition from app developers.
Also mobile workforce management services that aim to improve operational efficiency for
businesses are gaining traction as the cost of hardware and software declines.

Advertising is an important source of revenues for many LBS providers. The mobile channel
is getting established as an integral part of the marketing media mix as mobile media usage
grows. Targeting by location in combination with other contextual and behavioural
information greatly enhances the relevance of mobile advertising. It has been demonstrated
that location-targeted ads generate considerably higher return than conventional mobile
advertising, and the associated eCPM levels are several times higher. The main barriers to
adoption are related to the inherently limited reach of LBA which acts as a mental hurdle for
advertisers. The demand for hyper-local targeting of ads is so far limited among advertisers,
but is anticipated to increase given the considerable impact such campaigns generate.
Educating advertisers about this opportunity and new methods for campaign performance
evaluation are thus called for.

Historically, mobile operators have been key partners and the main distribution channel for
app and service developers. Operators have a direct relationship with large user bases,
allowing them to market services, pre-install apps on new handsets, present links to services
from their portals and handle end-user billing. This central role is now challenged by the
rising smartphone ecosystems that integrate key LBS and give developers access to location
data, distribution channels in the form of on-device app stores as well as billing and
advertising solutions for monetisation. Mobile operators are therefore exploring other
opportunities to leverage their assets, for instance by opening their location platforms to third
party developers and location aggregators that play an important role as intermediaries
between mobile operators and developers. Network-based location data is valuable for
developers and third parties that need to locate any device, not only GPS-enabled
smartphones. Mobile operators can provide network-based location data for services such as
mobile analytics as well as fraud management and secure authentication.

Table of Contents

Table of Contents . i
List of Figures vi
Executive summary 1

1 Introduction to location-based services 3

1.1 Definition of mobile location-based services 3
1.2 Mobile communication services .4
1.2.1 Mobile voice and SMS 4
1.2.2 Mobile data and applications 5
1.2.3 A brief history of location platforms and services .7
1.3 Mobile LBS categories 9
1.3.1 Mapping and navigation .9
1.3.2 Local search and information 11
1.3.3 Social networking and entertainment 11
1.3.4 Recreation and fitness 12
1.3.5 Family and people locator services 12
1.3.6 Mobile resource management 12
1.3.7 Mobile advertising and marketing 13
1.3.8 Other services .14
1.4 Mobile app monetisation strategies and business models 15
1.4.1 Free apps .15
1.4.2 Paid apps .15
1.4.3 Freemium apps and in-app payments 16
1.4.4 Ad-funding 16
1.4.5 New channel to market 17
1.4.6 Bundled products and services 17
1.4.7 Mobile app business model trends .18
1.5 Mobile location technologies and platforms 19
1.5.1 Mobile network-based location technologies .20
1.5.2 GNSS: GPS, GLONASS, Galileo and Compass .21
1.5.3 Bluetooth and Wi-Fi positioning 22
1.5.4 Hybrid and indoor location technologies 23
1.5.5 Handset client and probe-based location platforms .23
1.6 The regulatory environment in Europe and North America 24
1.6.1 European emergency call and privacy regulations 25
1.6.2 LBS regulatory environment in the US 26
1.6.3 Emergency call regulations in Canada 28

2 Smartphone ecosystems 29

2.1 Smartphone OS platforms 29
2.1.1 Smartphone platform developments and market shares 31
2.1.2 Smartphone vendor market shares 32
2.1.3 Android 33
2.1.4 iOS 34
2.1.5 Windows Phone .35
2.1.6 BlackBerry OS and BlackBerry 10 35
2.1.7 Samsung's Bada platform 36
2.2 App stores .37
2.2.1 Apple App Store .39
2.2.2 BlackBerry App World 39
2.2.3 Google Play .40
2.2.4 Nokia Store 40
2.2.5 Windows Phone Store 41
2.3 Ad networks and in-app ad solutions .42
2.3.1 Apple – iAd 44
2.3.2 RIM – BlackBerry Advertising Service 45
2.3.3 Microsoft – Windows Phone/Microsoft Advertising 46
2.3.4 Nokia – Nokia Ad Exchange 46
2.3.5 Android – AdMob and third-party ad networks 47
2.4 Smartphone industry analysis 47
2.4.1 Smartphone platforms are becoming new vertical silos 48
2.4.2 Towards complete LBS offerings .49
2.4.3 Operators start to back emerging smartphone platforms 49
2.4.4 Handset vendor strategies .50
2.4.5 The mobile web, HTML5 web apps and native apps 51

3 Operator LBS offerings and strategies 53

3.1 The European operator LBS market 53
3.1.1 3 Group .56
3.1.2 Deutsche Telekom Group 56
3.1.3 KPN Group 57
3.1.4 Orange Group .57
3.1.5 SFR .59
3.1.6 Telefónica Group 59
3.1.7 Telenor Group .60
3.1.8 TeliaSonera Group 61
3.1.9 Vodafone Group .62
3.2 The North American operator LBS market 63
3.2.1 AT&T Mobility 65
3.2.2 Bell Mobility .66
3.2.3 MetroPCS .66
3.2.4 Rogers Wireless .66
3.2.5 Sprint Nextel 67
3.2.6 TELUS 68
3.2.7 T-Mobile USA 68
3.2.8 US Cellular 68
3.2.9 Verizon Wireless .69
3.3 Location aggregators and Location-as-a-Service providers 70
3.3.1 Deveryware 70
3.3.2 Locaid .70
3.3.3 Location Labs 71
3.3.4 Lociloci 73
3.3.5 Mobile Commerce .73
3.4 Industry analysis 74
3.4.1 Organisational capabilities and goals limit operator's ability to provide LBS 74
3.4.2 Smartphone platforms challenge operators' role as distribution channel .75
3.4.3 Operators are no longer the central source of location data .75
3.4.4 Emerging opportunities for operators to sell bulk location data 76

4 Consumer LBS categories 77

4.1 Mapping and navigation .77
4.1.1 Mapping and routing services 77
4.1.2 Speed camera warning apps and services 79
4.1.3 Traffic information services 80
4.1.4 Turn-by-turn navigation services 82
4.1.5 Mapping and navigation industry trends 82
4.1.6 Mobile operator service offerings .85
4.1.7 Handset vendor offerings 88
4.1.8 App stores and service providers 90
4.1.9 Key market players 90
4.2 Local search and information .100
4.2.1 Directory services 101
4.2.2 Local discovery and review services 104
4.2.3 Travel planning, guides and information services 105
4.2.4 Shopping and coupon services .107
4.3 Social networking and entertainment 109
4.3.1 Social networking and community services .110
4.3.2 Check-in services 113
4.3.3 Friendfinder services 114
4.3.4 Communication, chat and instant messaging services .115
4.3.5 Location-based games 116
4.4 Recreation and fitness 118
4.4.1 Geocaching apps 118
4.4.2 Outdoor navigation .118
4.4.3 Sports tracking apps 119
4.5 Family and people locator services 122
4.5.1 Family locator services marketed by mobile operators .122
4.5.2 Third party family and people locator apps and services .124

5 Enterprise LBS categories and LBA 127

5.1 Mobile resource management 127
5.1.1 Fleet management services 127
5.1.2 Mobile workforce management services 130
5.1.3 Lone worker protection services 134
5.2 Mobile advertising and marketing .136
5.2.1 The marketing and advertising industry 136
5.2.2 Advertising on the mobile handset 137
5.2.3 Definitions and variants of LBA 139
5.2.4 LBA formats 141
5.2.5 LBA industry analysis .144

6 Market analysis and forecasts 147

6.1 Summary of the LBS market 147
6.1.1 The European LBS market 147
6.1.2 The North American LBS market 148
6.2 Mobile advertising and location 149
6.2.1 Challenges and opportunities for mobile advertising 149
6.2.2 Location can improve ROI for advertisers 150
6.2.3 LBA market value forecast 150
6.3 Vertical market trends 152
6.3.1 Mapping and navigation services become free for end-users 152
6.3.2 Search and information services growth driven by smartphone uptake .155
6.3.3 Social networking and entertainment services gradually add location 156
6.3.4 Smartphones are increasingly used as recreation and fitness devices 158
6.3.5 Family and people locator service uptake driven by free apps 160
6.3.6 Corporate efficiency investments drive WFM service adoption 161

Glossary 163

List of Figures

Figure 1.1: Mobile subscriptions by region (World Q2-2012) 4
Figure 1.2: Wireless service revenues (World 2012) .5
Figure 1.3: Smartphone adoption and market shares (Western Europe 2009–2012) 6
Figure 1.4: Smartphone adoption and market shares (North America 2009–2012) 6
Figure 1.5: Mobile location-based service categories .10
Figure 1.6: LBS system overview 19
Figure 2.1: Smartphone shipments by vendor and OS (World 9M-2012) 30
Figure 2.2: Leading mobile app stores (Q4-2012) 38
Figure 2.3: Examples of mobile ad networks (World 2012) .43
Figure 3.1: Mobile operators by number of subscribers (EU27+2 Q2-2012) 54
Figure 3.2: LBS offered by mobile operators (Europe 2008–2012) 55
Figure 3.3: Mobile operators by number of subscribers (North America Q2-2012) .64
Figure 4.1: Mapping app and service offerings .78
Figure 4.2: Speed camera warning apps 79
Figure 4.3: Traffic information platform .80
Figure 4.4: Traffic information apps and services .81
Figure 4.5: New business models for mobile navigation services .83
Figure 4.6: Navigation offerings from European operators (December 2012) 86
Figure 4.7: Navigation offerings from North American operators (December 2012) 87
Figure 4.8: Android, BlackBerry, iPhone and WP7/8 turn-by-turn navigation apps .89
Figure 4.9: Navigation app and service providers by active users (World Q4-2012) 91
Figure 4.10: Local search and information services marketed by operators (2012) .100
Figure 4.11: Leading directory service providers (2012) .101
Figure 4.12: Mobile yellow pages usage and app downloads (EU 27+2 2009–2012) .102
Figure 4.13: Directory provider distribution channels and business models 103
Figure 4.14: Local discovery and review services .104
Figure 4.15: Online travel companies .105
Figure 4.16: Travel guide publishers 106
Figure 4.17: Shopping assistant and coupon services (2012) 107
Figure 4.18: Social networks with over 100 million users (World 2012) .111
Figure 4.19: Mobile-originated social networking services (2012) 112
Figure 4.20: Social networking services with check-in feature (World 2012) 113
Figure 4.21: Examples of friendfinder services (2012) .114
Figure 4.22: Location-enhanced communication, chat and IM services (2012) .115
Figure 4.23: Examples of location-based game developers (2012) 117
Figure 4.24: Examples of outdoor navigation app developers (2012) 119
Figure 4.25: Examples of sports tracking app developers (2012) 120
Figure 4.26: People locator services marketed by mobile operators (2012) 123
Figure 4.27: Third party people locator services using Cell-ID (EU27+2 2012) .125
Figure 4.28: People tracking and location sharing apps (2012) 126
Figure 5.1: Examples of fleet management offerings by mobile operators (2012) 129
Figure 5.2: Workforce management services marketed by operators (2012) 131
Figure 5.3: Examples of mobile workforce management service providers (2012) 133
Figure 5.4: Lone worker protection service providers (2012) .135
Figure 5.5: Global advertising expenditure by media (World 2012) 136
Figure 6.1: LBS revenue forecast (EU27+2 2011–2017) 148
Figure 6.2: LBS revenue forecast (North America 2011–2017) .149
Figure 6.3: LBA revenues and forecasts (EU27+2 and North America 2011–2017) 151
Figure 6.4: Mapping and navigation service revenues (EU27+2 2011–2017) .153
Figure 6.5: Mapping and navigation service revenues (North America 2011–2017) 154
Figure 6.6: Search and information service revenues (EU27+2 2011–2017) 155
Figure 6.7: Search and information service revenues (North America 2011–2017) 156
Figure 6.8: Social networking and entertainment revenues (EU27+2 2011–2017) 157
Figure 6.9: Social networking and entertainment revenues (North America 2011–2017) 158
Figure 6.10: Recreation and fitness revenues (EU27+2 2011–2017) .159
Figure 6.11: Recreation and fitness revenues (North America 2011–2017) .159
Figure 6.12: Family and people locator service revenues (EU27+2 2011–2017) 160
Figure 6.13: Family and people locator service revenues (North America 2011–2017) 161
Figure 6.14: Workforce management service revenues (EU27+2 2011–2017) 162
Figure 6.15: Workforce management service revenues (North America 2011–2017) 162