On 14^th December 2011 location based service (LBS) provider TeleNav announced the availability of its HTML5 browser based GPS navigation service for a limited number of developers. The service will enable bricks and mortar retailers in the US to integrate navigation features onto its mobile website. Many retailers provide a map of business location on their websites, but this goes a stage further, allowing consumers with GPS enabled phones to access voice-guided directions to the merchant without needing to fire up a separate application. TeleNav aims to provide this capability for free, and there appears to be few barriers to entry for retailers.

 

Google employed a similar approach on the fixed internet, by making static maps available to almost anyone to embed onto websites for free. Google encouraged these users to build services on top of its maps. This free map strategy significantly boosted the presence and use of Google Maps online.

 

By making navigation available for free TeleNav aims to drive the availability of both its maps and voice navigation service on the mobile web, supplanting Google and other online map providers like Microsoft/ Nokia. With mobile generating 10% of website traffic for some retailers providing navigation in addition to maps for free is likely to be a no brainer!  Moving forward, I expect TeleNav will aim to monetize free navigation in a similar manner to Google. Google has segmented the market and only charges businesses leveraging Google Map APIs within a pay wall environment, for business-to-business use, or within the confines of an intranet.

 

Although this is undoubtedly a smart move by TeleNav, I expect it will be unlikely to replace the adoption of Google Maps or Nokia Maps APIs by businesses:

 

Both Google and Nokia will likely monitor the speed at which TeleNav’s free map and navigation services take off, and respond by replicating the offer.

Furthermore, although HTML5 supports offline mode, which allows an application to cache data for use when the handset is not connected to the network, I’m certain the user experience is likely to be compromised. That is exactly what this limited trial will aim to tease out!

On 1st December 2010 US ad network Millennial Media officially announced its expansion into Europe, entering into a fairly crowded mobile ad network space, which also includes Google (which acquired AdMob in 2010), Apple, Smaato, Yahoo, Microsoft, 4th Screen Advertising, Unanimis, Yoc, Sofialys, and DaDa among others. Strategy Analytics was invited to its launch presentation to hear more about its plans and ambitions. Globally, the Millennial Media mobile ad network is currently delivering 16 billion page impressions monthly, with Europe generating 2 billion (just 12.5%) of that. With Ofcom today indicating that 26%, 21% and 18% of cellular users in Italy, Spain and the UK respectively owns a smartphone, there is clearly still potential for growth in Europe, as more mobile phone owners substitute feature phones and expensive pay as you use data tariffs with smartphones tied to generous data plans. Indeed, Strategy Analytics also believes there is growth opportunity in Europe, and predicts strong growth in mobile display advertising with advertiser expenditure rising ten fold $600 million in 2010 to $6 billion 2015, as more users drive mobile web page impressions. So where does Millennial Media believe it will fit in to the existing mobile advertising market place? Well, it’s aiming to find the middle ground between premium ad networks like 4th Screen Advertising, and Orange owned Unanimis, which aim to maximise inventory return for premium publishers to get high CPMs, and blind ad networks aimed at filling large volumes of unsold inventory where its all about low CPMs and volumes (see figure above). Millennial Media does not intend to compete with the higher value mobile marketing campaigns from Blyk, Hipcricket or mobile operators like O2 Media. Personally, I’m a bit sceptical this gap really exists. So ultimately I do expect Millennial to fall into the blind ad network bucket over time. On the other hand in these tough economic times brand advertisers are increasingly looking for metrics to prove advertising ROI, in which case Millennial Media will be well positioned to grow. Either way, validating Millennial Media’s claim is something we hope to do as we continue to conduct more research into this area. Nitesh Patel

Words like ‘experimental,’ and ‘niche,’ are often used to describe the status of advertising on mobile phones. However, on 14th October 2010 Google announced that its mobile advertising business is currently operating at a $1 billion annual run rate, which I believe represents a significant milestone and proof point that advertisers are beginning to take mobile advertising much more seriously. Strategy Analytics estimates that globally advertiser spending on mobile will reach over $6.9 billion in 2010, which we estimate would give Google a 15% share of the total mobile advertising market. This compares to Google’s 35% share of the total digital advertising market. We are not surprised that Google’s share in mobile advertising is lower than its total digital share given that mobile advertising is more fragmented than the online advertising market. Our advertising estimates are built on assumptions about growing mobile media usage and the average price that advertisers pay media owners to display their adverts within their properties. Indeed, Google has confirmed this growth in usage is fuelling the rise in its mobile advertising revenue - the company claims that search queries conducted by mobile handsets has increased by 500% over the past two years, with search queries from Android devices playing a role in that growth. Search requests from Android phones increased 300% in 1H 2010. This evidence of improving usage will also have a positive impact on advertisers’ attitude towards allocating their budgets to mobile, with companies like Google, Apple, Microsoft, AOL, and Millenial Media positioned to benefit from this shifting sentiment. Although Apple is a one platform pony in the handset market it has shown how successful it can be at exploiting its niche. In June 2010 at its WWDC Apple stated that advertisers had already committed $60 million to its iAd platform. As online advertising networks Microsoft and Yahoo also continue to ramp up activity in mobile advertising, the next big question is – who will follow Google to be the next $1 billion mobile advertising company? Nitesh Patel

Dennis Crowley – Founder of Foursquare - may be right. Facebook Places is indeed boring. However, anyone – Crowley included -that thinks Facebook Places in its current iteration is the final step for Facebook into the location based social networking space is kidding themselves. Facebook Places will have long term ramifications on the location based social networking space in due time but for now there are more questions than answers:

· Will users be able to check in their friends on third party sites even if they are not members of that service?

· Fragmentation of various services still exist making checking in to Brightkite, Foursquare, Gowalla, and others time consuming. FB may allow for dual service check-in (ie. Foursquare and FB or Gowalla and FB but not all three).

· Will FB users find enough usefulness in third party networks to utilize them or will their growth be stunted?

The question about competition comes down to Facebook’s ambitions which is a desire to drive revenue through the creation of a comprehensive ad network. Places will allow FB to acquire more information on users, increase the frequency of user interaction with Facebook, and better understand the nature of relationships between individual users. This type of data is important and integral to advertising not only via mobile but also on the web. If Facebook knows who a user spends time with it creates compelling new advertising opportunities. Let alone knowing where people go. How frequently they are there. The intelligence and effectiveness of Facebook’s advertising platform could come to rival and quickly exceed that of Google.

Partnering with others gives FB a way to appease the market in the short term by not appearing anti-competitive but Places will thwart competitor’s long term growth. Even if it helps them in the short term by bringing awareness to the services. But think about this – if just 1% of Facebook users regularly uses Places – Facebook will have more than 5M users – double that of Foursquare. And 1% of users would be a failure by Facebook’s standards.

For now, competition can continue to abound as competitors will have the opportunity to differentiate. Foursquare can continue to offer mayorships and enticements. Gowalla can offer trips, pins, and other prizes. But in the long term - competitive services - will have to move well beyond the check-in in order to grow beyond their current user base. Booyah’s MyTown is an excellent example of how to accomplish this – by turning location – into a game.

The immediate effect will be on weaker competitors who don’t have the resources or the buzz to convince new users to sign up. Some of these services will likely wither away before the end of 2010 as others see growth stunted and plan exit strategies for 2011. A select few may continue to press on, but Facebook will be the biggest game in town by then. And with scale comes sponsors, advertisers, new business models, etc.

Competitors aren’t the only long term losers either as carriers – hoping smaller third party services – would emerge as a viable new revenue stream from local advertising may miss the boat as subscribers instead opt for Facebook’s service which is unlikely to share revenue with carrier partners.

Amazon has announced that over the past 12 months purchases made from mobile devices generated US$1 billion in sales, representing almost 3.5% of its total net sales during that period. $1 billion is clearly a large amount of money and 3.5% not an insignificant share. Furthermore, Jeff Bezos indicated that smartphones have had a strong role in driving mobile commerce to date, which is not surprising given the larger screen size and better resolution provides an improved product browsing experience over standard phones:- "The leading mobile commerce device today is the smartphone, but we're excited by the potential of the new category of wireless tablet computers. Over time, tablet computers could become a meaningful additional driver for our business." Unfortunately, there was little further information relating to the type of products being purchased via mobile, e.g. whether or not it includes the sale of ebooks, or the % mix between digital content (e.g. MP3) versus physical goods? However, this announcement, combined with the increasing volume of web traffic generated by mobile phones, and the fact that that the global smartphone installed base is set to expand from 458 million in 2010 to 1.1 billion by 2015, has a clear implication for web retailers that are seeing increasing mobile traffic to their sites: Integrate mobile to your digital sales process, because a growing share of consumers are using their phones to buy stuff! Perhaps not surprisingly, Amazon has been ahead of the curve with respect to mobile commerce for sometime. It currently offers dedicated smartphone applications for the major smartphone platforms (Android, Blackberry, iPhone, and iPod Touch) in the US. The absence of support for Symbian is clearly a consequence of Symbian’s low penetration in the US. Amazon has also designed mobile optimised sites for smartphones and in June 2009 Amazon’s subsidiary A9.com acquired Snaptell, a company focused on image recognition and visual search technology which allows users to take photos of products and find pricing information, rather like Google’s Goggles (still Beta) and ScanBuy. Linking the image capture capability on camera phones with off-board product recognition, price comparisons and product reviews can help to convert the handset into a powerful commerce device in my opinion. Perhaps most importantly though, Amazon allows users to register their payment details to their account and to make purchases using a single click, through its 1-Click ordering system, which eliminates the inconvenience of manually entering payment details. For many web retailers adapting for mobile is not likely to be a priority yet – few will have forgotten the dotcom bubble bursting. However, I believe this announcement by Amazon provides an indication of the potential size of the missed opportunity if they do fail to address evolving consumer behaviour. Nitesh Patel

Is there any benefit for Vodafone making its LBS software open source? I’m sure developers will love to get their hands on this code and use it to develop appealing location enhanced applications. But other than attracting developers to write compelling location services that can be distributed through Vodafone’s 360 application store, the move surely falls short of Vodafone’s initial intentions after gobbling up Wayfinder in December 2008 for $29 million. Up until this point, Vodafone had been the only carrier to have acquired a location based service application developer in an attempt to move into other parts of the LBS value-chain beyond providing user location and managing subscriber privacy. Vodafone decided to close down Wayfinder in March 2010, after Google and then Nokia launched free mobile navigation in December 2009 and February 2010 respectively, eroding Vodafone’s prospects of charging a premium for Vodafone Navigator, its turn-by-turn location application. Prior to this open source announcement, it seems likely that Vodafone would have attempted to sell the unit. However, given the shift to a free business model for navigation, I strongly suspect that interest would have been very low. Although maps will continue to work on Vodafone 360 Samsung H1 and M1 devices, its branded search application, Vodafone Locate, will be discontinued. Vodafone Locate is no longer available in the iTunes App Store or the 360 Apps Shop, nor has it been embedded in devices since Vodafone announced the intended closure of Wayfinder. Vodafone Navigation is also being phased out, with a final decision on when and how to be made. Vodafone Navigation is no longer available in the 360 Apps Shop, nor has it been embedded on any devices since Vodafone announced the intended closure of Wayfinder. Vodafone will now offer navigation through a partner, a more profitable approach to running their own navigation service, as highlighted in our report ‘Nokia & Google Shake Up $3.8 B Handset Navigation Market.’ This withdrawal by Vodaofne underlines the broader challenge that operators face in competing on services with internet giants like Google, whose business model is based on advertising and handset vendors, like Nokia, Apple and RIM that recognise the importance of delivering well integrated services in order to drive further growth in handset market share. Nitesh Patel

It finally happened. After watching the press go agog over the millions of users and millions more check-ins through popular start-ups Foursquare, Gowalla, Gypsii, Brightkite, and others, a heavy hitter is getting into the game with their own local service.

Facebook - once a rumored paramour of Foursquare - the popular social network will in fact launch its own service. How it will work is still shrouded in mystery but its decision will have wide ranging ramifications for all start-ups in this space while ushering in the notion of mobile social networks to millions of more users.

Why is Facebook a threat?
400 million active users
500 billion minutes per month spent on Facebook
100 million active mobile users - nearly 100x more than Foursquare

Some companies may be safe while others are immediately put at risk:

Independent Mobile Social Networks. Companies like Foursquare, Gowalla, Brightkite, and others without any white label solution are in the most immediate risk. Current users are not likely to abandon their services of choice but winning over new users will become a challenge. Will Facebook users really want to create an entirely new social network? Probably not. The result will be slower growth and less hype. The result is a loss of mindshare and the innovative partnerships that come with it.

 

White label solutions. White label solutions are probably still safe since Facebook is unlikely to share revenues with carriers who want to collect a percentage of local mobile advertising dollars generated from mobile social networks. Therefore, companies such as Gypsii, who have partnered with China Unicom and Telefonica in Latin America are safe - for now. However, if users opt to not use these services instead choosing Facebook even this more sound business model will be at risk. And with Facebook working with 200 carrier partners globally this could be a very real scenario.

 

Games. Booyah's MyTown has grown to more than 2M users since December with a majority of users logging more than an hour of gameplay per day. The Monopoly-esque location based game is unlikely to be impacted by Facebook's decision and may be the forbearer of the next generation of location based social networks to crop up after the check-in phenomenon.

 

It would be irresponsible to say that Facebook's location play will quickly kill the location based market. However, Facebook cannot be ignored. The big mobile social networks may now have to start thinking about a short term exit strategy. Despite fears, Facebook can trip along the way giving hope to today’s players:

1. Implementation. Google Latitude has failed to catch fire and arguably Google has many more users than Facebook - so a failure to properly implement could de-rail the service.
2. Interaction with the rest of the service. Users are already frustrated with all the changes Facebook has made - will adding check-ins - to an already crowded news feed infuriate them further?
3. Partnerships. Facebook will need to create compelling partnerships with small business to large brands in order to build a buzz around the new product and get users excited about using it.
4. Privacy. Facebook will have to tread lightly around privacy concerns in regards to sharing location information. A failure to protect users will result in the mass market being turned off.

In the end however, Facebook's decision to launch a location product may be bad for competitors (despite what I’m sure are pending quips that a rising tide raises all ships) but it is good for mobile social networking, good for small business hoping to partner with a more powerful local advertiser, and good for carriers hoping to educate users on mobile social networking.

Today, Nokia announced the inclusion of free turn by turn navigation on ten phone models – further enhancing Ovi’s value proposition. The service, which is almost certainly to be seen as a fast follower to Google’s similar launch in late 2009 should in fact be viewed as pushing an industry on the precipice over the edge. But the question is – does turn by turn even matter? From purely a platform perspective – yes, for now. For others such as Apple to follow suit they will need map data, turn by turn licensing agreements, an acquisition perhaps, or take a hit on margins. While Apple may find a way to bring turn by turn to the iPhone in short order, Nokia and Google have laid down the gauntlet by using maps as a competitive differentiator, a difference the companies must hammer home while the advantage is theirs. The proprietary ownership of mapping data is a huge advantage for Nokia (Navteq) and Google. There is a famous saying, wherever you go – there you are. But such antiquated logic demands an update and today we would be trite not to say, wherever you are - there your phone is. If you are not yet prepared to accept this reality you should peruse Yelp, foursquare, Loopt, Aka-Aki, Gree or Gowalla and you will clearly see that the future of mobile is not only about where you are but where you are going. By enabling turn by turn navigation on its devices both Google and Nokia have assured developers that location based services will be available to those seeking to include them in applications while making location based advertising easier. Nokia has two advantages over Google. Firstly its scale - S60 devices are ahead of Android devices, for now at least. Secondly, its navigation solution resides primarily on the device, not on the network. For users who travel internationally and don’t want to pay roaming charges, those with spotty coverage, or those who don’t want a data plan this is a huge advantage. For carriers hoping to offload some network congestion this approach is a relief. Of course, it's threat to carriers hoping to bundle TBT for an additional cost. For consumers (primarily those that do not own stock in a GPS manufacturer) this is a big win. For Nokia, "free" is a significant improvement on its current proposition but the company will have to do more in the long term to be seen as an innovator and not a fast follower. Despite the momentum building towards turn by turn navigation the features are simply a means towards a longer term end. Knowing where people are, where they are going, and how they are getting there is incredibly valuable information and could lead to a plethora of new advertising opportunities in addition to new applications. Related research: Nokia strides forward in online location and navigation Location based services, opportunities within an emerging battleground -Josh M

Today, Nokia announced the inclusion of free turn by turn navigation on ten phone models – further enhancing Ovi’s value proposition. The service, which is almost certainly to be seen as a fast follower to Google’s similar launch in late 2009 should in fact be viewed as pushing an industry on the precipice over the edge. But the question is – does turn by turn even matter? From purely a platform perspective – yes, for now. For others such as Apple to follow suit they will need map data, turn by turn licensing agreements, an acquisition perhaps, or take a hit on margins. While Apple may find a way to bring turn by turn to the iPhone in short order, Nokia and Google have laid down the gauntlet by using maps as a competitive differentiator, a difference the companies must hammer home while the advantage is theirs. The proprietary ownership of mapping data is a huge advantage for Nokia (Navteq) and Google. There is a famous saying, wherever you go – there you are. But such antiquated logic demands an update and today we would be trite not to say, wherever you are - there your phone is. If you are not yet prepared to accept this reality you should peruse Yelp, foursquare, Loopt, Aka-Aki, Gree or Gowalla and you will clearly see that the future of mobile is not only about where you are but where you are going. By enabling turn by turn navigation on its devices both Google and Nokia have assured developers that location based services will be available to those seeking to include them in applications while making location based advertising easier. Nokia has two advantages over Google. Firstly its scale - S60 devices are ahead of Android devices, for now at least. Secondly, its navigation solution resides primarily on the device, not on the network. For users who travel internationally and don’t want to pay roaming charges, those with spotty coverage, or those who don’t want a data plan this is a huge advantage. For carriers hoping to offload some network congestion this approach is a relief. Of course, it's threat to carriers hoping to bundle TBT for an additional cost. For consumers (primarily those that do not own stock in a GPS manufacturer) this is a big win. For Nokia, "free" is a significant improvement on its current proposition but the company will have to do more in the long term to be seen as an innovator and not a fast follower. Despite the momentum building towards turn by turn navigation the features are simply a means towards a longer term end. Knowing where people are, where they are going, and how they are getting there is incredibly valuable information and could lead to a plethora of new advertising opportunities in addition to new applications. Related research: Nokia strides forward in online location and navigation Location based services, opportunities within an emerging battleground -Josh M