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!

Location based services are all the rage. Just this morning Shopkick announced another partnership – this time with Crate and Barrel. Foursquare recently exceeded 5M users. Gowalla launched its newest update providing an overhauled user experience. Articles on the topic have appeared everywhere, including Fierce Wireless (Warning shameless self promotion at the last link). But despite the hype location based applications are still just at the larval stage.

Today, stalwarts remain the key players. Recently, we revamped our Apps Database – which used to contain the top ten apps for iPhone and Blackberry in the US. Our new iPhone database contains a more global view - capturing the top 100 (free, paid and grossing) apps - in 62 countries. The data shows that Facebook remains the dominant player – regardless of region. Out of 124 free apps lists (2 weeks of 62 countries) Facebook and Skype appeared on 98% of the lists. Windows Messenger appeared on 75% of the lists.

Interest in social networking is not restricted to mature markets either. In fact, the Middle East and Africa are most likely to download social networking services - with nearly 11% of all free iPhone downloads coming in that category – almost 2x that of Western Europe.

Clearly there is intense interest in social networking even if there is not yet sustained interest in location based social networks. Foursquare and Gowalla combined for 12 total appearances (11 for foursquare and 1 for Gowalla) managing to garner placement on less than 10% of all free apps lists. However, many of the companies, such as McDonalds, that were bold enough to partner with these up and coming companies have found great success as these services continue to slowly grow, expand, and increase their influence.

In fact, these services will be so important in 2011 that we dedicated an entire prediction about them in our recent report 11 for '11: Predictions on the Future of Mobile Media (although to know what we predicted you’ll need to read the report). Additionally, we will be hosting a webinar on Thursday December 17, 2010 at 10:00 EST to discuss the future of social networking and how location will come to play an increasingly important role in 2011 and beyond.

Please find more information and register at the link below.

Mobile Social Networking: A Platform For Success?

One message I've consistently been hearing from Nokia over the last two years has been that all of the different Ovi services will somehow combine together to make something wonderful that would "delight users" (their words). Nokia never gave any concrete examples, and I was starting to think that this was simply vaporware - but now that all the services are together and under the same Ovi banner, there is some magic starting to happen. The Nokia Gig Finder application genuinely impressed me at this year's Nokia World. The premise is simple - but then aren't all the best ideas? The Gig Finder app looks at the music you have on your phone, checks your location, and then suggests up-coming gigs for you. You can buy tickets directly, message your friends about it, save the gig on your calendar, get directions to the gig and listen to some more music from the artist to get you in the mood for the gig as well!. Music, Maps, Billing, Messaging, Social Networking and the phone's Calendar all coming together - which sounds like it should be far too complex for the user but in fact the app is remarkably simple and intuitive. All of the technical stuff is hidden and it is the complex integration of services at the back-end and the single sign-in (which has taken Nokia over a year to achieve across its Ovi suite) which makes this sort of stuff possible. An interesting, innovative, compelling, useful app which is greater than the sum of its parts - and with a developer community numbering over 3 million, I'm hoping to see more innovation like this emerging out of the Nokia ecosystem. As Thomas Edison said, "genius is 1% inspiration and 99% perspiration". After the years of talk, they needed something to prove there can be an end product. I'm sure there has been plenty of perspiration behind the scenes at Nokia as they rolled out and integrated these services, at last that 1% inspiration is starting to show. Related reports: Nokia Opens Up To Innovation - David MacQueen

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.

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

The industry has long talked about operators evolving into smart pipes by exposing a variety of network based assets for developers to use in their services and applications. The pressure on carriers to do so is certainly mounting. Smartphone sales are blazing and the market for mobile phone applications and browsing is going gangbusters, yet other than revenue from selling data operators are not seeing a lot of the action, particularly as app sale growth is happening through OEM stores rather than carrier portals. Take Telecom Italia just as one example:

• For the first three months of 2009 it reported a 27% drop in content revenue over the same period the previous year from €343m to €250m. This compares to 13% growth in browsing revenue from €469m to €530m.

Therefore increasingly, operators are considering how they can enter the value-chain of applications and services delivered over the top of their networks by exposing network capabilities such as their charging platforms, user location, presence, and user profile information to developers via APIs. There certainly seems to be demand for it if the Mobile Entertainment Forum’s Smart Enablers web seminars have been anything to go by. During these presentations the BBC and Yellow Pages, among other content providers, clearly stated that they hope in future to be able to access carrier information such as network latency for video streaming and user location data.

The stumbling block remains how operators commercialize these assets in a way to make it worth their while, while not employing a model that discourages the developer community. Alcatel-Lucent (ALU), a company that usually sells equipment, has come up with what it believes is a solution. Its Open API service, which will be discussed in more detail in an up coming Insight titled, Commercial Model A Stumbling Block To Alcatel-Lucent's Open API Service, proposes a revenue share model to compensate operators for sharing network based data with developers.

ALU proposes developers take between 60%-75% of application revenue, operators between 7%-10%, 3% to ALU to cover costs and the remainder to any third-party API providers such as advertising networks.

ALU claims to have already signed up some operators to Open API, but my initial thought is that at 7%-10% carrier revenue share represents a significant discount on the 30-70% operators currently receive from billing. Although I believe this type of revenue sharing agreement and API aggregation model is the way forward, the big questions are whether operators see it that way, and importantly, whether or not they are prepared to lower their lucrative 30-70% revenue share?

Nitesh Patel

Forecasting can be a tricky business. Every so often, a truly paradigm shifting event occurs that requires a wholesale re-think of how emerging markets will develop. Such is the case with Facebook Zero – a stripped down version (no pictures, videos, etc.) of the social network offered to non-data subscribers in emerging markets for free at 0.facebook.com.

It has been reported, and our newly updated draft social networking forecast (to be published in July) confirms that about half of all page views on the mobile web are social networking related. Facebook Zero should tip the balance further in favor of social networking in emerging markets.

The impact of the 50 carrier, globally supported Facebook Zero will be huge for users, carriers, and competitors.

1. Locking users in. Using its size, Facebook has been able to negotiate deals with carriers that other social networks or start-ups will not be able to rival. As individuals, their friends, and their families sign up for the free service the network effect will take hold and position Facebook as the de facto social network.

2. Reach. According to Strategy Analytics’ Global Smartphone Sales Forecast by Country: Asia Pacific & Emerging Markets and the Worldwide Cellular User Forecasts, 2010-2015, the number of mobile users in India in 2009 was 389.9m with just under 6 million smartphone owners or 1.5% of the mobile population using a smartphone. While not all these non-smartphones millions more users will have access to Facebook now than in the past expanding Facebook’s reach exponentially. And India is just one of the dozens of countries being deployed to (see chart below for the rest).

3. Advertising. A key revenue driver will be advertising. Facebook will have a sticky user that relies exclusively on its service to share personal information and location data which is necessary for targeted advertising to hundreds of millions of users in emerging markets. However, if carriers are not sharing in the revenue opportunity they risk missing out on the more than $7b in browsing revenue associated with social networking in 2010, according to the Global Mobile Social Networking Forecast 2006-2013.

4. Data Upgrades. While many users in emerging regions may not be prepared to sign up for data services yet, enticing users by showing what the mobile web offers with a stripped down version of Facebook could be a sufficient appetizer to winning their business in the future.

5. Boxes out competitors. The very hot mobile social networking space, which we have analyzed Here, Here, and Here will be owned by Facebook in emerging markets if Facebook can effectively roll out its geo-location it has touted. Facebook has just went from the 800lb gorilla in mature markets to the 2 ton gorilla

The service is also important for Facebook which has recently been banned in Pakistan and faces competition from feature phone staple – text messaging which serves as a crude social network in some emerging regions. What this means for partners – be it carriers, content owners, advertising networks, or others – is that Facebook is the partner companies will need to work with to immediately reach into emerging markets.

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.

Returning from CTIA in Las Vegas last week and with only 2 days before going off on vacation to Florida, I found myself reflecting that two of the most interesting meetings I had at the show were with mobile operators.

During CTIA I spent some time with AT&T emerging devices and T-Mobile M2M teams and was impressed with how both these units had managed to cut (or at least untie) the cord to the mother ship and avoid having innovation stifled by the Borg up at Corporate.

• AT&T’s efforts to encourage a broad range of new applications and devices has definitely paid dividends with Mr. Lurie and his team adding an impressive 1M users in Q409 as a result of new device categories (mostly PND and EBR).
• T-Mobile revealed a somewhat unheralded pedigree in M2M.

Partnership is the order of the day.

AT&T highlighted partner applications ranging from location enabled pet collars (Apisphere) to glow cap bottles to aid compliance with medication schedules (Vitality) to a very cool new tablet from Openpeak which is very different to the announced but apparently supply side challenged iPad.  Verizon Wireless and Sprint are of course also praying at the alter of open development but perhaps with less public presence.

When I think of enterprise mobility, AT&T and Verizon Wireless are top of mind but T-Mobile has in fact quietly been developing strong competency in the M2M space over the last 7-8 years.

T-Mobile offers four different SIM form factors to suit specific applications and have enjoyed triple digit growth for the last four years. T-Mobile US has quietly activated “hundreds” of different device types on its network with only a handful of devices being rejected or pulled due to network unfriendly characteristics. These devices span Telematics, Connected Energy, Telemedicine and several other applications.

So what is the common DNA of two very different operators that has allowed them to innovate and focus on new opportunities? Separation and operational autonomy to facilitate and open funnel approach to partners and speed of execution not normally associated with US carriers.

In the case of AT&T, the Emerging Devices group was chartered with developing a new space and freed from the legacy of voice & data consumer tariffs and prepaid/postpaid categories which just don’t cut it in the new connected reality where users will have multiple devices connected but used in very different ways. Mr. Lurie and his team have been able to streamline device certification and experiment across the spectrum of business models for new connected applications.

For T-Mobile, speed of certification (days not months) and the independence of being a self-contained unit (own engineers, own sales although linked to broader enterprise group) reporting to Finance & Strategy have allowed them to pursue their “easiest to do business with” approach to the M2M markets.

So, the takeaway? Innovation is alive and well at US operators but separation from the collective corporate mind is essential.

David Kerr

Mobile social networks: Loyalty, Publishing, and Revenue: Oh My! You may think that because we have ushered in the digital age there will be fundamental shifts in human behavior. You’d be wrong. Services such as Gowalla, Foursquare, Loopt, and even Yelp are finally at the tipping point of success because they tap into latent human desire. And then make acting on those desires simple. Much like the loyalty programs that offered a tenth sandwich after getting nine purchases punched on a card new social networks are offering benefits for loyalty firmly merging the physical and digital world. The aforementioned services are mobile social networks – allowing users to check-in to locations, earn badges for visiting pre-determined locales, and net loyalty rewards (such as free drinks) for particular achievements. The availability of smartphones and the opening up of mapping API’s will help these solutions succeed where other have failed. For greater insight see David MacQueen’s Insight Nokia Strides Forward in Online Location and Navigation. The most amazing part of these networks is the willingness of brick and mortar companies to participate. Becoming a Mayor (by visiting a place the most) on Foursquare and earning a free burger can only be achieved if the establishment opts in. And they are opting in. But free fare is just the beginning. In the last few weeks Foursquare has partnered with the American television network Bravo – allowing Blackberry users to earn special Bravo badges when they visit pre-determined locations, which one can assume will complement Bravo’s programming. Another Foursquare partnership with Canada’s Metro newspaper will provide location aware content from the newspaper’s nightlife section and eventually other sections as well. Finally, Foursquare most recently partnered with Zagat, allowing users to earn special Foodie badges at Zagat rated restaurants as well as offering restaurant tips. So, what does this all mean? Is it just a passing fad? In short, no. It seems like this is the new era in customer loyalty. While the social networking aspect of it remains new the ultimate goal is to drive user behavior. And open user’s wallets. While the players may change the fundamental merging of the physical and digital world is happening. Just this week OpenTable announced it had seated more than 2 million restaurateurs through its mobile applications. GyPSii is also building location based applications that offer location specific advertising such as coupons. While publishing companies will tout solutions such as the iPad as saving their businesses the truth is, services like location aware social networks could be the true path to salvation by driving consumer to spend identifiable real world dollars on real world goods.