As guest speakers David Kerr and I have just returned from the the inaugural Metaplaces location based services conference in San Jose 22nd-23rd September 2009. The event was attended by companies across the LBS value-chain. Among others, content providers such as Inrix, USA Today, WCities; Digital mapping companies Tele Atlas, Navteq, Waze, Open Streetmap; LBS application publishers uLocate, Wavemarket, Loopt, Google; LBS solution vendors Openwave, Sense Networks, 1020 Placecast, and Qualcomm. Notably, there was an absence of operators and advertisers, with only US carrier MetroPCS and Publicis representing respectively. The fact that so few carriers were in attendance underlines why they are losing their position in LBS, yes pun intended sadly, and suggests that LBS remains off their list of priorities.
The three main standouts for this event for us were:
- Waze: We were most impressed by the social digital mapping company Waze, who proclaimed it has recently expanded its application to Symbian and Windows Mobile platforms, and has just reached a critical mass of 160,000 users in Israel. Waze offers a free turn-by-turn (TBT) navigation application based on digitized census map data. This basic map is being constantly improved by a community of users whom allow their handsets to be tracked as they drive. Further user participation involves users actively annotating details to the map (e.g. notifying Waze of new roads, new one-way signs and changes to traffic flows, etc within the application). Making the process of user feedback as pain free as possible is clearly imperative to enhance participation levels. Overall, the model relies on an appealing trade off. Firstly, the user gets a free TBT application, and their incentive to improve the map and offer information is that their free TBT application will improve further in quality. Secondly, the benefit for Waze is rather than invest billions of dollars to collect map data, a la Nokia, its community is doing so on its behalf. According to Waze 1% of cellular users per market is sufficient. Armed with an improving digital map Waze can to some extent compete with TeleAtlas and Navteq in licensing of digital map data. Everyone is a winner, and although the quality of the maps are unlikely to compete with Tele Atlas or Navteq, the success of Wikipedia underlines the potential of user or community generated content.
- Uncertainty around monetization: We were looking forward hearing case studies about how companies had started to use location data to make money - the tag line for the event was 'How to Monetize Location Data & Services,' so can you blame us? Despite numerous innovative ideas about how location can be used, it is clear that most players in the LBS industry are still trying to figure out what business models will prevail, and many are pinning their hopes on advertising. There's little disputing that user location data can improve ad targeting if cleverly combined with other relevant data about the consumer. However, Sense Networks claims to have gone a step further. Its analytical tools allow it to categorize cellular users into classic (and not so classic) consumer segments based on tracking their movements over the course of a few months. This solution clearly addresses the problem that carriers have collecting data about their prepaid customer bases, and kills two birds with one stone. Firstly, carriers with large prepaid subscriber bases (in markets like Italy and many emerging markets) can learn more about their customers and adjust their own service marketing accordingly. Secondly, carriers with ambitions of becoming a smart pipe are in a stronger position to provide consumer targeting information to advertisers. Oh yes, as you'd expect, discussion about privacy implications was a key feature during the entire conference.
- US carrier bottleneck: US operators remain a bottle neck to location based service availability. While owners of smartphones integrated with GPS are able to use the rising number of location enabled applications that are available through vendor application stores, the majority of non-smartphone users are restricted to the services the carriers make available through their portals. To provide an example of how slowly US operators are moving regional US cellular operator MetroPCS is only just about to make location look ups available to third party applications that are distributed through its portal. It is yet to consider opening up user look ups on a wholesale basis. While US operators continue to guard the location data of their customers, carriers will continue to fall behind and LBS innovation will continue without them.
While innovation continues in the LBS sector, mainly outside the carrier channel, the unanswered question remains - where is the money?