Cast adrift

For the past few years, telecoms.com’s sister publication MCI has run an annual feature on mobile navigation and Location Based Services (LBS). And despite all the hype, in 2008 we’re still waiting for them to find their way to market.

Developments in navigation services have failed to produce any more meaningful application beyond the obvious; getting from A to B. And the operators still haven’t found a way to monetise the service.

This week, I attended a roundtable on the ‘Future of Mobile Navigation’. But the talk wasn’t so much about the future as it was about what had happened to navigation on the way to the party and when, indeed, would it actually be arriving?

Among those present: Peter Heath, director of alliances, EMEA, at BlackBerry maker Research In Motion (RIM), Oren Nissim, chief executive officer of mapping and navigation firm Telmap, Nick Langton, product manager for the Enterprise Application Partner Programme at Vodafone UK, and a handful of analysts from Yankee, IDC and Ovum, the general consensus was that to date, navigation and LBS has been an enterprise endeavour, but in order to turn it into a money maker for everyone, it needs to tap into the mass market.

There are only so many ways this can happen. One of them, the most obvious, is by making GPS available in more handsets. Heath said that RIM is actively pushing GPS into more of its BlackBerries, but the fact remains that the BlackBerry is still largely an enterprise device. To be fair, the last few BlackBerries have been curvier and more consumer targeted, but with the vast majority of mobile users on prepay tariffs, such a high end device isn’t going to break the mass market.

Vodafone’s Langton admits that LBS “are very much postpay services at present and we need a new, keenly priced model to target the prepay segment. Obviously the device will be key,” he says.

With their ever increasing screen size and the ‘always with you’ relationship we have with mobile phones, GPS-enabled devices have managed to kick the stuffing out of the PND (Portable Navigation Device) unit, fast replacing units like the TomTom. In this case the fact that phones cater better to pedestrians and offer more availability of real time info than a PND, are the winning features.

Yet translating that success to myriad other applications could prove tricky. Telmap’s Nissim said that the next generation of LBS would be context aware, such as finding your nearest cash machine. But he admitted that such services face stiff competition from the old fashioned – and far cheaper – ask-someone-in-the-street tactic. In fact, the only time I could see such a service being useful is when abroad in a foreign speaking country, but in that situation the roaming data charges would make the application prohibitively expensive.

When talking about monetisation, Vodafone’s Langton insisted that the company is generating revenue from navigation services, although I can’t imagine how, unless it’s from a cut of the subscription service to Telmap or similar. Telmap’s mapping application is sold as a white label product, and although it can be bought separately after market and installed, Nissim confirmed that the cast majority of activations are from preinstalled installations of the software. It’s well known that consumers don’t install applications on their phones, so again, the only revenues in this space come from preinstallations on a small number if higher end handsets.

Going forward Langton admitted that Vodafone didn’t really know what type of LBS content would be a revenue generator, although he said “m-commerce and advertising are elements we need to take a look at.” At this point the hackneyed example of a coupon that gets sent to your phone as you walk past a shop was wheeled out. A word of advice: just stick a sign in the window if you’ve got a special offer – it’s more effective and less annoying.

Langton drove the point home: “We see a high activation rate of GPS applications in the handsets we sell, people see it as a good value add.” And that’s it exactly – it’s a good value add. In terms of premium services, Telmap’s Nissim reckons a consumer would be prepared to spend £60 per year on an application that warns them of upcoming speed cameras, but this is hardly a killer app. It’s more of an extension to the existing killer app for GPS – finding your way from A to B.

By this same logic Nissim also believes that consumers would be willing to pay for services such as local restaurant reviews. Again, this seems to be a non starter. If I’m going to a restaurant and I’m going to care that much about the experience, then it probably won’t be a spur of the minute decision. I’ll have booked ahead and got the recommendation for free off the real internet, or even more shockingly, by word of mouth.

It’s almost time again for that annual LBS feature, and I’d wager that not much has changed in this space since last year. Except maybe that Nokia too has realised that navigation is a good value add. It’s acquisition of Navteq and the roll out of Ovi puts it in a perfect position to stomp all over the operators and the mapping firms by getting Nokia Maps on as many of its devices as it can as a basic feature.

It’s not that navigation has lost its way, as a service it knows exactly where it’s going. It’s just that rest of the industry has been wondering around in circles looking for killer services and applications that might not exist. As the joke goes, a really useful LBS application would be one that could point you to a really useful LBS application.

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