Consumer LBS market will double in 2009, says Gartner

Consumer LBS market will double in 2009, says Gartner

According to Annette Zimmermann, senior research analyst at Gartner, factors driving the increase in the next year or so include greater availability of GPS-enabled phones, reduced prices and the appearance of application stores."

Gartner predicts that advertising-based or 'free' LBS (disregarding mobile carriers' data charges) will gain more traction as users adopt it as a way to limit costs. Mobile carriers that stick to the current predominant business model of charging users $5 to $10 per month plus data plans will experience high churn rates as users will look for free alternatives.

Nokia and Google will compete for the top market spot in terms of user numbers in most markets. Mobile carriers will increasingly be under pressure from these two players with their carrier-independent LBS technology and services.

In North America and Western Europe, the share of users taking advantage of free services is approximately 10% – 15% today, and is expected to grow to 40% – 50% in 2013.

Gartner expects more compelling and useful applications and services to come to market in the next twelve to eighteen months, such as digital coupons for redemption in nearby shops and POI search services. Smaller niche players will survive in local markets only when they have an established user base and unique offering that larger players cannot compete with. Other players will be acquisition targets for larger vendors.

Gartner analysts said LBS market dynamics vary by region. For example, North America is the largest market due to mobile carriers' strong efforts in navigation services and family-safety solutions. In Western Europe, navigation is currently the most used application, followed by local search and "friend finder". There is still no significant uptake of safety applications.

Japan will continue to see steady growth as GPS has been required by law in mobile phones since 2007. In Asia-Pacific, during the summer Olympics, location services were offered in China for the first time, which is now an advertising-based solution and free to the user.

"The competitive landscape will change and most mobile carriers need to alter their approach toward offering LBS and dealing with developers," concludes Ms Zimmermann. "Subscriber growth will hinge on "free" – disregarding data charges – services. Mobile operators' initiatives to open up the API to third-party developers will help them compete against other players in the market and will also be beneficial to the different parties involved, down to the end user."

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