DIRECTIONS 2007: Location-Based Services

December 1, 2006 By: Mike Sheldrick GPS World

For nearly two decades, enthusiasts of LBS — location-based-services — have proclaimed that the year of LBS was "just over the horizon." Maybe next year, maybe within five years. In all those years, my own fervent hope — that someone would come up with a better term — has gone unanswered.

But 2007 could turn out to be the Year of LBS, or whatever the market calls it. Navigation system sales have doubled — again — in the United States, in Europe, and in Asia. Depending on which analyst you pick, estimates of worldwide sales are perhaps 8 million units, and will probably double yet once more in 2007. Beyond that, it's mere guesswork. Nav systems will soon be available on every phone, so we could be talking about hundreds of millions of deployed nav systems. Nobody knows what effect that will have on sales of personal navigation devices (PNDs).

Here's the point: Navigation, and navigation systems, are the most important tangible product of what we have chosen to call LBS. Valuable itself, navigation is the enabling technology of many location-based-services, or a powerful enhancement of them, making them far more useful and attractive to businesses and consumers. As navigation goes, so goes LBS. Right now, navigation-system sales are blistering hot. As many as a dozen top consumer-brand companies have introduced nav systems, and Garmin, at the top of the heap, just took a page from Apple, opening a flagship store in Chicago [see story and photo in "The Business"].

To understand how navigation really lies at the heart of LBS, take traffic information, which has been around long before GPS navigation. The utility of traffic information vastly increases when you receive only relevant information, or even better, when your nav system gives you a possible diversionary route, or predicts when you are likely to arrive at your destination. In a virtuous circle, navigation even enables better traffic information, by using vehicles themselves as probes. That prompts more people to buy navigation systems.

Looming Larger. It is impossible to predict the aggregate growth of location-based-services. Traffic is actually one of the smaller services, revenue-wise. Looming larger — much larger — are these LBS:

Local search, a.k.a. search, formerly known as Yellow Pages
Tracking, a.k.a. social networking, including family, friends, employees, and objects
Fleet management, a.k..a. mobile resource management (MRM).

Local search on its own constitutes a huge industry. Take your pick of its size and its potential growth. The Yellow Page Association puts it at $14 billion. Other credible observers, using Yellow Pages more as a metaphor, put it at $25 billion and predict it to reach $40 billion within the next five years.

Local search is too narrow a term to do justice to the potential. We are really talking about location-based commerce, incorporating location-based marketing and advertising. It has already begun. TomTom owners so inclined can download all the Dunkin? Donut locations, and get an alert when one approaches. Surely, turn-by-turn directions to the cure for Big Mac attack can?t lag far behind. Is this a great country, or what?

Thirsty. Already real-time, location-based fuel prices are available. In the not-too-distant future, drivers will get directions to the lowest cost nearby fuel outlet. Or trucking companies will negotiate a price as their trucks get thirsty.

Until now, we thought of navigation systems as discrete devices. Increasingly, however, they will be integrated and synchronized across multiple platforms. Mapping and search portals like Google, Yahoo, and MapQuest will support desktop search and directions, as they do now, but will share these with dedicated in- vehicle units, PNDs, and cell phones.

Increasingly, there will be a blurring of navigation devices. Already, PNDs continue to add features available on other devices, such as music, still photos, videos, and, of course, cell-phone connectivity. Soon, no doubt, they will offer nearly all the functions of personal digital assistants (PDAs). PDAs will morph into phones or PNDs, and pretty much disappear.

A large unresolved question is whether navigation systems will be off-board or on-board. Off-board offers a lot of advantages, particularly price. Current navigation systems from Verizon and Sprint run about $10 a month, but Cingular offers a $5.99 per month, 10-trip plan on a new GPS-equipped device.

On the other hand, memory continues to get cheaper, processors faster, and techniques can reduce the size of map, or download just enough for mobile use. Some kind of hybrid is probably the best solution.

Free Lunch. In the end, I believe, an advertiser, or group of advertisers will offer free navigation, and maybe even "free" navigation systems. After all, commercial destinations must account for 90 percent of the directions requests.

Are you listening, Krispy Kreme?