There's More to LBS than PNDs

August 26, 2008 By: Kevin Dennehy

LBS Insider Newsletter, Late August 2008

There's more to LBS than PNDs

Although the trade press loves to highlight portable navigation devices (PNDs) and cell phones, analysts are saying that companies shouldn't ignore other potentially lucrative location-based service markets. Even connected PNDs, which were the rage at this year's Consumer Electronics Show, have been slow to find a way out on the market.

"The market is currently transitioning. PND OEMs really only competed on price at the moment — look at Garmin's second quarter operating margin and TomTom's 2008 average sales price. In 2009, we will see the next generation of PND features, including cellular connectivity, and we will have a much better picture of the sustainability of PND shipment growth," said Patrick Connolly, IMS Research's director for mobile radio and GPS.

"In my view, it was always too early to expect major shipments this year, given the issues involved with this type of service. It is too easy to dismiss the difficulties in developing a complete, connected LBS model on PNDs as irrelevant because they most certainly are not," Connolly continued. "This isn't like Bluetooth, which you stick in and let the consumers use it if they want and as they wish. Given the potential costs involved, if new users cannot see a clear benefit, this will actually encourage them to seek a different PND and possibly a different manufacturer."

Connolly believes, as is true with other features, PND OEMs need to figure out who they are targeting with cellular connectivity. "What are the 'need-to-have' applications that only cellular can enable, which drive subscriber revenues? Is this going to attract new occasional users, or is it a replacement product for the everyday sat-nav user?" said Connolly, who helped to write the company's Worldwide Market for GPS in PNDs. "Ultimately, how large are these markets?"

Connolly said there had been suspicion that Garmin's Nuvifone would be delayed. "Recent product demos suggested that it was by no means a finished product, which may well tie in with Garmin's official statement. However, I don't think this has anything to do with a slowing GPS in cellular market, but Garmin getting to grips with new partners in a new vertical market," he said. "By all accounts, the GPS in cellular market is growing at a very impressive rate, with non-CDMA handsets set to outsell PNDs this year by a comfortable margin."

Market Needs To Move Beyond PNDs?

Connolly believes that as LBS moves beyond PNDs, companies have to be less reliant on satellite navigation to drive the market. "It is highly unlikely that someone will regularly use their business laptop, camera, or portable media player as their main sat-nav device. Consequently, new applications are required with different location requirements," he said. "Take the camera market as an example. Geotagging is set to greatly change the camera market. However, end users don't have the battery life to support continuous tracking using existing GPS chips, yet they are even more sensitive to time-to-first-fix than a typical PND user. Furthermore, there is much greater demand for indoor location capability because someone is more likely to take a picture indoors than outdoors."

The digital camera market is potentially a big one. At CeBIT earlier this year, several companies were touting combining a GPS data logger with GPS photo software to enable users to know where they took a photo. \

IMS Research says that online communities such as Panaramio hosts more than 2 million geotagged photos — a clear indication that the market could be poised to explode. Geotagging is continuing to gather pace without any help from GPS-enabled cameras, which illustrates the potential here. With new GPS solutions specifically targeting this market, this becomes a much more user-friendly experience, and I expect successful implementations to be a tipping point for geotagging," Connolly said. "Manufacturers are launching products and carrying out trials and I expect to see a lot more announcements next year."

Overall, the application is a cool one. It allows users to see their photos accompanied by maps, some of which can be put in a nicely bound book. One company developing this technology is NXP Software, which is spinning off its Location Technologies Group to form Geotate. PND giant Mio also plans to offer its Moov 380 — which features an embedded camera — with the ability to geotag photos and upload them to photo-sharing website Flickr.

Even business applications are being developed, or invented, for geotagging photos. Dexterra's Mobile Tracker uses GPS and LBS technology to monitor and track the location of a company's resources and assets in real time. However, one customer was using Mobile Tracker to locate billboards for their customers, said Benjamin Wesson, Dexterra vice president of product management. "A billboard company in the United Kingdom is ensuring that its customers know where they install their billboards. The geocoded picture validates the coordinates of where they board is so that the company paying for it can have assurance it is there," he said.

Not much has been written about the location-based game and entertainment market. No big industry sales are being driven by geocaching, which is a neat application, but not really that big a deal.

Take the Navteq LBS Challenge, for instance. You get several small companies with cool gaming applications in the running for the top prizes. The games are slick and appear to be fun, but has anyone ever seen them advertised anywhere?

However, IMS Research says that Sony and Nintendo are rumored to be developing location-aware gaming for next generation products. Already, companies are following Wii's recent example of adding sensor technology that assists with exercise and outdoor fun.

Connolly believes there is a market for GPS in laptops. How big that market will be remains to be seen. He believes it is divided into three different markets: low-cost laptops, ultra-mobile PC (UMPCD)/mobile internet devices, and business laptops.

"The UMPC market certainly has the portability to support sat-nav, but it remains to be seen if a significant market even exists for the device. Looking at the business laptop market, GPS serves to enhance existing laptop features almost exclusively in an indoor environment, which borders on being an oxymoron in many people's eyes," Connolly said. "However, pinpoint accuracy is not as necessary for many of these applications. Wi-Fi is a common feature. As a result, this market lends itself well to a hybrid GPS/Wi-Fi location and/or cellular network-based location [product]."

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