Tough Times, But Some Segments Strong and Growing

LBS Insider Newsletter, July 2009

This has been a tough year financially in the location-based services industry, particularly for start-ups and smaller companies. As we pass the mid-point in the year, issues such as finding a consumer mass market, privacy connectivity, ubiquitous location, awareness, and cost remain huge, according to Patrick Connelly, an analyst with IMS Research.

“There are a lot of big numbers being bandied about [regarding] LBS subscribers, but in reality, the market remains at a very early phase, particularly when you look beyond [navigation],” he said. “Location-focused companies have been heavily restricted by these issues for so long that they are now in serious danger of being overtaken by the big boys on many aspects of this market. For all the talk and hype in the industry, beyond sat-nav, I think it is going to be really difficult for start-ups to generate significant revenue directly from LBS.”

Whether companies like it or not, Google has made the most market inroads in the past year, Connelly says. Indeed, many see the Internet giant as an evil take-no-prisoners competitor. “They have improved on every aspect of their LBS offering: from maps to cellular and indoor location, geotagging, social networking, location-based advertising, voice recognition, and local search,” he said. “It might take another year or two to pull these together, but clearly, Google has big plans in this space. These guys have the scale across a range of technologies to really make GPS and LBS useful and drive revenues as a result.” 

On the GPS side, Connelly said it was disappointing to see NemeriX go under, but the significant level of consolidation in the market over the last year or so has created a very competitive environment. “We have seen SiRF/CSR, Infineon/Seiko, u-blox/Geotate, Glonav/NXP/ST/Ericsson, as well as strong partnerships for the likes of Skyhook, Mexens/Yahoo, and Spotigo/Genesas,” he stated.

“While in some cases this has slowed developments in 2008, I think these new companies/partnerships will bring some really interesting products and services to market over the next two years relating to GPS. It will also be really interesting to see how changes to the cellular reference design market have a direct impact on the GPS market.”

For all of the gloom and doom, Connelly said that IMS, which tracks GPS and indoor location shipments through a new service, believes that the overall market grew by 42 percent in terms of units shipped. “Both the laptop and camera markets showed very strong initial growth in 2008, with a strong forecast for 2009. Indoor location technologies have also been one of the major highlights of the industry last year, with very high penetration rates across a range of devices, even outstripping GPS in the laptop market,” he said. “What is really interesting is the number of uses there are for these technologies and the range of technologies that can be used to meet the particular needs.”

So, what is doing well and what isn’t in this economic downturn? Connelly says that the portable navigation systems market is expected to remain subdued for much of the year.

“This should have a 3- to 6-month knock on effect to OEMs and LBS providers and will create a lot of opportunities for companies that can work across these platforms. Alternatively, there is a lot of potential to form partnerships and services focused on these emerging markets,” he said. “GPS manufacturers are already back on track to some degree. There was a significant decline in shipments in the fourth quarter of 2008, which is in line with the rest of the semiconductor industry. But we are already seeing strong growth of 24 percent in the first quarter 2009.”

Beat the Traffic Software Moving in A Slow Market

Despite the worldwide economic slump, Triangle Software’s Beat the Traffic product is successfully moving in several markets. “We’ve made excellent progress in our core market of broadcasting and cable. We grew 50 percent over the last 12 months — despite the most dramatic downturn in our economy,” said Andre Gueziec, Triangle Software president and CEO. In June, the company announced a big client — Time Warner Cable — in New York, with ramifications for big contracts in other parts of the country. A large number of Triangle employees are working on this new contract, Gueziec said.

Triangle/Beat the Traffic has not been involved in integrating software into personal navigation devices (PND) like many other traffic companies. Instead, the company is shifting focus and time to online and mobile segments for on-demand traffic information, Gueziec said. “We have not been active in the PND space, but we have big plans for the presentation of our information on various mobile platforms,” he said.

For example, the company launched a mobile WAP portal, www.BeatTheTraffic.mobi, which was recently featured in the Wall Street Journal. Gueziec, whose Triangle Software purchased LandSonar in 2008, believes the presentation of traffic information is the company’s strength. “We are an early innovator in this space, with more than eight years of experience. Traffic is considerably tricky than might appear at first,” he said. “If you go through the user forums on some of our competitor’s online platforms, you will witness endless user complaints of accidents being displayed on the wrong side of the road, bridges collapsing. Yet the display showing green-'free flow' [is seen]. That can't be good.” Overall, Gueziec’s goal is the make his company, and its www.beatthetraffic.com website a top destination for personalized traffic information. Despite competition, he said the visits to the website are growing monthly.

“Weather is similar in the sense that it is available everywhere, on every screen and newspaper — yet the dedicated weather portals are doing well. Wasn't weather.com acquired for $3 billion recently?” he said.

The company offers traffic speeds, incidents, cameras and personalized point-to-point trip times. The Beat the Traffic GPS-based software is powered by Inrix.

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