Location Based Services Poised to Lead the VAS

Date:   Thursday , January 29, 2009

Gone are the days when the only option to reach your destination was by asking a stranger on the way for directions or letting the notorious taxi or auto drivers take you for a ride, literally. Enter the world of location based services (LBS), where finding your way is a child's play, and it's a lot of fun using it too. Once an exclusivity of the developed world, LBS is now increasingly becoming commonplace in emerging geographies like India.

LBS is poised to take up the next lead in the growth of value added services (VAS) on mobiles, opine industry pundits. In fact, LBS is not a new thing. It's been around for more than 10 years, especially in the American and Far Eastern markets. There used to be a running joke in the U.S. and Japan that every year is 'Year of LBS', which didn't materialize. However, after 2007 things started changing and 2008 was a very great year for LBS as worldwide LBS revenue crossed a billion dollar mark.

Karthee Madasamy, Sr. Investment Manager, Qualcomm Ventures, defines LBS saying, "Location is really about bringing context to content and LBS are those services that are enabled with locational identity." So, what kind of services the consumers can expect from LBS? Well, only imagination is the limitation. However, LBS may include point-of-interest and navigation assistance, gaming, location based information services, personal security, asset and fleet tracking, business transaction with location information, apart from peer-to-peer networking.

Market Dynamics
LBS is one of the quickest growing segments nowadays. Globally, the LBS market is predicted to grow to a 13 billion-dollar industry by 2012. With more than 300 million mobile users, LBS is expected to see a huge growth in India, which could be a huge market. Even though it is a new entrant in the Indian market, the country is one of the fastest growing LBS markets. "The Indian market was about $22 million in 2007 and is expected to cross $500 million in next five years," says Sujit Kumar, Director, CL Infotech.

Some major global players in the area include Trimble, Leica Geosystems, SiRF, CSI Wireless, and Navteq (now acquired by Nokia). "The main drivers of this growth would be the logistics vertical, which will heavily use Global Positioning System (GPS) for tracking. Apart from that, individual consumers and car navigation systems are also supposed to drive the market in terms of revenue," opines Rohan Verma, Director, MapmyIndia.

Interestingly, despite the IT doing the countryproud, the concept of digital maps was completely absent in India as only paper maps claimed its dominance. But the scenario is altogether different now. When commercial application of satellites manifested in the form of GPSthough it is in its infancy, GPS hasstarted generating interest among the larger section. Till 2004, there was little consumer awareness about the value of digital maps and location based services. With the launch of mapping and directions portals like MapmyIndia in 2004 in India, followed by the worldwide launch of Google Earth displaying satellite imagery in 2005 and Yahoo India Maps in 2006, consumers started realizing the benefits of being able to search for maps and directions easily, printing customized route maps with turn-by-turn directions, and then carrying them along. Today digital maps, which are the lifeline of LBS, have gained much usage among Internet users.

"MapmyIndia was one company that provided store locator services like the nearest store, and services like how-to-get-there to leading banks and car companies like HDFC, ICICI, and Hyundai during those days," says Verma. Today consumers realize that digital maps are truly a high utility tool, as they can easily locate the nearest service center or dealer or ATM and save a lot of time.

Indian Landscape
Today India, with over a billion people, certainly is one of the fastest growing markets in the world for wireless connectivity and hence one of the last great frontiers for wireless location based services. The issues like social networking, personal safety, enterprise efficiency, geographic information services, and asset protection — that are being addressed worldwide, are present in India as well. But the major concern is how to deliver a compelling value to an Indian population, currently with teledensity of around 11 percent, which will accelerate the migration not just to wireless connectivity but also to key value added services. "The key to creating compelling services for the Indian market lies in identifying high value services and tailoring them to suit the unique Indian market requirements," says Gopal Srinivas, Head, VAS Marketing, IDEA Cellular.

For instance, navigation on mobile handsets, one of the most successful location based services worldwide, is largely customized for automotive use in America, while in other geographies such as Japan it focuses on mass transit and pedestrian navigation. In India, clearly, there is significant reliance on both mass transit and more individual modes of travel such as automobile and bicycle. Any comprehensive navigation service would need to adapt for the different modes of travel both in the assumptions made and in the services provided. Thus, bus and train schedules and walking or biking transit times are key to pedestrian travel, while real time traffic information is much more relevant to automotive traffic.

Similarly, the high density of businesses and markets and the lack of comprehensive geo-coded directory information make the provision of useful-points-of-interest services more challenging and also much more valuable. Consumers can be lured only if there is some true value for what they pay. Thus, how can one create reliable location based services for a market that shows clear and compelling need for such services?

Certainly, technology also plays a major role in this and the foundation of such services is clearly based upon reliable, ubiquitous, and highly accurate location technology. Services need to work with a high level of accuracy whenever and wherever called upon. As such, many industry experts believe that the true potential of the location based service market lies in the combination of GPS and wireless signals in a mobile handset for a hybrid technology called Assisted-GPS (A-GPS). Already deployed widely in the U.S. and around the world, A-GPS provides the most accurate, universally useful positioning capabilities available today. Powering the vast majority of location based services that have been deployed on mobile handsets, A-GPS overcomes many of the challenges of simply relying on GPS satellites alone to extend precise positioning of areas such as dense urban conglomerations, craggy canyons, deep interiors of buildings, and in other difficult areas.

A-GPS increases the value of services that the operators can offer, while enabling a much wider range of revenue generating services. With its superior performance and wide availability, A-GPS has already been deployed around the world. However, while many countries are already nearing the stage where A-GPS is mainstream, India is still in its infancy in this area, and as a result a vast market still remains untapped here.

Immense Possibilities
How LBS becomes a game-changing phenomenon? "Possibilities are endless," says Madasamy. In fact, there are many location based services and location service possibilities that are relevant to India.

Consider point-of-interest and navigation assistance. In this case, rather than having to purchase a dedicated device, wireless users can load a navigation application onto their handset for turn-by-turn directions, voice prompts, maps, and more. Local search capabilities give users the ability to find the closest coffee shop, restaurant, movie theater, gas station, or shopping mall. Once they find where they want to go, directions may be optimized depending on whether the user is traveling by foot, bus, or car.

As we all know that social networking is a growing phenomenon, as people increasingly want the ability to stay in touch with friends and family. One immense possibility of peer-to-peer location services is an application that can be used to give wireless users a way to easily locate their contacts, allowing them to find each other in crowded areas, or to help decide on a place to meet that is convenient to all involved. Such applications can easily be adapted for dating services, or to allow friends to exchange pictures and video embedded with information on where they were when the photo or clip was taken.

Here is another cool opportunity. LBS can dramatically enhance mobile gaming. Today gaming companies have come up with GPS-enabled games that allow users to track other nearby players on maps displayed on their mobile phones. Participants can interact with each other in the massive multiplayer game without having to be in front of a PC. These games can be incredibly detailed and users can benefit from meeting other gamers in person as well, if they wish.

In many developed countries mobile emergency services are mandated and this can be implemented in India as well. The idea is simple. When a subscriber dials a predefined code, such as 100, 101, or any other number, the emergency application obtains the subscriber's geographic location and communicates this information to the appropriate emergency services.

Personal security is the most talked about service that can be derived from LBS. Location services can allow parents to monitor and track the location of their children, giving them peace of mind when they are away from home. It may even be possible to set alert prompts if a child roams outside of a particular area during a specified time – for example, outside of the school campus during school hours! Parents may be able to use their cell phones or the Internet to locate and communicate real-time with the loved ones. In fact, services of this kind have already been very popular in Korea.

LBS can help enterprises in asset and fleet tracking. With an asset-tracking application, a company could give customers the precise locations of valuable items on detailed maps with street names and numbers, coupled with the option to be alerted when an asset is not where it should be, to locate an asset when it's been lost or stolen, or to track its movement at all times – right down to the street level. Anything from expensive gadgets and valuable property to shipments can be instantly tracked and located in real-time. A very similar application could also be used to keep track of mobile workforces, such as trucks of a delivery company or the mobile employees of businesses.

Here is a cool idea on how businesses may also benefit from LBS. They can deliver targeted advertising to users who opt-in for special offers. Perhaps a wireless user who passes by a certain type of store he often frequents will receive an exclusive discount offer on his phone that is good only for that day, delivered because of their proximity to the business. Being able to factor in the geographical location of potential customers gives businesses an additional edge in focusing their efforts, while users only receive the offers that interest them.

There are limitless opportunities, for instance fishermen can get weather alerts on the high seas, depending on their location, farmers can get alerts about unseasonal rains, which can help them reduce crop damage. This can have a critical impact on the food stocks, procurement situation, and inflation levels in the current scenario of low grain production.

Growth Challenges
In India, the issue of data quality is a major cause of concern. Verma opines, "Though LBS as a market has been around in India for a couple of years now, it started noticeably taking off during 2008. The reason for this was that sub-quality products powered by poor quality maps had been introduced in the market before that."

"As of now, I would say that Indian map data quality has huge opportunity for improvement,"opines Marc Naddel, VP, Partner and Developer Programs - North America, Navteq. Data quality is an issue, because GIS information is not quite accurate in a dynamic environment. Obviously, consumers want accuracy and completeness of data. There's a paucity of data that can be overlaid on top of what is already available. "But it's an opportunity for all the players in the ecosystem to play their role to build a solid LBS ecosystem in India," he adds. Also, it's an opportunity for talented developers and platform providers based in India to come up with innovative offerings. There are many interesting applications that can be built upon it.

However, the silver lining is that the GPS market has seen some positive moves. For instance, Airtel’s launch of GPS navigation on Blackberry in 2007, and the launch of MapmyIndia Navigator, an in-car GPS navigation device all over India, and the launch of digital maps on its mobile devices by Nokia have helped improve customer perception of the quality and benefits of the GPS enabled products.

Another key challenge is monetization. How to make the Indian customers pay for such services? With VAS revenues being dismal and as low as about 12 percent of the total revenue it’s a highly challenging task to lure more consumers to use LBS. Samanth Vepa, Business Program Manager, Yahoo! opines, "LBS will take a long time to develop in India. Right now, the industry is evolving and volumes are a problem. But we don't think that will always be the case."

It's a well-known fact that more than 80 percent of the mobile subscribers use basic handsets, which are suitable for making voice calls. So, it's the cost of the device that is hindering the LBS growth, opine industry experts. Says an analyst, "High cost of the GPS device or the high-end cell phone that supports LBS at this point of time are not able to justify returns on the investment for many applications."

"In India the end users don't want to pay unless such services are proved really beneficial. Hence, to push the growth of LBS well-prepared strategies have to be put in place, like making the services affordable or preferably free. Making the services free for consumers by adopting the advertisement based model, embedding maps in the mobile devices as Nokia has already done, or very low tariff subscription based models may drive the adoption," opines Naddel.

Since 2004, a lot of positive changes have been made by the government to expedite adoption of the services. GPS was removed from the classified list of defense equipment in 2004, which allowed free import of GPS devices without the need for a license from the information and broadcasting ministry or clearance from the defense ministry.

In India, though location based services are currently in a nascent stage, there are clear indications that they will become one of the most sought after services in a few years, thanks to the country's tech-savvy young population. Many experts believe that the coming two years are promising for the market, with cellular handset players like Nokia, Asus, HTC, service providers like Airtel, GPS device players like Gramin, and solution providers like SatNav and MapmyIndia eyeing the Indian LBS market more aggressively.

What this means is that more apps are on the anvil, leading to more people buying GPS devices and subscribing location based services, provided they are made affordable for Indian consumers. There is a major role for everybody in the ecosystem - be it government, carriers, investors, or data providers - to give a solid boost to the segment to make LBS lead the mobile VAS segment.