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The Evolving Location Based Services Opportunity

The Evolving Location Based Services Opportunity

From personal conveniences to life-saving services, there are plenty of niche markets to tap within this "killer app" of wireless data services. First, though, a strong infrastructure is needed.

Location-based services have received considerable attention, and are frequently mentioned as one of the "killer applications" of wireless data services. Like all new technologies, certain applications of location-based services have been overhyped while others have been overlooked. This article provides a brief overview of the opportunity, while addressing a number of the misconceptions.

One of the jobs of a marketer is to try to create concise "use cases" with which to explain the value of a product or service. For the last couple of years, players in the industry (myself included, I confess), have described the wireless location-based services opportunity by holding up a cell phone and saying that by using the microbrowser, you'll be able to get answers to three questions: "Where am I?"; "What's near me?"; and "How do I get there?"

While effective in quickly setting the scene, this use case underrepresents the location-based services opportunity, and implies that the handset is the only way in which location-based services will be deployed. Rethinking the questions in less concrete terms, the first, "Where am I?" establishes a context for a subsequent question. After all, asking for someone's current location is seldom the end of the conversation. "What's near me?" is simply a search. Finally, "How do I get there?" is just one of the many actions that you might take once you find a place of interest. Let's explore each of these ideas in more detail.

Establishing a Context
The ability to answer the question "Where am I?" is a compelling scenario with many applications ranging from public safety to retail to billing. Motivated by the FTC's E911 mandate for handset location capture, companies such as Cambridge Positioning Systems and SnapTrack have brought network and handset-based solutions to market. While the E911 deployment schedule has slipped a number of times, many carriers are now deploying services that will result in increasingly accurate network position capture over time. Moving from coarse cell-sector (approximately 500m) to angle of arrival (AOA) services (with resolution of approximately 100m), they aim to reach a point where, using a hybrid server and handset GPS model, they'll be able to locate consumers within 10m.

Each location-capture technology has its strengths, weaknesses, and costs. For instance, depending on the implementation, network-based location-capture techniques such as cell-sector and AOA do not require changes to the handset. On the downside, due to the length of time it takes to "lock in" on a signal, these techniques are incapable of calculating the location of handsets in motion such as those deployed in cars. On the other hand, GPS requires changes to the handset, which makes them more expensive and renders existing handsets obsolete. In addition, GPS technology won't work well inside buildings or anywhere a line of sight with the GPS satellites can't be established.

It's important to note that while automatically determining a customer's location helps create a compelling user experience, it's not a solution to every problem. With so much new technology around, it's easy to lose track of how people go about their daily lives. While there are certainly many scenarios in which we want to ask questions about the world relative to our current location, there are many more in which we want to ask questions about places where we are not.

Consider someone making dinner reservations. Using a location-based service, they can ask for restaurants relative to a location (chosen, for example, by street address, street intersection, zip code, point of interest, or from their stored profile). Once they find a restaurant that meets their criteria, they can share this information with their friends in the form of an invitation. Using the location passed in the invitation, their friends can use this as a starting point for queries to find, for instance, the nearest parking location or subway stop. Automated location capture is used only when you want to perform an action relative to your current location.

Automated location-capture technology, even network-based implementations, won't necessarily be active all the time. A common m-commerce scenario is the vision of a consumer walking through a mall and being messaged about what's on sale as they pass by stores.

Ignoring the myriad of privacy, content, social and economic issues that must be overcome, and concentrating on location-capture alone, this scenario is highly suspect. For this scenario to work, a location-capture system would have to be actively sampling the consumer's handset to be able to determine the location within a few meters, given the few seconds it takes to walk past a storefront. Unless being actively used, most wireless devices only communicate with the network every 30 seconds or so. Hardly time to begin calculating a position, let alone making the connection between where the consumer is walking and any items on sale! Moreover, as noted, network-based positioning is not accurate enough to associate a specific store with a customer. Given that GPS-based handset location does not work indoors we can chalk this one up to wishful thinking.

Automated location-capture aside, there are many different ways to establish a starting location. Consumers can build up profiles that contain lists of frequently visited places, recording, for example, the addresses of their home, office, clients, and favorite entertainment establishments. Alternatively, coarse cell-sector location can be combined with interactive services to prompt the consumer through a list of major cross streets. Another technique is to quickly drill down from state to city to neighborhood to landmark. Conversely, you can go bottom-up by searching for a point-of-interest by name and using it as a starting location.

Searching for an Opportunity
Once we've established a physical context, we can ask questions such as: "Where is the nearest 3-star hotel?" or "Where is the nearest 24-hour truck stop?" On a more personal level: "Where is my friend right now?" Perhaps even: "Where are the nearest people who share my interests?"

Good answers to these questions require that information in the system is structured, rich, and up-to-date. To receive a good answer, you need to be able to ask good questions. Good questions are based, in part, on the relevance of the information presented. Is it personalized? Is the information in the system filtered, based on the consumer's profile? Is it contextualized? Are the choices presented appropriate to the task the consumer is trying to perform? Is it intelligent? Some location-based service providers use very primitive calculations to determine what is near the consumer. An intelligent location-based system needs to take geography into account when performing a proximity search. Consider, for example, a location-based service being used in a vehicle. When a driver requests the location of the nearest gas station, he or she is not usually interested in knowing about those behind - only in those close to the route being taken. Systems that do not provide intelligent results will be quickly passed over.

Performing an Action
The name location-based services is misleading. I prefer to rearrange the words into services based around location. What kind of services are they? Airflash has an effective motto for describing theirs: "Find it, share it, buy it." Services are, to a large degree, dependent on the content in the system. Vindigo, a Palm-based location-based application, deals with content that falls into the categories "Eat, Shop, Play" for which they provide services to display information and maps.

The most frequently mentioned location-based services - the two above included - fall into the concierge category. However, it's a mistake to limit your thinking about location-based services to just these types of applications. After all, you seldom see people starving on the street for lack of a wireless restaurant finder! Concierge applications are "nice to haves," not "must haves."

There are many niche markets that can receive significant business value from location-based services. Maptuit's FleetNav service, for example, targets the long-distance transport market. Trucking companies, faced with rising fuel costs, are eager to reduce the number of miles that a truck is driven. Using information about truck stops, fuel networks, weigh scales, and the like, FleetNav provides routes and directions that optimize the driver's journey and minimize the number of "out of route" miles - travel that doesn't contribute to getting to the destination.

It should be clear that there isn't going to be a single location-based "killer app." Many of the more effective deployments of location-based services are existing informational services that have been augmented using location. Canada411, for instance, is a telephone directory service that provides directions to listings. Tellme provides driving directions as just one of the many services in their voice-driven portal. The OnStar system being built into many new cars offers concierge functionality in addition to its public-safety and theft-tracking services.

Deployment Issues
While many business opportunities await, there are a number of deployment issues that stand between us and wireless nirvana. The market is full of competing products from cell phones to PDAs to purpose-built wireless computers, to say nothing of the choices presented by network standards such as CDPD, GSM, GPRS, 3G, and the like. Given the number of choices, and the breadth of potential applications, it should come as no surprise that one solution does not necessarily fit all.

On the equipment front there is no clear front-runner. WAP phones, hindered by the lack of a keyboard, are best limited to data retrieval. Wireless PDAs, which boast better input capabilities, have not yet made significant inroads, at least in part because there are few vendors providing end-to-end solutions. Proprietary device markers, such as Qualcomm and Highway Master, do provide end-to-end solutions but only to specific vertical markets.

The underlying carrier network, and associated billing model, is also a challenge. Today's 2G circuit-switched network carriers generally charge for data access by the minute. Until we move to a packet-switched 2.5G network, such as GPRS, that's capable of supporting a revenue-sharing model, it's difficult to envision a viable economic model for independent content providers. In any event, the advertiser offset model employed on the Internet is incompatible with the display capabilities of today's wireless devices.

Carriers are currently wrestling with the opportunity that the wireless Internet presents. Given the limitations of the telephone handset, WAP users do not "surf the Net." For a time, it looked like the start menu on the telephone would become a hot piece of real estate, but that seems to have died an early death as consumer adoption fell far short of expectations. History has shown that closed-garden deployment models - where the carrier tries to control all the content that the consumer has access to - do not promote innovations and hence usually stagnate after a few generations.

For wireless location-based services - and indeed all wireless applications - to flourish, a better economy of access and revenue sharing must be pursued. In the meantime, wireless service providers that are in it for the long term are focusing on niche markets to build on when the underlying infrastructure stabilizes.

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