Assessing the Future of Location-Based Services: Technologies, Applications, and Strategies

Assessing the Future of Location-Based Services: Technologies, Applications, and Strategies

Robert Harmon (Portland State University, USA) and Tugrul Daim (Portland State University, USA)
DOI: 10.4018/978-1-60566-156-8.ch005
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Location-based services (LBS) are approaching an inflection point. The continued rollout of the technological infrastructure, the availability of LBS applications, and the market’s increasing awareness of their potential value should lead to increasing business opportunities. However, there is still a high degree of uncertainty in the LBS space. Challenges are emerging to the cellular network operator-centric LBS model. Hardware companies, application providers, competing infrastructure technologies (such as Wi-Fi, WiMAX, and satellite networks), and new competitors from the computer and Internet industries are all vying for market position. Customers are becoming interested in location services, but the uptake has been slow. New LBS business models and new strategies need to be considered. This chapter evaluates the future of location-based services through a critical assessment of the technology, service applications, market trends, and strategic issues.
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Are location-based services (LBS) finally ready to take off? For almost ten years LBS has been heralded as the next killer application in the wireless space. Yet the uptake for LBS has been very slow. Potential customers, both business and consumer, have a poor understanding of what LBS is. They perceive LBS to be complex, costly, and offering insufficient value to warrant adoption. Mobile operators may be mostly to blame for this. They have been slow to roll out services, targeted niche markets, offered poor service quality, charged high subscription fees, and limited the access of innovative third-party application providers to their closed networks. In a very real sense the operators’ “walled gardens” have choked off promising paths for innovation. Joe Astroth, VP of the LBS division of Autodesk sums it up well: “LBS is the killer application that got killed on the way to the mainstream” (Baig, 2006).

However, this disappointing situation may be about to change. ABI Research projects worldwide subscribers of GPS-enabled LBS will grow from 12 million in 2007 to reach 315 million in 2011 (Morse, 2006). International Data Corporation (IDC) projects the location-based advertising (LBA) market alone to be a $2 billion market opportunity by 2011 (Boulton, 2007). North America and Western Europe will likely see the greatest growth. In North America, operators such as Verizon Wireless and Sprint with 3G networks have embraced GPS. European LBS has been limited by the lack of GPS capability. However, the continuing rollout of W-CDMA enabled smartphones with GPS chipsets will enable the growth of LBS there.

The extended gestational period for LBS has engendered reevaluation regarding its potential and its role as a standalone class of mobile services. Three key issues will determine the future of LBS:

  • 1.

    Will LBS be a service category unto itself or will it be an added feature to existing services--adding value by increasing usability and enhancing the user’s experience?

  • 2.

    How will changes in customer expectations of the mobile Internet experience impact LBS?

  • 3.

    What changes in LBS business models will occur as the mobile operators are challenged by Internet-based business models from competitors such as Google, Nokia, and Apple?

As the Internet and mobile worlds converge and LBS starts to look more promising, competitive issues will abound. The industry dynamics are already in flux as key players in the mobile ecosystem vie for power. Handset manufacturers are including GPS, Wi-Fi, VoIP, and soon WiMAX capabilities on their smartphone platforms that will enable users to bypass cellular networks. Google, with a regulatory boost from the Federal Communications Commission, is pushing to disrupt the market with the potential for a network-neutral open cellular system in the 700 MHz band (Gapper, 2007). LBS application providers are leveraging new handset and network technologies and partnering with other members of the operators’ value chain to create innovative applications and to challenge the operators’ channel power. They are also developing applications that enable customers to “free ride” on cellular networks. The basic questions here are: What LBS services do users want, where will that value be generated in the LBS ecosystem, and who will capture it?

The Internet is by its very nature an open system. Anyone can launch a website or an e-commerce service. This is anathema for mobile operators who limit choice and competition with their walled-garden networks. The operators are coming under increasing pressure from customers, regulators, partners, and competitors to open their networks to innovation. With or without the operators’ acquiescence, this opening is starting to happen with Wi-Fi and VoIP-capable smartphones. WiMAX, which recently became a 3G standard, will further challenge the operators’ closed networks (Allison, 2007). Apple’s Wi-Fi-enabled iPhone is the first major breach of AT&T’s network and brand dominance. More openness and disruption is on the way which should favorably impact the growth of LBS.

Key Terms in this Chapter

Mobile Data Networks: 3G and 4G high-speed mobile networks that enable Internet access on mobile devices. 3G networks are circuit and packet switched and 4G is packet switched. Such networks use W-CDMA, CDMA2000, and WiMAX technology for 3G networks. OFDMA technologies such as Long Term Evolution (LTE) for GSM networks and Ultra Mobile Broadband (UMB) for CDMA networks and Mobile WiMAX are standards being proposed for 4G networks.

Location Enablement: The use of GPS or other location technology, handsets, networks, applications, and infrastructure to deliver location-relevant information to any portable wireless device that has the capacity to display multimedia content.

Mobile Web2.0: The foundation of Mobile Web 2.0 consists of personal information and social connections that people share to form social networks. The Mobile Web as accessed from cell phones, PDAs, and other mobile devices deliver Internet protocol (IP) multimedia to mobile users. It essentially harnesses user-generated content as the means for creating a rich user experiences capable of creating superior customer value.

Location Technology: Advanced technologies that determine the location of a mobile handset device. Network based technologies use the cellular network to determine the user’s location. The primary handset-based technology is the satellite based Global Positioning System (GPS). Hybrid technologies such as A-GPS attempt to minimize the line-of-sight drawbacks from pure GPS handset solutions. It incorporates the accuracy of a GPS solution for outside open areas and is network-assisted for poor GPS signal locations such as indoors. Short-range local positioning technologies such as Wi-Fi, Bluetooth, and Radio Frequency Identification (RFID) that may be built into the handset can provide accurate location data since the access point location is known.

Industry Food Chain: A hierarchical business ecosystem where the identity, roles, and relative power of the industry’s participants define their market position. Industry food chain participants exist in an economic, political, and physical environment where the dynamics of their relationships affect strategic choices and outcomes and are characterized by uncertainty. Studying an industry’s food chain can identify roles and strategic options of the participants and help to foresee competitive disruptions that may be on the horizon.

Mobile Social Network: A mobile location-enabled social structure made of nodes of individuals or organizations that are linked by values, visions, ideas, or friendship. The mobile social network is a map of all of the relevant ties between the nodes being studied leveraged by knowledge of each member’s location. The network determines and leverages the social capital of individual actors to enhance each user’s experience and the collective value of the network.

Location-Relevant Services: Location determination is a building block for creating interactive services where contextual awareness is a key attribute. Context means enabling marketers to reach customers at the right location with the right solution at the precise time they are ready to buy. Location-relevant services bring the Internet site to the user, personalizing relevant information to fit the customer’s real-time requirements at the point of need.

LBS Applications: Location-enabled services such as navigation, family tracking, emergency services, asset tracking, logistics planning, workforce management, customer management, location-based advertising, and social networking that are delivered over a mobile network to a location-ready multimedia handset.

Location-Based Services (LBS): Location-based services (LBS) provide location-specific information, often in context with other mobile applications, which is relevant to the mobile user’s real-time choice behavior. These services determine the exact location of the user and can use push and/or pull information methods to respond to queries or suggest possible decision options to the mobile user. Knowledge of the user’s location can be used to deliver context-relevant information to customers where and when they are most likely to buy.

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