The eternal telephonic question ?where are you?? is likely to be obsolete in the near future. It might be fascinating to locate your friends, employees or spouses through paid location-based services (LBS), but the market explored till now is just the tip of the iceberg. Reason being some would like to pay for it, and some would chose not to.
Three months back, the telecom operators were thrilled about the 3G auctions and winning more circles than their competitors. But now is the time to analyse its after effects. Having spent an astronomical amount as license fees, it will be a strong imperative for the operators to look at the Rs 11,000 crore value added services (VAS) market, which currently gives them only 10% revenues. Though LBS comprise a very small portion of the VAS market, the total spend in the LBS market in India is expected to rise to $78.2 million in 2013, estimates Canada-based IE Market Research Corp. The upcoming launch of 3G services will provide a major surge and push to LBS applications in India.
LBS?information and entertainment service accessible by means of mobile devices?requires the combined effort of telecom operators, handset makers and mapping information engine companies to reach the target audience. The services could range from finding the nearest ATM machine, restaurant, business or the location of a friend or employee. They also include parcel tracking and vehicle tracking services, mobile commerce when taking the form of coupons or advertising directed at customers based on their current location.
Good news is that innovation is already on the minds of top telecom operators to build applications and grab customers. For instance, Bharti Airtel has created a lot of talk in the town with the Airtel Friend Locater service for which you pay Rs 10 for 10 days, to get in touch with all the 10 friends on your buddy list. Shireesh Joshi, director marketing (mobile services), Bharti Airtel says, ?We believe that by making customer interactions location-intelligent, we can enable their experience with smarter interactions and add value to them. It will enable the average user to understand how such services can enrich social interactions.?
Pallab Mitra, head 3G, product marketing, Tata DoCoMo says, ?The 3G subscriber base is expected to reach a whopping figure of 540 million globally in 2010. The market size has huge potential for applications such as LBS and navigation to become quite popular and be adopted by the end users seamlessly in India.?
It is important to understand that consumers are not a standalone target audience for LBS. Even enterprises and public services sector take advantage of it. Malls and coffee houses have started using LBS in India for advertising, being influenced from the West. Rajat Tandon, director, India sales, Navteq explains with an example that suppose if you are crossing Select City Mall and your profile is available with Ed Hardy, which is also running a sale in the mall. You shall get an SMS on your cellphone??why don?t you get in?we have special offer for you.? Ed Hardy has a server which has your location available to it. Costa Coffee and Barista are also doing LBS advertising. ?Navteq is one of the few companies which is doing location based advertising in India and has customers in India including Zee Studios,? he says.
Navteq was acquired by Nokia in 2008. It is evident that even handset makers are taking sufficient initiatives to have inbuilt maps and data in their devices. Jasmeet Gandhi, head, OPM & Devices at Nokia believes, ?Already there are a few million devices out there in the market and our consumers are ready to experience and explore new avenues in the location-based services space as we roll it out. They are requesting for location-based applications, such as locally relevant content to help them explore the place around them and this will be an essential platform in mobile devices going forward.?
Even Ranjit Yadav, director (mobile & IT business), Samsung India agrees. ?We already see consumers requesting for LBS applications, such as mapping, routing and navigation to be essential platforms in mobile devices going forward and 3G will change this space.? Market research firms like iSuppli are predicting that by 2014, there will be virtually no more market for standalone devices for GPS. ?And naturally, we will be looking at fulfilling this consumer need by making this feature available in more and more of our affordable touchscreen phones and smartphones,? he adds.
Though other sectors such as retail, automotive and FMCG also use LBS services, Rohan Verma, director at MapmyIndia believes that telecom is a massive user of their mapping data as it helps them to monetise it through value added services. Coke is an example of FMCG which uses location for sales and marketing. On the other hand, retail uses it for site selection. Bombay Taxi also uses LBS for tracking. He further adds, ?We did not see much of LBS in the past two to three years, but on one side we saw navigation because it was used independently in devices. LBS services are slowly being made available and expectations are high from 3G.?
The way the circles have been won, nobody is in a comfort zone. The faster they apply 3G, the faster they can win subscribers. The question remains that what are the data services that telecom service providers can use, which consumers can pay for?through which operators can monetise.
Rajive Chandra, director of sales and marketing(APAC), Tele Atlas, gives a global perspective: ?My vision is that LBS will pick up once 3G is launched. The speed will go up from 120 Kbps to 1 Mbps. In Indonesia, speeds are upto 14 Mbps. We provide navigation maps and software to HTC, RIM, Motorola, Sony Ericsson and Samsung and they bundle it into handsets and sell it.?
Amidst the excitement between telecom service providers, handset providers and mapping information companies, Jaideep Ghosh, director, KPMG expresses his analytical view that as compared to other VAS like video, audio and gaming, location-based services and navigation will benefit a shade less as they do not rely much on speed. But he ensures that LBS is likely to be more successful in the enterprise segment than the consumer market. Cargo training, emergency services and public sector will drive the growth.
Adding to this, Joshi from Airtel says, ?SMEs use LBS to track their small sales force. Being a consumer application, we allow the subscribed user to add only upto 10 friends in their buddy list. Even then we have seen a number of SMEs use the service to keep track of their sales force position.? Simultaneously, Tata Docomo?s Mitra ambitiously states, ?We target different industries in the enterprise segment ranging from manufacturing, logistics, utilities, municipal corporations, MNCs and public distribution systems.?
Clearly, LBS is a proven market globally and even India is adapting to it. The market might be large but the propensity of Indians to pay is low. Thus, mobile phones being the larger market for LBS as compared to other devices, it is time for operators to provide interesting applications at low cost and derive revenues from advertising.