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J’son & Partners Consulting Company presents main results of the research «Augmented Reality and Location-Based Services Markets in Russia and World». The study examines two innovational segments in …

J’son & Partners Consulting Company presents main results of the research «Augmented Reality and Location-Based Services Markets in Russia and World». The study examines two innovational segments in mobile communication which may strongly influence all informational infrastructures and consumers’ way of life in the nearest future.
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  • 1. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 1 J’son & Partners Consulting Company presents main results of the research «Augmented Reality and Location-Based Services Markets in Russia and World». The study examines two innovational segments in mobile communication which may strongly influence all informational infrastructures and consumers’ way of life in the nearest future. The World Market of LBS Applications and Services Location-based service (LBS) is a type of informational and entertainment services based on the determining of current location of the user’s mobile phone. Visualization possibilities of modern smartphones allow displaying electronic maps of quite high quality on the screen that enables to use LBS for solving different business, navigational and entertainment problems. There are two types of LBS: 1. Services based on determining subscriber’s location with use of Global Positioning Systems (GPS and GLONASS); 2. Services based on determining subscriber’s location towards base stations of the mobile network operator. The first type allows determining subscriber’s location with great precision, but it is necessary that a special module with satellite connection was installed into the mobile terminal. The first such phone with installed GPS was started to be sold in Japan in 2001, and since 2007 all phones supporting 3G shall have built-in GPS module. Since 2002 LBS is used for commercial activity by mobile network operators in Russia. Main trends are:  Determine self-position location;  Determine other subscriber position location. In the majority of location positioning systems in Russia, which are offered by mobile network operators, the permission for “search” from the “searched” subscriber is an indispensable condition. Sometimes such permission is registered in a separate contract with operator, but permission as the searched operator’s SMS or USSD answer is used more often.
  • 2. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 2 Figure 1. Categories of LBS Applications in the Application Stores Souurce: J'son & Partners Consulting Along with the development of mobile phones’ technological level, namely, with appearance of the smartphones with built in GPS-module and formation of the new market segment of mobile applications the structure of LBS market was changing. New market players appeared apart from mobile network operators: LBS mobile applications vendors, mobile applications stores. Since mid-2000s LBS technologies have become more common. Main inflow of the audience was provided due to LBS mobile applications spread through mobile application stores. According to J’son & Partners Consulting estimations, the global audience of LBS mobile application users reached 486 mln people in 2012. The study by J’son & Partners Consulting’s includes the detailed analysis of LBS development conducted in the following macro-regions:  North America  Latin America  Europe  APR countries Nowadays, every fifth mobile device user in the world uses LBS (19%) and over 62% plan to do so in the future. Location-based services types Navigational applications (46%) remain the most popular LBS. At that, the rapid growth is shown by social network services that allow registering oneself in one or another place, such as Foursquare or Way of Living Navigation News and Weather Transport Reference books and Books Social Networks Sport and Fitness Travel Utilities Other
  • 3. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 3 Facebook Places. The usage of social LBS services increased by 50% and now their range already accounts to 13% users. Different types of location-based applications are dealt with in more details in the research:  Navigation  Geomarks  Family locators  Auto trackers  Geocashing and Geotagging  Check-in services  Search services  Informational services  Games Business models and monetization At present, J’son & Partners Consulting experts distinguish three main monetization models which are used in LBS mobile applications: 1. Advertising model is the most spread business model 2. Model based on collecting revenue from pay LBS mobile applications. 3. Premium accounts model is a variant of monetization model. Account owners get the additional functional, for example, access to the contact information of the other accounts and hiding one’s own personal information. There is a range of the applications to support LBS market development. Among the developing ones it is worth highlighting the sector of applications for sport and fitness that continues to develop for a long time. In 2012 number of downloaded programs of this category shall exceed 100 million.
  • 4. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 4 Development Forecasts of the World and Russian Market of LBS In 2012 the world audience of LBS application users is estimated at 486 mln people by J’son & Partners Consulting. Figure 2. The Global Market of LBS, 2012 – 2016 Souurce: J'son & Partners Consulting The volume of LBS mobile applications and services market was growing during the last 4 years. Particularly rapid growth was noticed in operators’ revenues from LB services provisioning. According to J’son & Partners Consulting estimations, the volume of the world market of LBS mobile applications and services at the end of 2012 amounted to 3.75 bln dollars, and by the end of 2016 it will reach 16.89 bln dollars. LBS mobile applications and services market is considered as one of dynamically growing; in the period from 2012 to 2016 the average annual increase will account more than 70%. The Russian LBS Market The estimation of the Russian market of the LBS mobile applications and services by J`son & Partners Consulting experts was conducted according to the model similar to the estimation of the world market. Revenue structure of this market consists of three categories: 1) Mobile LBS advertisement; 2) Revenue from purchases of LBS mobile applications; 3) Operators’ LBS. 3,75 16,89 0,00 2,00 4,00 6,00 8,00 10,00 12,00 14,00 16,00 18,00 2012E 2016F
  • 5. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 5 Figure 3. The Russian Market of LBS, 2012 – 2016 Souurce: J'son & Partners Consulting Market volume of LBS mobile applications and services in Russia in 2012 comprised 36.8 mln dollars. According to J’son & Partners Consulting forecasts, the revenues from LBS in Russia will make 121.7 mln dollars by 2016. J’son & Partners Consulting experts are convinced that LBS mobile applications and services market in Russia during 2013-2014 will enter the active development phase. Similar services and applications will be considered by advertisers as a powerful instrument of sales increase. The successful western examples will stimulate this interest. Market Drivers and Barriers J'son & Partners Consulting experts note that positive factors for market growth of the content applications such as smartphones sales number increase, gadgets average price reduction, improvement of indices of mobile Internet usage, smartphones expansion and mobile phones wide penetration, local market entry by global players, tablet PC expansion. The following factors among the barriers are distinguished by the experts: complex conditions to take signal, smartphones’ insufficient penetration, Monetization difficulties, incomplete reach. 36,79 121,73 0,00 20,00 40,00 60,00 80,00 100,00 120,00 140,00 2012E 2016F
  • 6. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 6 Overview of Market of Augmented Reality Applications and Services Augmented Reality (AR) is the term belonging to all projects focused on augmentation of the reality with any virtual elements. Augmented Reality is a component of mixed reality, which also includes “augmented vitality” (when real objects are integrated into virtual environment). Augmented Reality is one of the most promising world trends. In J’son & Partners Consulting experts’ opinion, the revolutionary changes in digital technologies consumption are to be expected exactly from successful projects in the Augmented Reality field. Augmented reality technology can change people’s information access and make it more applicable and convenient. For example, the creation of infrastructure and services for everyday problems solving. The advertisement became the first field of augmented reality technology employment. Nowadays, 80% of all employments of this technology are used for purposes of advertising. Technology Description Augmented Reality is a technology that enables to add virtual functions to the real objects in real-time mode. This technology can work both with markers usage (images or objects which are read by the program as starting points) and without them, when video flow is analyzed and digitized.
  • 7. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 7 There are 2 types of augmented reality devices: 1. Smartphones with camera and special software An important distinguishing feature of smartphones as augmented reality devices is their widespread occurrence. Figure 4. The Example of Smartphones with Camera and Special Software technological capability (availability of camera, display) understandable interface for user software availability Advantag es inconvenience of constant use resource intensity of software high battery rate lack of applied programms Disadvan tages
  • 8. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 8 2. Augmented Reality Glasses There are already implemented augmented reality glasses, but the market is in for devices aimed for the mass segment. For example, Google Company actively announces Google Glass of its own development, which stands a good chance of becoming main mass device that uses the augmented reality technology. Figure 5. The Example of Augmented Reality Glasses Augmented realities are already implemented with the use of the above mentioned technologies. Augmented reality technology can change users’ access to information and make it more applicable and convenient. This will happen with infrastructure and services occurrence for everyday problems solving. Convenience of constant use Customizing according to the goals of the augmented reality and software and hardware system Possibility of evolution into different devices Advanta ges Bulky devices Unavailability of mass market devices Disadva ntages
  • 9. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 9 The World Market of Augmented Reality Mobile Applications and Services Market structure, market players There are three main market categories: companies manufacturing devices; mobile phone manufacturers and augmented reality glasses manufacturers. The first category is enterprises using devices, soft and creating content on the basis of the present technology. This category includes web-studios making projects on the basis of the augmented reality, advertising agencies, where there is a department specializing in new technologies, and also “boutique” agencies, which are engaged only in augmented reality (for example, AR-Door). There are not so many such companies (productions) in Russia, and there are no market players whatsoever, which manufacture devices and SDK (software development kit). The second category is the SDK manufacturing companies. They are Total Immersion (France), Metaio (Germany), Qualcomm, which opened a department on developments in augmented reality sphere and Layar, which is engaged in geolocation. Such companies as Vuzix, which manufactures glasses during 12 years, and Innovega Company that presented lenses of augmented reality in 2011 belong to the third category. Business models, monetization The augmented reality market is in prospect, but several monetization models can be already distinguished. Advertising model As successful examples of this business model implementation in the Russian market, three types of advertising companies can be given. 1. Marketing activities 2. Classical advertisement with the augmented reality 3. Advertisement inside the applications of augmented activity Classic advertisement business model, where the main beneficiary is the advertiser, is used for implementation of advertisement business model in the market of the augmented reality. Developer Advertising agency Advertiser
  • 10. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 10 Application model As far as the majority of augmented reality capabilities is implemented from mobile application, all the business models of mobile applications market are suitable to it. The revenue items are:  advertisement;  application sales;  application subscribing;  sales inside the application. Game model In case of game-business model, where the augmented reality is a basis of a computer game, then the revenue scheme is similar to the ordinary game business-model. The Developer produces game for the definite platform PC/PS3/Xbox and then the Publisher spreads this game in convenient for him shape. Though, there is a constraint, physical markers are needed for some games for more quality work and that complicates their digital distribution. Developer Application Store Consumer Developer Publisher Consumer
  • 11. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 11 Forecasts of Market Development of Mobile Augmented Reality Applications and Services 2013-2015 Augmented reality systems can be applied in all fields of human activity: from aircraft industry to navigation. Several branches where the augmented reality will be demanded are worth to be distinguished:  Education: Creation of projects for children where different experiments, media files, schemes can be illustrated will enable to involve children into the educational process and to save from hardware.  Complex production: The augmented reality technologies shall be demanded for high precision production. The use of the augmented reality by Boeing Company can be given as an example.  Advertisement: At present, many advertisement projects with the use of augmented reality are already implemented. In the future such capabilities will be used by advertisement companies more extensively and this means not only mobile, but also Outdoor advertisement. Augmented reality market is inseparably associated with the scientific-technical progress and, according to J’son & Partners Consulting forecasts, by 2016 it will enter the phase of active development after reaching the annual turnover of 2.2 mlrd
  • 12. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 12 List of contents of the full (page 107) report on the research results “Market of the Augmented Reality and LBS Mobile Applications” 1. Introduction 2. Sources and methodology 3. Definitions 4. Market overview of LBS applications and services 4.1.World market of LBS applications and services – general overview 4.1.1. Prospects of the North American and European market development 4.1.2. Prospects of the Asian market development 4.1.3. Prospects of the Latin American market development 4.2.Types of LBS applications and services 4.2.1. Navigation (for example: Google Maps) 4.2.2. Geomarks 4.2.3. Geocashing (for example: Locus Pro from Asamm Software) 4.2.4. Geotagging 4.2.5. Checking services 4.2.6. Searching services 4.2.7. Information services 4.2.8. Games 4.3.Business model, monetization 4.3.1. Cases: monetization of LBS-applications 4.4.Market structure and its peculiarities 4.5.Volume and dynamics of the market, 2009 – 2012 4.5.1. Development of LBS applications and services, 2009 – 2012 4.5.2. Development of the Russian market of LBS applications and services, 2009 – 2012 4.6.Forecasts of the LBS applications and services market development 2013 – 2015 4.6.1. Development of LBS applications and services in the world, 2013 – 2015 4.6.2. Development of the Russian market of LBS applications and services, 2013-2015 4.7.Market drivers and barriers 5. Overview of the augmented reality applications and services market 5.1.Augmented reality technologies and their implementation in mobile platforms 5.2.The world market of augmented reality mobile applications and services– general overview 5.3.Types of augmented reality mobile applications and services 5.4.Monetization of large business 5.5.Market structure, market players 5.6.Forecasts of augmented reality mobile applications and services market 2013 – 2015 6. Adjacent markets 6.1.Broadband wireless network in Russia and in the world
  • 13. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 13 6.2.Smartphones market in Russia and in the world 6.3.Tablet PCs market in Russia and in the world 7. Conclusion and Recommendations List of Figures Figure 1. General scheme of LBS work Figure 2. General scheme of LBS work Figure 3. General scheme of LBS work Figure 4. General scheme of LBS work Figure 5. Picture to Mobile Marketing Association Survey Figure 6. Audience of LBS applications in Asian-Pacific countries, mln people Figure 7. Profitability of LBS applications in Asian-Pacific countries, mln dollars Figure 8. Profitability of LBS applications in Asian-Pacific countries, mln dollars Figure 9. Audience of LBS applications in countries of Latin America, mln people Figure 10. Profitability of LBS applications in Asian-Pacific countries, mln dollars Figure 11. Profitability of LBS applications in Asian-Pacific countries, mln dollars Figure 12. Google Maps in different devices Figure 13. Built in Map application in iOS devices Figure 14. Built in Map application in Windows Phone devices Figure 15. Yandex.Maps application in different devices Figure 16. Life360 Family Locator in different devices Figure 17. Family Tracker in different devices Figure 18. Family Locator in different devices Figure 19. Track Viewer auto tracker n different devices Figure 20. Locus Pro for Android devices Figure 21. OpenCaching for Android amd iOS Figure 22. GeoCaching Buddy in different devices Figure 23. Geo-cashing Plus in different Windows Phone devices Figure 24. Flickr in different devices Figure 25. Geotag Photos in different devices Figure 26. Example of Foursquare mobile version and mobile application Figure 27. GetGlue for iOS and Android devices Figure 28. GetGlue for different devices Figure 29. Tunerfish for different devices Figure 30. Yell on different platforms Figure 31. The best in Moscow for iPhone Figure 32. Where for iPhone and Android Figure 33. Weather HD in different devices Figure 34. Nike+ Running in different devices Figure 35. Kuponator.ru in different devices Figure 36. Little Empire in different devices Figure 37. Shadow Cities in iPhone Figure 38. Avarage value of applications for iPad Figure 39. Avarage value of applications for iPhone Figure 40. Advertisement campaign Blue Moon Figure 41. MapQuest Maps Figure 42. Poynt Figure 43. Tully’s Coffee Figure 44. Foursquare Figure 45. BMW Figure 47. Volume of the market of LBS mobile applications and services in the world, bln dollars, 2009А – 2012Е. Figure 48. Revenues from LBS services in the world, bln dollars, 2009А – 2012Е Figure 49. Volume of the market of LBS mobile applications and services in Russia, mln dollars, 2009А – 2012Е Figure 50. Revenues from LBS services in Russia, bln dollars, 2009А – 2012Е Figure 51. Forecasts of volume growth of the world market of LBS mobile applications and services, 2013F – 2016F. Figure 52. Forecasts of volume growth of the Russian market of LBS mobile applications and services, 2013F – 2016F Figure 53. Smartphones park in the world, mln pcs Figure 54. Avarage value of smartphone in the world, dollars Figure 55. Example of smartphones with camera and special software Figure 56. Example of augmented reality glasses Figure 57. Mysterious Raygun in different devices Figure 58. Cactus.AR for iPhone/iPad Figure 59. AlterGeo in Windows Phone Figure 60. Virtual model from REDMADROBOT
  • 14. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 14 Figure 61. Fingo in iPad Figure 62. Google Goggles Figure 63. Google Goggles Figure 66. Total traffic of mobile data transmission in the world, EB, 2010-2016 Figure 67. Total active subscriber base of mobile communication in Russia, mln of subscribers, 1 Q 2010 l – 2 Q 2012 Figure 68. Total traffic of mobile data transmission bln MB, 1 Q 2010 – 2 Q 2012 Figure 69. Frequency of mobile Internet use from smartphone Figure 70. General available park of smartphones in the world, bld pcs, 2010 – 2016 Figure 71. General available park of smartphones in the world by operating systems, mln pcs, 2010 – 2012 Figure 72. Total sales volume of smartphones in mln pcs, in Russia, 1 Q 2010 – 2 Q 2012 Figure 73. Dynamics of avarage retail price of a smartphone in Russia, USD, 2008 – 2012 Figure 74. Market structure: smartphones – phones, %, in physical terms, Russia, 2009 – 2015 Figure 75. General available park of PC in the world, mln pcs, 2010 – 2012 Figure 76. General available park of tablet PCs in the world by operating systems, %, 2010 – 2012 Figure 77. General available park of tablet PCs in Russia, mln pcs, 2010 – 2012 List of Tables Table 1. LBS Types Table 2. SWOT analysis of monetization models Table 3. Layar Table 4. Metroshka Table 5. Spyglass Table 6. AR Tower Defense Table 7. Toozla Table 8. Wikitude ___________________________________________________________________________________ The newsletter was prepared by the J'son & Partners Consulting Company. We exert every effort to provide actual and forecasting data representing the situation in full and available at the time of the publication of the material. J'son & Partners Consulting reserves the right of revising the data after publication of some new official information by individual players. CONTACT FOR MORE INFORMATION: Pavel Yermolich Commercial Director Pavel@json.ru www.json.ru