Location Based Services_Mobile Apps

September 17, 2011Mobile Phone Location-Based AppsNiches, Uses & Players Deals Coupons Loyalty & Family Status Tracking Recommend Spot ations Networking Emergency Flocking Assistance RelationshipsBy Peter Rovick

CONTENTSEXECUTIVE SUMMARY ................................................................................................................................... iTERMS ........................................................................................................................................................... 1MERCHANT PARTNER PERSPECTIVE ............................................................................................................. 3APP USER PERSPECTIVE ................................................................................................................................ 5FUNCTIONALITIES: What Can I do with these Apps? ................................................................................... 6PLAYERS & THEIR APPS ............................................................................................................................... 12PRIVACY & PERSONAL SECURITY ................................................................................................................ 15PREDICTIONS ............................................................................................................................................... 17CONCLUSION............................................................................................................................................... 21APPENDIX .................................................................................................................................................... 23

EXECUTIVE SUMMARYApps for mobile phone location-based services are gaining great momentum, and the field is wide openas companies rapidly evolve technologies and related offerings. At the core is the ability to track thelocation of the mobile phone. Companies are developing location-based apps that typically cater tousers seeking immediate gratification relative to their particular and immediate interests.Differentiation is in the details. Many companies developing apps have similar claims and goals, butuser experience and acceptance (not claims) is a key success factor. For example, many apps claimability to bring users deals in their immediate vicinity, but several factors can shape user and ultimateacceptance/popularity or rejection:  Does customer experience meet claims?  Does the app have at least one compelling and somewhat unique functionality?  What is the geographic scope of the app? Will users be turned off if the app doesn’t meet marketing claims for their specific locations of interest? o Will a user wait patiently until his or her area is served or he or she move they reject app and move on to others?  To what extent are offers relevant and/or personalized to user interest?  Do incentives compel users to pursue them?  How timely is the information? Are the deals expired or could the merchant even be out of business?  Is the app “buggy” or simply lacking in feature development?Initial releases tend to have multiple bugs and user feedback reflects this, occasionally resulting inmarket rejection. Many early-stage startups feel pressured to release apps when they may not beconsidered MVPs (Minimum Viable Products). This tends to be driven by top-down needs of thecompany, in contrast to focus on customer and user experience. New and creative ideas may beimportant, but execution is critical – the devil is in the details. Companies may have world-classdevelopers, marketers, or other key contributors, but it takes a combined effort of multiplecomplementary skills. Companies may have elegant engineering, but if they don’t have goodmarketing, support, financing, or other key functionalities, they likely face significant obstacles tosuccess.Privacy remains a concern for many current or potential app users and often is cited as the main reasonfor why people do not use location-based apps.1 At this early stage, privacy options and terms varysignificantly across apps, but likely will continue to play an important role in which apps people use andtrust to keep their location and information private per individual tastes.1 http://www.readwriteweb.com/archives/why_people_do_dont_use_location_apps_survey.php i

White Paper: Mobile Phone Location-Based AppsPurpose: The purpose of this report is to focus on terms, niches, uses, and players related to location-based apps available for Android, iPhone, Blackberry, and other phone types. While many reportsprovide a quantitative overview with statistical information related to market growth, revenues, appuser base, etc., the intention of this report is to focus more on qualitative and behavioral factors relatedto providers, app users, and merchant partners.Resources: Links to sources and further information are provided in footnotes for easier access. Aswell, the Appendix lists multiple additional resources related to the market, with the intention of servingas an open source for further information.Geographic Scope: While some specific apps mentioned may be available globally, the focus within thisreport is limited to availability within the USA. Terms and uses have a global context.Target Audience:  Marketing and Sales Professionals: those with interest in segmentation, competitive analysis, positioning, value propositions, etc.  Individuals: app users exploring the niches  App Developers: who seek behavioral and marketing-oriented insights  App Providers: including emerging startups and established firms seeking validation, information, and comparison  Merchants: those with existing apps and/or those considering expansion of offerings  Investors: including those who may be considering investments in this space or keeping tabs on the competition, potential uses, etc.Peter Rovick ii

White Paper: Mobile Phone Location-Based AppsTERMS  Check-ins: Instances of tagging locations, events, or activities to show that you are present, or at least are thinking about them. Apps including FourSquare and Facebook Places are helping to contribute to this trend, though you don’t necessarily need to be at the location when checking in.2 Many app providers have hopped on the check-in bandwagon, offering the opportunity to “check-in” to television shows, movies, food, alcohol, etc.3 o Social components of check-ins relate to status and self-perception (“look at me!”), sharing (“check this out”), and status or prominence. o Status, Titles, & Awards: With apps like FourSquare, one can become the “Mayor” by achieving the highest number of check-ins at location during one month. These incentives have a behavioral impact related to self-image, ego-enhancement, and related concepts.  Crowdsourcing: An open call to a large, undefined community for mass-collaboration to complete tasks. One well-known example is the open request to Wikipedia users to add content to its growing encyclopedic database. In the context of location-based apps, some companies openly ask users to contribute locations, events, merchants, deals, and other information in order to evolve databases for informational sharing with other app users.  Geo-Fencing: Creating defined, virtual spaces around designated locations. The current trend relates enticing smartphone users within a chosen radius to enter a store, typically with advertisements or coupons/deals. o More complex uses involve tracking and analyzing the behavioral patterns of users inside stores, including how much time they spend in certain areas of the stores and to related traffic flows.  Geo-Marketing: Using geographical information leveraging visualization of a specific area to research, plan, and implement marketing programs. Current trends focus on applications in mobile and social networking aspects with an emphasis on “The Four Ps”: Product, Price, Place, and Promotion. 4,5,62 http://www.asiadigitalmap.com/2011/07/the-science-of-check-ins/3 http://thenextweb.com/apps/2011/08/04/beyond-location-7-more-things-you-can-check-in-to/4 http://www.db-marketing.com/geo/default.shtml5 http://www.gfk-geomarketing.com/fileadmin/gfkgeomarketing/en/company/geomarketing_in_practice.pdf6 http://www.searchenginejournal.com/geo-marketing-as-a-new-business-marketing-tool/20595/Peter Rovick 1

White Paper: Mobile Phone Location-Based Apps  Mobile Phone Tracking / Localization / Triangulation: Determining the current position of a mobile phone via one of several methods.7 o GSM Localization: The use of roaming signal strength and distance to the nearest mobile phone tower to determine location coordinates. Approximately 80% of mobile phones use GSM (Global System for Mobile Communications). o 2-D Trilateration: Determining a phone’s radius from three separate locations (typically cell towers) and using the overlap of the three relative circles to pinpoint a location.8 o 3-D Trilateration: Similar concept, except using 3 dimensions or spherical radii. An emerging trend is using 3-D trilateration within buildings to determine not only horizontal location, but also vertical location of the mobile phone and user.  For example, department stores with multiple floors stand to gain from tracking the relative movements and trends of users in each department on each floor.  Near field communication (NFC): A technology that enables two wireless devices in close proximity to conduct transactions and data exchange. This enables consumers to make payments simply by tapping their NFC-enabled phones on readers or waiving the phone within a few millimeters of the reader.  Unique Identifier: Similar to a MAC address on a computer, a unique identifier is a series of letters and numbers that is unique to each device. o iPhone (UDID - Unique Device Identifier): A UDID for Apple hardware (e.g. iPhone) is a series of 40 letters and numbers. iPhone users need the UDID in order to install apps approved by Apple. Users can locate the UDID when synching an iPhone by clicking on the Serial Number of the device within the iTunes screens on a computer. o Android: There are several options - see footnotes. 9,10 o Blackberry (Pin #): Click on “Options” and then select “Status,” or in a blank email type “Mypin” in the Subject line and press the “Enter” key. 117 http://en.wikipedia.org/wiki/Mobile_phone_tracking8 http://electronics.howstuffworks.com/gadgets/travel/gps1.htm9 http://android-developers.blogspot.com/2011/03/identifying-app-installations.html10 http://www.pocketmagic.net/?p=1662Peter Rovick 2

White Paper: Mobile Phone Location-Based AppsMERCHANT PARTNER PERSPECTIVEMany location-based apps are based- upon interaction between app users and merchant partners likeretail stores, restaurants, coffee shops, and hotels. Partner recruitment techniques vary ranging fromactive outbound pursuit (e.g. direct solicitation from app provider to potential merchant partner) topassive techniques related to inbound marketing or customer referral resulting from tagging orrecommending merchants to other app users. Regardless, potential or active merchant partners wantto know “what’s in it for me?” Below are some of the potential benefits and related considerations formerchant partners. Customer Acquisition & Retention: One of the most popular geo-marketing revenue models for app providers involves charging fees to merchants in exchange for advertisements or coupons/deals offered to customers. o Advertising and Brand Awareness: Depending on the app, ads can appear on phones as (potentially annoying) popups or can be listed less obtrusively in folders which users must open in order to browse ads.  Challenges & Opportunities: Simply put, greater complexity in app design can lead to significant differentiation in this space. A combination of tactics can lead to higher user satisfaction, a win-win on several levels for both app developers and for merchant partners.  Too many choices: Depending on the app and user location, a phone can become inundated with ads from different merchants or even from one single merchant. App providers and partner merchants face the threat of user rejection and negative user feedback if users are overwhelmed with ads. In a market where many app developers rely heavily on viral networking to promote user adoption and retention, this can be deleterious.  Over-Exposure: Users may be excited to receive a coupon for a new merchant or from their favorite merchant, but users can be turned off by too many ads from one merchant or by ads that don’t auto-delete after a certain timeframe.  Quality: A picture is worth a thousand words. Ceteris paribus, well- designed ad images will reign over those with simple text messages or images of lesser quality.11 http://www.youtube.com/watch?v=q-7dZQHKjPg&NR=1Peter Rovick 3

White Paper: Mobile Phone Location-Based Apps  Irrelevance: Non-coffee drinkers (and they do exist) likely won’t want to receive ads for local coffee shops. Selective targeting is one method of differentiation. Apps which enable merchant partners to define parameters of who will receive ads may not win the war, but can win many battles. By enabling partners to search user fields (e.g. Profile categories like “Favorite Beverage” or “Right Now, I’m Looking For…”) and send messages to a more specific user audience, app providers can reduce ad irrelevance and increase user satisfaction. o Coupons/Deals: The challenge is to attract new customers and/or foster repeat business from existing customers without cannibalizing revenues. One of the criticisms of Groupon is that existing loyal customers will take advantage of deals, resulting in significantly lower profits, net of discount and fee paid to Groupon. New entrants following in Groupon’s footsteps in this increasingly crowded space simply differentiate by charging lower fees to participating merchants. Brand exposure and Loyalty o Check-ins: While Groupon fostered the craze in group coupons, many might attribute the current craze of checking in to FourSquare. While the act may not generate revenues, it seems to be having significant behavioral effects.  Status: By checking in more frequently than others during a given time period, users of the FourSquare app and others gain titles like “Mayor” and a relative status.  Habits: Incentives associated with check-ins motivate users to return repeatedly to the app(s). Once the habits are formed, users may be more likely to return and retain status and pursue other (often incremental) achievements. Savvy app developers provide incentives not only as a user acquisition tool, but also as a means to retain users and foster loyalty.  Points for Check-ins: Apps like TopGuest now offer rewards points for check-ins at your favorite locations.12 In a market where many are wondering how app providers will convert check-ins apps to revenues, it remains to be seen who will follow.12 http://www.readwriteweb.com/archives/TopGuest_apex_gives_you_loyalty_program_points_for_local_mercha nt_check_ins.phpPeter Rovick 4

White Paper: Mobile Phone Location-Based AppsAPP USER PERSPECTIVETo accept, or to reject, that is the question. Whether ‘tis more pressing to get an app to market, Or tomore fully develop the app And by delaying risk possible loss of market share and dominance.Contrary to cliché, timing is not everything; however timing can be one key factor in immediate and/orfuture success, and for some, a key to ultimate survival. Startups which are relying solely on one app asa platform typically face serious challenges of how to allocate scant resources including funds andhuman resources. Established companies do not have to be first movers, and often have the benefit oflearning from the successes and mistakes of early entrants to market. 800 pound gorillas like FacebookGoogle, and eBay clearly are not relying on one app for survival, and have the ability to throw millions ofdollars and significant human resources at one or many issues.While the likes of Google Shopper may have been subject to early criticism, users may be more likely toreturn time and again as Google evolves its product, based on the strong reputation Google has earnedin the marketplace. Small startups may not be so fortunate and may be dead on arrival throughpermanent user rejection if their apps are not considered MVPs (Minimum Viable Products) upon initialrelease.A few key success factors that can determine if users ultimately will accept and embrace an app or ifthey will reject it and move on to others:  Relevant/Personalized Information: To what extent does the app cater to my specific interests and immediate needs? How “smart” is the search functionality? Do results filter out information that may not interest me?  Compelling Incentives: Are offers significant enough to motivate me to pursue them?  Comprehensiveness: Does the app cater to my locations of interest? The app may include a robust offering for people in San Francisco or New York, but what if my focus is on the vicinity of Chicago, small-town USA, or Hong Kong and services are limited in my area of interest?Companies offering services of limited scope might be wise to list appropriate caveats and to setexpectations on timeframes for expected future availability. Even better, they might wait (if possible)for initial release of an app until it can meet its marketing claims.Peter Rovick 5

White Paper: Mobile Phone Location-Based AppsFUNCTIONALITIES: What Can I do with these Apps?This section focuses on potential uses of apps and on user experience. So what are some of the possibleuses of apps based upon mobile phone tracking?  Coupons / Deals: The new twist on an old and proven concept. In a world of instant gratification, instant coupons and deals quench the thirst. “I want a coffee right now. I’ll use my app to find me the best mocha-choca- latte deal within a 3-block radius.” Instead of clipping paper coupons or searching websites, people now can use apps to search for instant coupons or deals in their immediate vicinity. A related value proposition might be something like “For the ‘on-the-go’ individual who wants immediate gratification of needs, [app name] is the source for deals near you that satisfy your immediate needs.” o For app providers, differentiation lies in at least three key areas:  Relevance: Similar to the concept of results yielded from a website search engine, the issue lies within finding “the best fit” without having to sort through myriads of offers. If I’m using my app to search for coffee deals, I do not want to see ads or coupons for clothing, jewelry, sandwiches, etc., though merchants may benefit when this leads to impulse shopping. That said, users likely will reject apps that provide too much clutter, and will seek apps that provide the most relevant results.  Expiry: Most coupons expire, so users only want coupons that are valid right now, or within a timeframe that is acceptable to each individual user.  Proximity: App users are seeking deals available near them or least “close enough” so as to compel the user to action. o Groupon emerged from the ether by offering group coupon incentives via its website, but now faces stiff competition in a saturated market, thanks to hordes of copycats who seized upon the simple concept. In an effort to evolve and continue to survive, Groupon leveraged the “spot” market by offering GrouponNow, a platform providing incentives to share deals via personal social networks. With newer mobile apps, Groupon enables users to search for nearby Groupons using GPS and location-based services. In a rapidly evolving market, this service is not a point of differentiation; Instead, it is an act of “keeping up with the Joneses.”Peter Rovick 6

White Paper: Mobile Phone Location-Based Apps o Deal Saturation: As the deals space becomes saturated, providers are re-evaluating their emphasis on deals. Facebook recently pulled out of the space and Yelp is reducing its human resources focused on daily deals 13. o Coupon Redemption Growth: eMarketer recently reported on the rapid growth of mobile coupon redemption, estimating “nearly 20 million US adults will redeem a mobile coupon this year” and rates will nearly double to 16.5% in 2013 (or approximately one third of smart phone users). 14 Group coupons/deals may hit saturation, but single coupons hold great promise.  Advertising: It may not be necessary for merchants to cannibalize profits by offering discounts via coupons or deals. Simple information on products or services may be what users seek. In these instances, app providers can increase brand awareness and mindshare through presence in search results. App users don’t need to carry around their laptops in order to research local merchants and related products or services. They simply use the app for category or key word searches within their target radius. o Which App? A key challenge for merchants is ensuring presence on appropriate apps. Some app providers automatically include listings of local merchants, while others go through the laborious task of “signing up” one merchant partner at a time, in what appears to be a highly inefficient (though perhaps highly targeted) process. FourSquare, Localicious, and others have enabled users to put merchants on the map through the check-in process. This form of inbound marketing can lead a merchant right back to an app provider like FourSquare to seek partner opportunities once it becomes clear that a significant number of local users are relying on the app for instant searches. o Add a Deal: Providers including The Dealmap allow an app user to add a deal, if they don’t see it listed. This is a win-win-win for users, merchants, and app providers, enabling sharing, “word-of-mouth” advertising, and potential partner recruitment opportunities, respectively.  Status, Achievements, Awards and Badges: Facebook and others have significantly influenced daily and hourly habits (and positive self-image?) of millions of users through games and other incentives to earn various achievements. Now, app providers including FourSquare, The Dealmap (acquired by Google), and Localicious are earning a loyal following of users who frequently return to their apps to “check in” and/or earn various badges or points. o Incentives: A key tactic in compelling continued app usage, habits, and loyalty is providing incentives that are easily achieved and are incremental in nature. While development of these app features requires funding and human resources, there may13 http://www.pcmag.com/article2/0,2817,2392245,00.asp14 http://www.emarketer.com/Article.aspx?R=1008576Peter Rovick 7

White Paper: Mobile Phone Location-Based Apps be no material reward (e.g. no points to cash in for merchandise) in contrast to the multitudes of point rewards programs vying for public mindshare. “Make It A Game, People Will Come,” reports Dan Rowinski of ReadWriteWeb.15 The question remains, “how will FourSquare convert high usage into revenue opportunity?” If Facebook is any indication, perhaps gaining a large and loyal user base serves as a model and addresses the “chicken or the egg” conundrum, though revenues and a significant user base certainly can be accrued simultaneously. o With The Dealmap, users not only can earn badges, but also can earn points by adding or sharing deals. These points can be exchanged for items like gift cards  Note: while “The Dealmap iPhone Demo” video mentions this 16, the author could not find any references on their website to how to exchange points for rewards – this feature may have been discontinued.  Flocking: This term can be used to describe the social behavior of gathering in one spot. It seems to be especially popular in the teen and twenty-something bracket (including university students) who can use location-based apps to identify locations of friends, potential friends, love interests, and others, and then invite others to meet at or “flock” to one location. o Example: You are at a bar, sporting event, or concert and notice on an app map that ten friends are within a radius of 1,000 feet. You use the app or some other social networking tool to invite them to meet at one location. o HMU (Hit Me Up), a call to action, was the #1 status trend of 2010 on Facebook, with over 80,000 mentions per day by the end of the Summer of 2010.17  Tracking family/friends o Children: “It’s 10 pm. Do you know where your children are?” This question was posed every night by a local television network during the author’s childhood. Parents have many reasons to want to know the whereabouts of their children, including safety and health. Tracking via location-based apps can help parents keep tabs at very least on the approximate location of a child.  Key issue: Certainly, children who do not wish to be tracked can find various was around being tracked, but some may find mutual agreement with parents as to the potential benefits – its all in the “P” for “Positioning.”1815 http://www.readwriteweb.com/archives/2way_summit_preview_location_redefined_mobile_-_whats_next.php16 http://www.thedealmap.com/mobile/iphone-app/17 http://www.facebook.com/blog.php?post=466369142130Peter Rovick 8

White Paper: Mobile Phone Location-Based Apps  FBI Child ID: The FBI recently released an app that can be used to store and share information (with authorities) in the event your child is missing. At this point FBI Child ID is only available for iPhone and does not allow you to track the location of a child via mobile phone, but this and other features may be added in the future. 19 o “On The Way…”  Tracking apps can come in handy when picking up children from daily activities, and also can help the child know if “mom *or dad+ is on the way.”  Family or friends coming in from out of town? Location-based apps can enable the host to track the location (and thus calculate the approximate arrival time) of the guest. Several states now prohibit by law texting or mobile phone use while driving, so allowing others to track your location enables a distraction-free method of keeping hosts up-to-date on position and approximate arrival time. o Medical Conditions: While there are multiple hardware devices on the market to help family track the location of loved-ones with various medical conditions (e.g. alzheimers or dementia), location-based apps may provide a free alternative if both parties have mobile phones with tracking capability. Google Latitude is one app mentioned by Dementia Weekly and Alzheimer’s Weekly.20  Note: Some hardware devices may provide additional benefits including instructions on what to do if a device bearer is found in need of immediate care. These devices typically are worn on around the neck (necklaces), or on the wrist (bracelets or watches) or ankle.21,22 o Emergency / Guardian Angels  Safety in town, on campus, etc.: Undergraduate and graduate students can add an extra layer of physical and emotional security by enabling friends to track their whereabouts. The occasional news story will mention a student who was confronted or even attacked while walking across campus, perhaps during a late night return from library to dormitory. Location-based apps now enable friends and even campus staff or security (depending user choice and on app features and/or settings) to track students .18 http://www.brighthub.com/electronics/gps/articles/47117.aspx19 http://www.fbi.gov/news/stories/2011/august/child_08051120 http://www.alzheimersweekly.com/content/geotracking-and-geofencing21 http://www.alz.org/georgia/in_my_community_20344.asp22 http://alzheimers.org.uk/site/scripts/documents_info.php?documentID=109Peter Rovick 9

White Paper: Mobile Phone Location-Based Apps  Apps Against Abuse: Vice President Biden and Secretary Sebelius announced “a challenge that encourages the development of applications that provide college students and young adults with the tools to help prevent dating violence and sexual assault.”23 This may lead to an app that enables a student to notify instantly campus security with the click of just one button in such urgent situations.  “Spot Networking”: There are some newer apps that enable users to find out what other user are in their immediate vicinity and to seek networking opportunities “on the spot.” People often associate this with downtime, when one has free time before a flight, train, meeting, meal, game, or some other event. For example, business travellers often have to wait an hour or two for a flight and may want to seek insights regarding a current business problem, home project, hobby, or other personal interest. Some apps allow users to search profile details of other users within a defined radius and then contact them to suggest a possible quick meeting. Did you know that he/she is an expert carpenter? Parents may find themselves watching a children’s soccer game, but may not know that a fellow parent is a specialist on a topic that is of current interest. Profile details in social networks often reveal facets about people that may not have come up in casual or even deep conversation. Profile details on an app may reveal something new and interesting to fellow app users. Potential ice breaker? Here are just a few sample apps and scenarios… o Travel:  IMGuest: This app enables business travellers to learn more about fellow hotel guests in order to connect and create new business opportunities. Perhaps a drink and conversation at the bar is in order after a long day of work. “Don’t just Check-In, check around”24  Uppward: You are on a flight to [Buenos Aires] in the company of multiple other frequent business travellers who have at least a few things in common or that might interest you (e.g. mobile phone apps, restaurant suggestions, destination knowledge, frequent flier program insights, or skills and experience).25,26  Yammer: connect with your co-workers and networks while out of the office.23 http://challenge.gov/HHS/199-apps-against-abuse24 http://imguest.com/help.php25 http://www.planely.com/info/about/26 http://uppward.com/Peter Rovick 10

White Paper: Mobile Phone Location-Based Apps  Relationships: There already are multiple apps focused on personal relationships that can help people to track potential love interests, to avoid “the ex,” and to develop, maintain, or enhance a relationship via activity suggestions, analysis of romantic skills, set reminders for daily tasks, etc..27 o Trust: tracking the spouse – a recent court ruling in New Jersey (07-07-11, A-0654-10T) found that tracking spouses with a GPS device is not an invasion of privacy, with certain limitations. This not only applies to the person who wishes to track the spouse, but also to private investigators.2827 http://www.huffingtonpost.com/2010/05/20/best-iphone-apps-to rescu_n_583203.html#s91080&title=Girlfriend_Keeper28 http://www.judiciary.state.nj.us/opinions/squibs10-11.pdfPeter Rovick 11

White Paper: Mobile Phone Location-Based AppsPLAYERS & THEIR APPSAs the world of apps rapidly expands, so too do the potential functionalities like those listed in theabove sections. It is no secret that emerging startups typically need to devote all of their resources toone critical function that will serve as their point of differentiation. Even if they are first-to-market witha new functionality, they will need to continue to differentiate as established players like Google addsimilar functionalities on their existing apps.Beware of the 800 Pound Gorillas: Have tried the latest Netscape Navigator browser? Perhaps youhave, but the last Navigator browser was released in 2007, long after Explorer and other browsers haddominated the market (yes, the AOL merger and Mozilla stepchild can be taken into account, but you getthe picture).As Google, Facebook, and others further develop their apps in this space, with seemingly endlessavailable resources in comparison to those of startups and even the likes of Groupon, mere survivallikely will be the concern for many smaller companies, perhaps even for well-funded startups likeFourSquare.Large companies like Google and eBay already are busy with acquisitions to complement their existingofferings. Among the higher profile acquisitions in this space are Google’s acquisition of The DealMapand eBay’s acquisition of Where.Check-in Space: FourSquare is enjoying popularity as the hottest check-in app, but best not to rest onone’s laurels. Competitors large and small likely will crowd this field and strive for differentiation andmarket share. Quipster by Mobilitz claims to go beyond the “where” to the “why” of check-ins.Family& Friend Tracking: Many apps enable users to show their current or most recent location, oftenby listing an address or by pinpointing the location on a map. Other apps simply who where one is“checked-in,” or location names that a user posted for others to see.Since personal privacy remains one of the biggest deterrents to adoption and repeated use of location-based apps, companies provide options to enable various degrees of privacy. Many allow users to turnon/off location tracking capability, and some allow users to select which other users can see yourlocation. That said, most apps lack privacy setting functionalities that might provide sufficient level ofcomfort to those interested in using apps for tracking family and friends.For those seeking privacy, Neer by Qualcomm provides a higher level of privacy than what currently isprovided by other apps, for those who are wary about sharing information with the world. Neer usersadd family and friends to their “Inner Circle” with the concept of sharing “just the places you choosewith the people you choose.”Peter Rovick 12

White Paper: Mobile Phone Location-Based AppsGeneric Location Names: Actual locations are not shared, only the names users assign to them like“work,” “school,” and “soccer practice.”“Did the kids get picked up? Is now a good time to start dinner? Is a colleague still in her office, or hasshe already gone home for the night? Those are some of the use cases Neer wants to address.”29 Company App Name Link Banjo Banjo www.ban.jo Blockboard Blockboard www.blockboard.org Bloomspot Bloomspot www.bloomspot.com Crowdbeacon Crowdbeacon www.crowdbeacon.com eBay Where eBay Milo Facebook Facebook Places www.facebook.com/places Facebook Mobcast www.facebook.com/mobcast foursquare foursquare www.foursquare.com Friends Around Friends Around www.friendsaround.com Google Google Latitude www.google.com/mobile/latitude Google Offers/The Google DealMap www.thedealmap.com Google Google (Near Me Now) Gowalla Gowalla www.gowalla.com Groupon Groupon Now! www.groupon.com/now iapps24 StepTrace iapps24.com/steptrace.html LivingSocial LivingSocial livingsocial.com/mobile29 http://latimesblogs.latimes.com/technology/2011/01/neer-is-location-technology-for-those-who-dont-want-to- overshare.htmlPeter Rovick 13

White Paper: Mobile Phone Location-Based Apps Locimobile (GTX Corp) iLOCIi2 www.locimobile.com Localmind Localmind www.localmind.com Loopt Loopt www.loopt.com Loqly Loqly loqly.me Meet Gatsby Meet Gatsby www.meetgatsby.com/about Mobilitz Quipster www.quipster.co Niftybrick Software HeyWAY www.niftybrick.com/heyway.html Qualcomm Neer www.neerlife.com NeuAer ToothTag www.neuaer.com OmniSoft Systems gOmni Tracker www.gomnitracker.com Ping4 Inc. P!NG4 www.ping4.com Sonar Sonar www.sonar.me/faq BaDTech SAS TellMeWhere tellmewhere.com WhitePages Localicious www.local-icious.com Winkpass Creations Friend Mapper www.amigomapper.com Wizi Wizi www.wizi.com Yelp Yelp Mobile www.yelp.com/yelpmobile Travel & Spot Networking Uppward Uppward www.uppward.com IMGuest IMGuest www.imguest.com Relationships OkCupid OkCupid www.okcupid.comPeter Rovick 14

White Paper: Mobile Phone Location-Based AppsPRIVACY & PERSONAL SECURITYThe entire premise and promise of location-based apps is predicated on knowledge of the location ofmobile phones. According to a 2011 report by White Horse Productions, privacy concerns remain themain reason for why people (both current and potential app users) do not use location-based apps.30, 31While there may be many potential benefits as mentioned in the above Functionalities section (e.g.tracking friends and family, finding local merchants and/or deals, etc.), a common reaction is immediaterejection of the concept (and thus the apps) for reasons of personal privacy. That said, this may be moreof a knee-jerk reaction, before a potential app user even investigates the specifics related to privacy anduse of personal information.Hence, the challenge and/or opportunity for greater adoption lies in app functionality (options availablein privacy settings), privacy policies, and public education.Some Key Questions include the following: the who, what, where, when, why, and how…  Who do I want to track my location? I may be willing to allow specific family members, friends, and colleagues to track my location, but can they learn or infer things about me that I do not want them to know? Do I want my employer to know that I am not where they think I should be at this moment? Do my children want me to know where they are?  What information (and how much of it) do I want to share? I may be willing to share my location with a certain subset of people, but what other information am I willing to share? My location alone can lead others to infer things that may or may not be true.  What are the advantages/benefits and disadvantages involved? Perhaps my decision to use a location-based app is based upon the net weighting of benefits derived vs. potential risks.  When do I want to be tracked (if ever) or do I even want to allow tracking? At times, it may be useful for people to know where I am or to check on my status when I am “on the way,” but when do I not want to be tracked? Can I turn off the functionality, and even then, what can people infer from this? Even when location tracking is turned off, some apps list “last known location.” This may not suffice for the wants and needs of the user.  Why do others want to track me? Tracking may be very useful when gathering with friends and family or in other instances, but are there other purposes of which I may not approve?  How will app providers (people, carriers, governments, etc.) use information that I share? Will they share all or portions of my personal information with other companies or individuals and30 http://www.readwriteweb.com/archives/why_people_do_dont_use_location_apps_survey.php31 http://www.whitehorse.com/resources/#Peter Rovick 15

White Paper: Mobile Phone Location-Based Apps how can it positively or negatively affect me? What is the app provider’s (and my carrier’s) Privacy Policy, and how many people even read this policy, let alone actually understand it?  How can I adjust settings to control how much information or data I share? Can I do more than simply turn tracking capability on or off?A Few Considerations Related to Privacy:  Privacy Policies: Read the policy offered by the app provider. At minimum, this may help to remove some FUD (Fear, Uncertainty, and Doubt). Remember that carriers/network operators (e.g. Verizon and AT&T) almost certainly can track your location32 (though there are ongoing legal challenges), so unless you are willing to cancel your mobile phone subscription, the question is who else do you want to allow access to your location information?  Privacy Controls: Explore and experiment with the privacy control options on each location- based app. Many already allow you to turn tracking on and off, but what do the apps indicate when you have disabled location tracking? Some show your last known location while others show nothing. What other privacy control options and functionalities are available on each app?  Analytics: How will various entities utilize location-based data as the industry evolves and what are the potential benefits and drawbacks for the many stakeholders involved? For people who want in-depth information, seek reports like “Location Analytics and Privacy” by ABIresearch. 33Lessons from the Past? If the evolution of online payments offers any indication, people will becomemore comfortable with privacy issues as location-based apps evolve. In the late 1990s when asignificant number of companies started offering online payment options, many people were slow toadopt due to privacy concerns. Today, just look at the success of one company: Amazon.com as anindication for adoption of online payments. People still may be concerned about purchasing from anon-trusted source, but well-known companies seem to have quelled the concerns of most potentialcustomers enough to compel them to purchase online. The same likely will hold true for location-basedapps, particularly for apps offered by well-known companies like Google and Facebook at earlier stages.As people embrace their apps, they likely will gain confidence and then explore apps by lesser-knowncompanies.32 http://www.nytimes.com/2011/03/26/business/media/26privacy.html33 http://www.abiresearch.com/research/1007751Peter Rovick 16

White Paper: Mobile Phone Location-Based AppsPREDICTIONS  In-store Applications (next big thing?): At this relatively early stage of the LBS apps, most apps simply focus on attracting customers to the front door (e.g. of a store). The question is “what value can apps provide once potential customers have entered the front door and now are on- site?” o Look for newer technologies that enable stores to track and cater to in-store customer behaviors. This may lead to improved customer experience in several areas, including…  Locating items: Directions that help customers (app users) to find products of interest in less time with less hassle.  Impulse purchases: Instant advertisements or coupons on your mobile phone may lead to additional & unplanned purchases.  3-D Trilateration: Merchants with multiple floors (e.g. Macys and other department stores) will track not only your horizontal location, but also your vertical location (Floor 1, 2, 3, etc.) as well as your movements around and between floors.  Improved store layouts: Merchants may be able to analyze traffic flows and behavioral patterns of customers in order to enhance store layouts and more efficiently utilize floor space.  Exit Strategies: As behemoths like eBay, Google, and Facebook rapidly develop their offerings and fill in gaps (see above grids and categories) to address various a variety of typical uses, it will be increasingly difficult for startups to compete and survive. Acquisition may be the main strategy of many smaller startups, but which companies will be attractive candidates and why? “Good value” will work for some, but ironically early success may be a deterrent for companies like Foursquare if valuations over-inflate. o Groupon put the group deal “on the map,” but now faces stiff competition from Facebook, Google, and many others and likely will see eroding market share in coming months. After rebuffing an offer from Google, Groupon filed for IPO which initially was planned for September, 2011, but now appears to be on hold until market conditionsPeter Rovick 17

White Paper: Mobile Phone Location-Based Apps change.34 In the current challenging IPO market Groupon and other hopefuls may see reduced valuations and/or reduce initial price offerings. Timing is a key factor.35 o Companies like Where and The Dealmap already have been acquired by eBay and Google, respectively. o Look for continued acquisition activities by established companies, especially acquisitions of startups which have earned reputations as leaders in one or more functionalities or sub-markets. Rumor has it that Facebook may put in an offer for Hot Potato in the near future.36 Who will be next – Loopt, Gowalla, or FourSquare?  Wireless Companies Will Develop Apps to Drive Use: One of the key reasons Qualcomm developed Neer was “to give users more excuses to use their smartphones.”37 o Look for other hardware companies and carriers (among others focused on wireless technologies) to develop apps which can drive usage and loyalty to their products and services.  Privacy: As noted earlier in this report, privacy remains a key obstacle to adoption of location- based apps and related services. While most apps include privacy settings, many are limited at this point, and may not be enough to overcome the “creep factor” associated with location- based apps. o Look for app providers to bolster privacy settings in the coming months, though this may be difficult for small companies which feel pressed to allocate limited resources towards other functionalities related to their core value propositions.  Tracking and Analysis: App providers who charge fees to merchant partners (e.g. restaurants, coffee shops, & retailers) will be challenged with demonstrating ROI to the merchant partner. Partners who pay fees for services should want to know details related to how they are benefitting in return for partner fees. This includes analyzing and acting upon data yielded from34 http://online.wsj.com/article/SB10001424053111904537404576554812230222934.html?mod=WSJ_hp_LEFTTop Stories35 http://articles.economictimes.indiatimes.com/2011-08-11/news/29876489_1_ipo-filing-scott-sweet-enduro- royalty-trust36 http://techcrunch.com/2010/07/27/facebook-hot-potato/37 http://latimesblogs.latimes.com/technology/2011/01/neer-is-location-technology-for-those-who-dont-want-to- overshare.htmlPeter Rovick 18

White Paper: Mobile Phone Location-Based Apps advertisements or discounts offered via location-based apps. How many potential customers were targeted during a time range or with a specific offer and which users took advantage of the offer? Are we cannibalizing sales or gaining new customers and/or business that we would not have gained without the app and related offers? Are we impacting customer behaviors by fostering increased loyalty from existing or new customers? A related question is “how will partners capture data like POS (point of sale) data?” This likely will be easier for larger partners (think chains like Starbucks and big box retailers like Macys) who already have scanning capabilities at the cash register and related networked infrastructure for compiling, storing, and analyzing data from purchases related to consumer behaviors. Tracking results likely will prove a significant challenge for smaller partners like “mom & pop” coffee shops, restaurants, and stores, most of which won’t be able to scan coupons on mobile phones or capture data automatically at POS. Even if these smaller merchants manually track coupon/offer redemption, how can they ensure accuracy, especially if they need to train and remind multiple (often short-term) employees to track the data? As well, what is their incentive to share this data with the app provider? If the app provider is unable to demonstrate ROI based on data, merchant partners have much better leverage to negotiate lower fees or no-fee terms. o Look for app providers to differentiate by capturing and sharing data and analytical tools with partners. The likely early winners will be established companies with deeper pockets who can afford to devote resources to developing these tools for their partners. Data types, accuracy, and relevance to merchant interest will be important factors as well as the quality of the tools provided to sort through and analyze the data.  Manufacturer & Retail Nirvana? Tobi Elkin of eMarketer lent great evidence for the promise of mobile coupons and related data capture in an interview with Tiffany Tan of Clorox. 38 Tan notes “In an ideal world, we would like it to show up at the shelf—a consumer walks into the store, goes to the shelf and sees Clorox products.” In regards to the current challenges, Tan adds “But the reality is that most retailers where CPG products are sold don’t have a universal coupon reader system at the point of sale. That fact affects how elegantly our coupons can get implemented. As technology advances we will get there, but right now for CPG, mobile couponing probably isn’t what everyone imagines.” That said, this is just one sign of the promise of mobile apps and the veritable gold mine of related consumer data. o Look for use of NFC (Near Field Communication) as one creative way to capture point of sale (e.g. coupon redemption) data. The ability to “tap & pay” with your mobile phone (preferably) or wallet will provide a faster payment experience, while also enabling app providers and merchants to more accurately track data.38 http://www.emarketer.com/blog/index.php/tracking-mobile-coupons-shelf-cloroxs-nirvana/Peter Rovick 19

White Paper: Mobile Phone Location-Based Apps NFC has been touted for several years as a “next big thing,” but the adoption curve has been slow especially in the USA (reminding some of the ever-elusive but anticipated promise of PKI). That said, at least two developments this year may help to cross the chasm from talk to actual usage.  Google Wallet & Google Offers: In late May Google announced a Google Wallets NFC payment program as well as NFC incorporation into Google Offers, asserting that “300,000 merchants are ready for the Google Wallet program.” Google’s VP of Commerce Stephanie Tilenius did acknowledge “this vision will take awhile *sic+ to come to fruition.” 39 That said, the reality that a tech giant like Google is executing on NFC may be the long-anticipated kick start that NFC has needed. Google’s proof of concept in lining up key players along the chain (financial institutions, mobile network providers, retail companies/merchant partners, and consumers) should lead the way for others to follow. 40  Global Initiatives and Standardization: While Japan has been the leader in NFC and mobile payments, major European mobile operators recently committed to rolling out NFC mobile payment services in “select markets” by 2012. Franco Bernabe, CEO of Telecom Italia notes “NFC represents an important innovation opportunity and will facilitate a wide range of interesting services and applications for consumers, such as mobile ticketing, mobile couponing, the exchange of information and content, control access to cars, homes, hotels, offices, car parks and much more.” 41 o Just one example, Telefonica sees London as the first mass-market for NFC payments, predicting the British 2012 Olympics as a catalyst for introducing NFC-supported handsets. 4239 http://www.zdnet.com/blog/btl/google-wallet-nfc-payment-program-google-offers-announced/4943140 http://www.fiercewireless.com/europe/story/can-googles-nfc-initiative-trigger-uptake-m-payments/2010-12- 10#ixzz1Da2eJZ9O41 http://www.eweekeurope.co.uk/news/gsma-banks-on-nfc-mobile-payments-2172542 http://www.fiercewireless.com/europe/story/london-first-mass-market-nfc-mobile-payments-says- telefonica/2010-09-17#ixzz1Da2TWSKSPeter Rovick 20

White Paper: Mobile Phone Location-Based AppsCONCLUSIONStill in the introduction phase of the industry lifecycle, location-based apps and related services areevolving rapidly with significant advancements on a monthly basis. Macro (industry standards) andmicro (individual app) technology advances and related app functionalities are creating vastopportunities. App developers and app providers (often one and the same) are working along withmobile networks, merchants, and other players to explore and exploit the potential benefits for allstakeholders involved in the mobile app gold rush.At this point revenue drivers for location-based app providers are related to advertising, coupons, anddeals. The rush is on to establish partnerships with merchants and stake claims in this wide open field.The challenge for some app providers is how to convert to revenue opportunities their apps based onpeople tracking, social networking, check-ins, relationships, and other functionalities.Manufacturers (e.g. Clorox) and merchants see great opportunity in promoting their products andservices in the new mobile world as new possibilities are created. Capturing and aggregating datarelated to advertisements, coupons, and deals is a key early challenge, especially for smaller companieslacking in-store networks and point of sale redemption technologies and related devices. The longawaited realization of NFC for mobile payment, data capture, and many other benefits will help in thisarea. Manufacturers and merchants stand to gain significantly from analysis of data related toconsumer behavior coming from location-based apps, in an effort to enhance customer experience andloyalty.Location-based apps providers continue to emerge and stake their claims on new and evolving sub-niches. Over the last couple of years, it might have sufficed to bring a raw (non-robust) app to themarket, but this window is closing as giants tech firms (e.g. Google, Facebook, eBay), mobile networkoperators (e.g. Verizon and AT&T), and larger merchants (e.g. Macys) develop and enhance their mobileplatforms. Many startups will pin their survival plans and exit strategies on acquisition by one of themarket giants, but Google and others already have been busy in partnerships and acquisitions to roundout their offerings.While privacy concerns currently limit wider adoption of location-based apps, many issues will beaddressed through more robust privacy setting options in the apps themselves, greater clarity in privacypolicies, and mass cultural acceptance as location-based offerings continue to expand. Many seeparallels related to online payment methods that originally met with a mix of concern and cautiousoptimism, but which now are globally accepted.The stage is only partially set, the players are auditioning, and the script evolves. Act I is far fromcomplete, and Act II promises a bright future for those who offer robust solutions and stay ahead of thecurve.Peter Rovick 21

White Paper: Mobile Phone Location-Based AppsAuthor Bio: Peter Rovick has over fifteen years of sales and marketing experience and has worked forseveral tech startups, assisting with go-to-market strategies, channel and direct sales, and relatedactivities. He earned his BA in Psychology at Bucknell University (’91) and his MBA at Babson College(’09), where he was awarded a Babson Fellowship, graduating Cum Laude with a Global ManagementConcentration. Peter is an active volunteer for multiple organizations including his alma maters andWGBH, the major PBS affiliate in New England.Contact: provick@hotmail.comTwitter: @SmartphoneTrackPeter Rovick 22

White Paper: Mobile Phone Location-Based AppsAPPENDIXMarket Analysis, Forecasts, and StatisticsAssociations  Mobile Marketing Association: http://mmaglobal.com/  Association of National Advertising: http://www.ana.net/ o Digital, Social & Mobile Advertising: Provides links to reports by various sources under “Insights & Research” tabNewsletters  Jumptap MobileSTAT: http://www.jumptap.com/dynamicContent/images/photo/MobileSTAT_july_2011.pdfNews  All about Geomarketing: http://www.allaboutgeomarketing.com/category/apps/  eMarketer: http://www.emarketer.com/Articles.aspx  iPhoneTrackingApp: http://www.iphonetrackingapp.com/  Mashable: http://mashable.com/mobile/  Mobile Commerce Daily: http://www.mobilecommercedaily.com  MobiAD News: http://www.mobiadnews.com/  MobileBeyond: http://mobilebeyond.net/  TechCrunch: http://techcrunch.com/ (click on “Mobile” & “Social” tabs)  TNW: The Next Web: http://thenextweb.comSurveys  White Horse: http://www.readwriteweb.com/archives/why_people_do_dont_use_location_apps_survey.phpWhite Papers  MomentFeed: Location is the New Frontier in Digital Marketing o http://momentfeed.com/whitepaper/  The Social Customer: Location-Based Marketing White Paper (multiple parts in blog format) o http://thesocialcustomer.com/maxgladwell/33718/location-based-marketing- whitepaper-part-iPeter Rovick

White Paper: Mobile Phone Location-Based Apps  Telesoft Technologies: Location-Based Services white paper: o http://www.telesoft-technologies.com/support/document-library/location-based- services-white-paperResearch Firms  ABIresearch: http://www.abiresearch.com/ o Location Analytics and Privacy: The Impact of Privacy on LBS, Location Analytics, and Advertising – 3Q2011  comScore: http://www.comscore.com o Mobile Metrix  eMarketer: http://www.emarketer.com/Products/Reports.aspx o Mobile Coupons: Offers and Deals Light Up the Last Mile – SEP11 o Coupon to Groupon: New Channels for an Old Tradition – JUN11 o Beyond the Check-In: Best Practices for Location-Based Marketing – JAN11  Forrester Research: http://www.forrester.com o Mobile Commerce Forecast: 2011 To 2016 – 17JUN11 o The State of Mobile Commerce Apps – 16JUN11 o Mobie is Not Just Another Channel – 25FEB11, updated 08MAR11 o Location-Based Commerce: An Evolution in Mobile Shopping – 15FEB11 o Mobile Adoption And Sales Forecast, 2010 To 2015 (US) - 14JAN11  Gartner: http://www.gartner.com/technology/home.jsp  GigaOM: http://gigaom.com o Location-based Services Worth $10B by 2016  Grizzly Analytics: http://www.grizzlyanalytics.com/ o Mobile Location-based Services, 2012-2015: From Standalone Apps to Integrated Features - 23MAY2011  IDC: http://www.idc.com o Worldwide and U.S. Mobile Applications, Storefronts, Developer, and In-App Advertising 2011–2015 Forecast: Emergence of Postdownload Business Models, JUN2011  Juniper Research: http://juniperresearch.com o Mobile Location Based Services o Mobile Payment Strategies  Market Research.com: http://www.marketresearch.com  Mind Commerce: http://www.mindcommerce.com/ o Mobile Social Commerce: Social Media + Mobile Commerce Creates Market Opportunities – SEP11 o Near Field Communications (NFC) Markets: Challenges, Opportunties, and Market Forecasts to 2016 – JUL11 o Mobile Local Search 2011 – JUL11  Nokia Research Center (NRC):Peter Rovick

White Paper: Mobile Phone Location-Based Apps o Location, Context, and Mobile Services  Pyramid Research: http://www.pyr.com o Location-Based Services - Market Forecast, 2011-2015 o Europe Telecom Insider / Vol. 3, No 1, June Edition - The Peril and Promise of Mobile Social Networks for Operators – JUN2011  Salisonline: http://www.salisonline.org/ o Global Mobile Application Market (2010-2015) -18JAN11  The Search Agency: http://www.thesearchagency.com o Comprehensive Guide to Location-Based Social Media  White Horse Productions: http://www.whitehorse.com/resources/# o Lost in Geolocation: Why Consumers Haven’t Bought It and How Marketers Can Fix It o The Future of In-Aisle Mobile  Yankee Group Research: http://www.yankeegroup.com o Mobile Transactions o Google Opens NFC Payments to Lock Up Location-Based AdvertisingPeter Rovick

Location Based Services_Mobile Apps

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Location Based Services_Mobile Apps — Document Transcript