David Kerr - Strategy Analytics

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Location Trends Over The Next Five years

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David Kerr - Strategy Analytics

  1. 1. Strategy Analytics Collision Course: How will the Location Market Evolve in the next 3-5 years? David Kerr Vice President, Global Wireless Practice dkerr@strategyanalytics.com
  2. 2. Agenda Where are we today? Major issues impacting location services market On portal to off portal – who has the upper hand? Monetization strategies & challenges LBS users & revenue flows Conclusions www.strategyanalytics.com 2
  3. 3. Custom Insights to Support Client Business Planning Connected Home RF Components Defence Devices Systems Multiplay Networks GaAs Advice Services Digital Wireless Handset Media Work Components shops Proprietary Strategic Automotive Consulting Advisory Multimedia Insights Wireless Enterprise for Reports Navigation Projects Success Emerging Automotive User Markets Electronics Experience Smartphones Consumer Bench Best Wireless Energy marking Practice Devices Virtual Worlds Wireless Tariffs Media www.strategyanalytics.com 3
  4. 4. LBS Market: Current Status Global LBS Revenues 2009 - $1 billion People Tracker 6% Search 2% Other LBS Map Data Overlay 4% • LBS has been over–hyped in the past 1% • CDMA markets more advanced than GSM Mobile Maps 1% • US carriers controlling LBS • Revenues dominated by TBT Navigation: Pedestrian TBT Nav. 3% • Navitime: +4 million subscribers (July 09) In Car TBT Nav. • NIM: 3.5 million licenses end 2008 83% • Telmap: 400k paying customers (2Q08) • Other LBS contribute to <20% of revenues www.strategyanalytics.com 4
  5. 5. Opportunity for LBS is Expanding GPS Pene tration of Handsets Sold (% ) 80% GPS on handsets set to 70% expand significantly 60% • GSM markets 50% • WiFi 40% Cell Tower databases 30% • Google, Skyhook, Spotigo, Nokia 20% Application Stores 10% • Off portal 0% distribution 07 08 09 10 11 12 13 14 20 20 20 20 20 20 20 North America Western Europe 20 Asia Pacific Central & LatAm CE Europe Africa Middle East Total Source: Strategy Analytics Global Wireless Practice Jun-09 www.strategyanalytics.com 5
  6. 6. GPS Beyond the Wireless Handset Non Mobile Phones devices 250 offer GPS Opportunities too • MIDs and Netbooks 200 • Cameras Shipments (m) 150 Connected PNDs and Other Devices Emerging 100 • WiFi and Cellular 50 • 23% of PNDs connected in 2014 0 • 15% of cameras WiFi in 2014 GPS offers good combination 07 08 09 10 11 12 13 14 20 20 20 20 20 20 20 20 technology Digital Camera Portable iPod/MP3 Player Portable Media Player Mobile Internet Device (MID) • robust technology, next Netbook Portable Nav Device (PND) generation development limited Source: Strategy Analytics Digital Consumer Practice May-09 • $0.50 cost point in in www.strategyanalytics.com mainstream handset markets 6
  7. 7. Other Consumer Market Drivers Monthly Data Plan Adoption as a Penetration of Total Cellular Users monthly data plan penetration of cell. users 35% Consumer data package adoption 30% • Rising mobile data adoption • Mobile browsing, access to social 25% networks e.g MySpace, Facebook, 20% email (%) ‘All you can eat data’ plans 15% • iPhone model has been catalyst 10% • Japan leads, NA and Europe strong 5% Increasing consumer use of 0% application stores 2008 2009 2010 2011 2012 2013 • Apple, Android Market and Nokia Ovi Store W.Europe N.America C.E.Europe CALA APAC MEA Japan • +60% Apple users and +50% Blackberry users downloaded Source: Strategy Analytics ‘majority of their apps for free’ www.strategyanalytics.com 7
  8. 8. Consumer Interest in LBS US Interest in Location Enabled Services Sports Tracker 16% Social Apps Time Tables 20% Picture Geo-Tagging 21% Friend Finder 24% News 24% Business Search 36% City Guide 37% Practical Apps Car Locator 39% Traffic 41% Weather 43% Maps 49% Routes 53% 0% 10% 20% 30% 40% 50% 60% interest (%) Wireless Media Labs, End-User Survey, July 2009 www.strategyanalytics.com 8
  9. 9. Power is in the hand(sets) of consumers •Operator Consumer •OpenNetwork internet Publisher IP Owner Operator •Handset manufacturer services • Carrier walled garden approach breaking down – GPS and cell tower databases opening up LBS • Who has the upper hand? – The operator has an important relationship with the consumer – Internet players have the brand – Handset manufacturers can integrate access • Consumers have more power than ever before www.strategyanalytics.com 9
  10. 10. Mobile LBS Competitor Positioning Strong competition within LBS apps retailing and own LBS applications Role Within Location Services Location Acquisition Retailing LBS Own LBS Apps Internet Companies Google MyLocation Extend internet apps to mobile Operators Network location data Portal, app stores White label premium apps Handset Vendors Enabling GPS, location APIs App stores & on device Nokia PND Extend navigation to handsets App Developers Focus on own LBS apps www.strategyanalytics.com 10
  11. 11. Who Will Win? Operators remain a strong player in LBS as they leverage their strengths: • Preinstall, bundle and zero-rate own applications • Developing own app stores and take share of billing revenues Handset vendors increasingly important for LBS distribution: • Application stores & device integration • Preinstall own or partner applications – e.g. Wayfinder and Sony Ericsson Independent provider with strong brands will gain traction in mobile: • Strong brand recognition e.g. Google, TomTom – Smaller players without brand likely to struggle • Branded players good partner for operators and handset vendors www.strategyanalytics.com 11
  12. 12. Smartphone App Stores A New Route To Market Growth in LBS availability though application stores has been impressive: • 2.8k location aware applications in Apple App Store • 400 location enabled apps in Android Marketplace, • 23 location enabled apps in Nokia Ovi Store. • Operators typically offering a handful of location enabled applications. Company Application Type Pricing Model Networks in Gokivo Navigation & $0.99 application download with $9.99 per month for voice Motion Local Search guidance through App Store. Intermap AccuTerra Outdoor Terrain $0.59 per application with additional map bundles purchased Maps in application through App Store uLocate Where LBS Aggregation Free application available through App Store, App World and for Palm Pre. TomTom TomTom Navigation £60-£80 for a lifetime user license. Yelp Yelp Local Search Free. Internet model based on advertising. www.strategyanalytics.com 12
  13. 13. Off Portal Application Stores Gaining Upper Hand App Stores: Volume Market Share 2008 - Global App Stores: Volume Market Share 1H09 - Global Handango, Android, 3% RIM, 1% 2% Handango, Palm, 1% Nokia Stores, 3% 9% Nokia Stores, Get Jar, 10% 11% Operators, Get Jar, 12% 40% Apple App Operators, Store, 12% 67% Apple App Store, 29% Source: Strategy Analytics www.strategyanalytics.com 13
  14. 14. Clear LBS Applications Opportunities Emerging 500 450 400 350 sers (m) 300 250 LBS U 200 150 100 50 0 07 08 09 10 11 12 13 20 20 20 20 20 20 20 In Car Navigation Pedestrian Navigation Maps Map Data Overlay People Tracker Other LBS www.strategyanalytics.com 14
  15. 15. Show me the money – Pricing varies by application Subs A la Carte Rental Ads Free Maps/ Routing Nokia, Google Intermap Vodafone, Orange Navigation (TBT) Nokia TomTom, Verizon locationet, Garmin Wireless Skrobbler Social Location Loopt, Where, GyPSii Loopt, Where, GyPSii GyPSii Safety Location VZW, AT&T, Sprint Search Yelp, Google Yelp, Google Utility LBS Verizon Wireless G-Park www.strategyanalytics.com 15
  16. 16. Monetization Challenges Pricing options include free, freemium, a la carte, subscription and advertising: – Subscription: Preferred model for carriers. However, adoption has been low and willingness to pay is segmented. – Free & Freemium: Ideal for driving downloads, promoting other channels and awareness building. Nokia Maps a major example of this. Challenge to up sell and provide value-add. – A la carte: Low ($0.5-3.0) price points proving ideal for impulse purchase within application stores. Not ideal for applications generating ongoing costs, e.g. TBT navigation. – Advertising: Currently nascent and experimental. Unproven on mobile. www.strategyanalytics.com 16
  17. 17. Other Pricing Strategy Considerations Other factors to consider: • Costs? People TBT • User segment? Tracking High Vehicle • Competition/ substitutes? (Safety) Nav. • Willingness to pay? • Frequency of use? • Ease of use? Value to user Value to user Med Routing Local Map Sports Car Locator Tracker City Guide Local News & Search & Advertising Low Buddy Finder Weather (Social) City Local 5-20 meters Location Accuracy www.strategyanalytics.com 17
  18. 18. Monetization Conclusions Different monetization models will co-exist, but SA predicts: • Increased bundling together of distinct location applications improves value-add. – uLocate’s WHERE application – Google Maps Layers • Use of freemium type models will gain traction. Hybrid examples: – Gokivo - $0.99 for basic application with $9.99 per month for navigation – Intermap - $0.59 application with additional charge for additional map bundles • Revenues from advertising will generate over $3.5 billion for LBS, the vast majority through location enabled search. – Advertising linked to location enabled search represents a strong proposition for local advertisers. www.strategyanalytics.com 18
  19. 19. LBS Search and Advertising – the Hot Topic • Location enabled search will drive LBS advertising • But still need to prove effectiveness to advertisers • Opportunities for local advertising – Customised solutions emerging – Yelp, Sherpa, Cha Cha • Growing momentum behind connecting mobile advertising with location enabled services – Navteq acquires location based advertising network Acuity (Sept 09) – Alcatel Lucent (location and messaging platform) and 1020 Placecast (advertising engine) launch a hosted service to wireless operators (May-09) – Advertising network Quattro Wireless teams up with uLocate to deliver ad targeted units into uLocate’s WHERE iPhone application www.strategyanalytics.com 19
  20. 20. $7.5B Global LBS Revenue Opportunity in 2013 8,000 Other LBS 7,000 Location Enabled Search 6,000 LBS Revenues ($m) People Tracker/ Locator 5,000 Spending Map Data Overlay 4,000 3,000 Mobile Maps 2,000 Pedestrian Navigation 1,000 In Car Navigation 0 07 08 09 10 11 12 13 20 20 20 20 20 20 20 • Location enabled search including advertising will emerge quickly: approach $3.6B in 2013 • Navigation and map applications will remain strong: $2.9B in 2013 • Monetization key challenge impacting rate of market development www.strategyanalytics.com 20
  21. 21. Revenue Flows in the Value-Chain • Advertising 63% 37% LBS APP • Subscription Digital Content LBS Location Developer/ LBS Retail • A la Carte Maps Providers Platform Acquisition Publisher • Freemium • TeleAtlas • InfoUSA • Google • Operator • uLocate • Operator • NavTeq • ViaMIchellin • Nokia (Ovi Maps) • Skyhook • Wavemarket • Device Vendor • Intermap • Inrix • TCS • Google • Nokia • D2C • DeCarta • Google • Retailing LBS will generate almost $1.3B (37%) by 2013: Operators and device vendors in strong position to capture this opportunity. • LBS publishers will generate just over $2B (63%) by 2013: Navigation the primary opportunity. Revenue distributed across other value-chain partners. • Search will drive location advertising revenues to reach $3.6B: Search giants Google, Yahoo and MSFT well positioned. www.strategyanalytics.com 21
  22. 22. Conclusions • Opportunity is large – Navigation and search will drive total LBS revenue to $7.5B by 2013. • Routes to market are changing – Carrier wall garden around LBS has broken down • Application stores are becoming a significant route to market • Operators remain strong retail partner • Monetizing LBS remains complex outside navigation and search – Maps, Navigation & Routing will generate $2.9B – Search will generate $3.6B by 2013, dominated by giants Google, Yahoo/MSFT – Other categories hindered by lack of established business models • Companies have to be responsive and nimble over the next couple of years as the market matures to make the most of the opportunity. www.strategyanalytics.com 22

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