Location-Based Services: Moving

Beyond Mapping To Encompass

the Digital World
Players compete and cooperate in a developing
service landscape

Author: Neha Dharia, Senior Analyst, Consumer Services, Ovum

Location-Based Services: Moving Beyond Mapping To Encompass the Digital World

This is a chapter extract from published Ovum

Research. The full report is available on the Ovum
Knowledge Center

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Location-Based Services: Moving Beyond Mapping To Encompass the Digital World

Summary
In brief
The location-based-services industry has been gaining momentum over the past decade through
maps and navigation. It has now reached an inflection point: Growth in mobile devices and consumer
acceptance of mobile mapping services means the time is ripe for proliferation of the number and
variety of location-based services available, going beyond basic navigation to services such as smart-
home technology and security. As the digital world moves from a browser-based model to an app-
based one, location is playing a crucial role in customizing content for the user.

Already, location is being used creatively to add value for the user by adding a layer of context to the
service, be it in social media, automotive, payments, marketing, or the more established navigation
domain. As more applications become “context-aware,” basing their functions on what users are doing
– and when and where they are doing it – location will become a default input to the majority of
applications that users run. It is therefore imperative that operators, vendors, and consumer service
providers be aware of the scope of the location-based-services (LBS) industry and its expected
growth in the near future.

Ovum view
 LBS are widely applicable across industries. Location is rapidly becoming a key
component of services in various industries, including advertising, transportation, payments,
health, and social networking. Location technologies can add context to the service, making it
more sophisticated in terms of meaningful search results, the ability to verify a user’s location
for a payment, and even locating the best available transportation in the vicinity. LBS add
value for enterprise clients as well, by providing efficiencies in their logistics and
transportation verticals and enabling them to monitor staff routes and scheduling.
 Connected cars could challenge mobile navigation. As more car makers adopt in-car
navigation systems, even in lower-end models, many LBS will cater not only to mobile or
satellite navigation offerings but to a dedicated or integrated unit, providing a comprehensive
in-car experience that addresses comfort, traffic, safety, and diagnostics. Pure mobile
navigation players such as TomTom and Google Maps will need to have a tighter integration
with the car itself, to enable a range of functions such as gas meters and mileage monitors. In
the future, there will be greater integration between the navigation technology in the car and
that on the mobile device, enabling the same software to navigate while driving, parking, and
walking.
 Location adds incremental value to monetizable services. Location is an enabler
technology that both adds value to existing services and plays a crucial role in boosting
revenue. In a world dominated by free digital services monetized by advertising, location can
enable meaningful targeted advertising. LBS assist in closing the online-to-offline purchase
loop, in which a customer can find a retail store in the vicinity through an app to buy an item
found online. LBS also spurs innovation within other verticals, such as the development of a
new user-based model for car insurance.

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Location-Based Services: Moving Beyond Mapping To Encompass the Digital World

 Smart-living applications will put geosensing at their heart. Currently, smart-living/smart-

home applications work independently and rely on manual intervention. Over time, this is set
to change so that the applications and devices in our homes and on our person react
automatically based on a number of inputs, including location. Such features will put the
location platform at the heart of our digital lives.
 Consumer adoption of LBS is growing rapidly. Consumers are rapidly opting for LBS in all
services. For instance, LBS provider TCS states that it handles over 7 billion location
transactions per month for mobile operators. This raises the question of user privacy, which
needs to be addressed either through policy or regulation.
 The industry is marked by cooperation among the competition. Vendors, especially in
the mapping and navigation ecosystem, have a symbiotic relationship: Many players are
dependent on one another for certain mapping data. There are only a few players with access
to mapping data, and the rest build on this data using content relevant to their industries. For
instance, Magellan uses OpenStreet Mapping Foundation mapping data but looks particularly
at the navigation market in the US and Europe, meaning that its content focuses on elements
such as toll roads and highways.

Recommendations
 Telcos need to get a firmer foothold in the LBS value chain. Operators already have a
stake in network-based location capability and are the main conduit for location transactions,
but all major operators are looking at various ways to leverage location data to create services
and increase incremental revenue. As more services adopt location functions, telcos will need
to place themselves firmly in the LBS value chain to ensure that they are involved in the
evolution of services and take a part of the resultant revenue.
 Telcos should work closely with vendors in building LBS propositions. Ovum sees an
evolution in operator-led services from mapping to more evolved services such as security
and smart home. To enable this, operators need to find the right partner with which to offer
LBS services, perhaps in the form of a location-platform vendor such as Google and HERE,
which cater to navigation and mapping, or a vendor that already has predominantly telco
clients, such as TCS. Each vendor has different strengths and capabilities, and operators
need to be careful to choose the right partner depending on their location strategy. Ovum has
outlined and ranked vendor capabilities in Ovum’s Location Platform Index: Mapping and
Navigation 2H 2014.
 Privacy is a top concern. All players in the location value chain need to build transparent
safeguards that customers can use and trust to control their location data if the adoption of
LBS is to continue. Location-platform vendors, operators, and OEMs must emphasize the role
that privacy and security play in their location services. There is a need to build in a flexibility
that gives users control over their own location data, especially when it comes to the
automotive industry, healthcare, and payments. In all three cases, location provides a strong
value add, but if the data is misused, it can badly harm consumer trust.
 Vendors need to consolidate their position in the LBS space. As location services find
applicability beyond mapping and navigation, the importance of location-platform vendors will
come to the fore, and competition in the space will intensify. It is becoming more important for

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Location-Based Services: Moving Beyond Mapping To Encompass the Digital World

the platform vendors to strategically position themselves within their area of expertise, be it
healthcare, navigation, or any other field. This will put them in a strong position to combat new
entrants as LBS gain momentum.
 OEMs should be aware that location is moving beyond mobile . Location as a service is
moving from stand-alone devices such as mobile phones to a variety of devices, such as cars
and wearables. Device manufacturers that are strong players in location, such as Garmin and
Magellan, need to diversify and move toward a larger variety of consumer services to widen
sales of their offerings.

Ovum Consulting
We hope that this analysis will help you make informed and imaginative business decisions. If you
have further requirements, Ovum’s consulting team may be able to help you. For more information
about Ovum’s consulting capabilities, please contact us directly at consulting@ovum.com.

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