ABI Research recently released a report entitled, “Geofencing Finally Emerges to Enable New Multi-billion Markets by 2018,” predicting a market size of $300 million. Editor in Chief Joe Francica asked ABI’s senior analyst, Patrick Connolly, to provide additional details on how “geofencing” became an entirely separate market.
On February 1st, ABI Research released a report stating, “With low-cost developer’s tools becoming available, geofencing is finally coming out of the shadows, moving beyond traditional location-based applications, to form the backbone of a host of new applications and services.” ABI estimated that the market for geofencing could reach $300 million by 2017. Directions Magazine’s editor in chief, Joe Francica, contacted Patrick Connolly, a senior analyst with ABI, to discuss the details.
Patrick Connolly (PC): Geofencing has been around so long that it feels about as hot a topic as turn-by-turn navigation, but we now have some high-potential markets emerging around indoor/proximity location, retail applications, tracking, enterprise and location-based advertising, that geofencing can help to unlock. To meet this, a range of companies are now offering low-cost geofencing capabilities to developers for the first time, including carriers (via partners), Esri, Qualcomm, Google, etc.
PC: The potential around retail applications is huge and this is where a lot of innovation around geofencing is focused, in conjunction with analytics services. But companies like Esri and TomTom appear more focused on supporting enterprise apps. Carriers also have huge potential to enable new high value services around fraud prevention, mobile to mobile (M2M) and gambling, given their reach across all handset types. But it’s clear that as geofencing becomes widely available to developers, it can also have a small but significant part in enhancing existing services such as social networking, photography, local search and push notification.
PC: The feedback from the National Retail Federation (NRF) was that retailers are now prepared to start investing some time and dollars into both proximity and indoor location technologies. 2013 will see a lot more retail applications launched, but ABI estimates that less than 20% of them will support customer-facing geofencing and/or indoor location features. In reality, retail location-based advertising/marketing is not forecast to really take off for at least another 2 years, but it is coming and once the broader ecosystem and analytics techniques are in place, it will become an incredibly powerful tool. In the meantime, geofencing can be used to generate significant revenue through store-level customer analytics, push notifications and proximity marketing.It’s not just a case of developing an application and off you go. Retailers need to select the right technology for their stores and then build a much larger ecosystem required to make all of this happen including analytics, advertising platforms, inventory/loyalty/ERM/POS integration, message delivery/push notification and so on.
PC: Already this year, we have seen one carrier having to pull a proposed location analytics service based on an uninformed newspaper article, despite being legally watertight. But as carriers, retailers, advertisers/brands and commercial enterprises begin to get involved in the LBS market, the industry is going to have to get better at being more transparent.
PC: As investment funding dries up, many application developers are caught between the shift to free applications and the inevitable but delayed arrival of mobile advertising. This has caused many in the industry to look at markets where app users are happy to pay, which has resulted in a major refocus on enterprise in 2012 across the whole application market, not just LBS. Examples include fleet and resource management, lone worker protection, BYOD settings, dispatch, track and trace and no doubt we will see a host of new services emerge that we haven’t even thought about yet.
PC: Location and geofencing can have a much more significant part to play in the future of mobile social networking. Companies like Highlight, Glympse and Glancee (acquired by Facebook) are very divisive today, but they illustrate how social networking is shifting from connecting with existing friends to finding new ones based on location and common interests and goals. Geofencing provides a way of bringing much needed control and restrictions to these services. The real innovation will come from start-ups focusing on specific groups of people, but there are already rumors that Facebook is planning a find-my-friend feature in 2013.
PC: Companies like SimpleGeo (acquired by Urban Airship) and Geoloqi (acquired by Esri), were some of the first to realize that developers would require geofencing and location analytics, but many would not have the money, time, and/or know-how to support the necessary spatial storage, location data retrieval and analysis required. This problem becomes particularly acute as the install base grows rapidly. These new breed of platforms are designed to remove these problems for developers managing the back-end and helping to control costs.