LBS: Are Consumers Ready to Blow This Market Open?

At the ESRI Telecom and LBS Summit in San Diego last week, the potential market for location-based, or rather "location-enabling," services was discussed yet again, but now with more data to understand why it is poised for exponential growth.Putting the main problem aside for moment -- that most handsets like cell phones are not equipped with location-determination technology, like GPS -- the market for consumer products that are equipped with GPS is rapidly expanding.And given that cell phone manufacturers are installing GPS chipsets in newer models, there will soon be a convergence of applications with the devices that support marketable, (read: fun and useful,) gadgets.

In a presentation by Rich Rudow, of Trimble Outdoors, a division of Trimble Navigation, he discussed the evolving market for GPS equipment.

Marine use - first heavy adopter of handheld GPS in early 90's
Land Navigation use in late 1990's
New categories

Fitness - wrist mounted units
Portable car navigation.

Rudow mentioned that approximately 10-12 million U.S.consumers have handheld GPS equipment today, and that number is growing daily.Particular attention should be paid to the fitness market.With products such as the Garmin Forerunner 201, TomTom Go 700, and Magellan eXplorist 500, active consumers are looking to measure performance. Specifically, they are looking for products that have portability, low cost, maps, durability and a long battery life.


Garmin Forerunner 201	TomTom Go 700	Magellan eXplorist 500

Many of the these features are being supplied by the explosion of the cell phone handset market that includes a digital camera.Rudow suspects that the ability to combine these two elements with the cellular handset has created a fork in the road.For example, the newer handsets are now including mega-pixel cameras with a high quality lens (Nokia has a product with a Zeiss lens), more hard drive storage, multimedia graphic user interfaces, streaming video, and wireless bandwidth to move content to/from the phone from the Internet.Second generation handsets are now in beta that include video and audio clips, GPS waypoints, maps at any scale on the fly (topo, street, aerial), upload or download paths, full GPS marked text and audio blogging.

So where is the evidence that the shift is on?
Sales of these multifunction handsets are already impacting standalone devices.

Sales of handsets with digital cameras surpassed digital camera sales in 2004.
Sales of PDA's have declined.
Handsets are poised to make a serious run at the MP3 players.
In 2008, it is projected that 600 or 700 million handsets will be Java or BREW enabled.

Rudow thinks that GPS handset adoption by consumers is a matter of when, not if.He offered the following observation from a market research report: the conventional portable car navigation segment is expected to peak in 2006 at volumes of 3 to 4 million units and then yield the market to wireless handset solutions (Strategy Analytics - Portable navigation hitting a dead end, June 10, 2005).He also believes that the GPS fitness market is very young but holds promise with market expansion beyond competitive athletes.

So what's the thinking here? What is Trimble seeing to be so optimistic? Rudow also quoted numbers from their own market research of GPS usage in the recreational marketplace.The top users are:

19% hiking, backpacking
12% hunting
14% boating/fishing
12% off road ATV
11% Geocaching.

Trimble's conclusion: by 2010, 30-40% of US wireless subscribers will be paying something to a wireless operator to do something with GPS location services on a handset.

To support this claim, Andy Graham, president of Bones in Motion (BiM), a startup company looking to provide one application in the recreation market and winners of NAVTEQ's 2005 LBSChallenge, believes in "making GPS personal." BiM is developing applications for active and healthy lifestyles, specifically for the cycling and running enthusiasts. This is a group of early adopters, some 20 million strong, that are "tech friendly," with some of the highest average incomes (more than tennis or golf) and that is "persistently connected" to the Web.BiM's first product will be called BiM Active.It will have real-time feedback for the user by recording an individual's activity on a GPS-enabled mobile phone, such as speed, distance and the calorie burn in addition to ancillary data like topography.But BiM really want to enable a "community of users" to share bike routes and log personal training runs, even conducting races remotely between friends because the application will have the ability to calibrate different routes to normalize difficulty so that "training buddies," though miles apart, can compare regimens.