What next for Location Based Services (LBS)?

Back in 2003 I got very excited about the potential of Location Based Services (LBS) having seen what DoCoMo had done using cellular triangulation on pre GPS phones. The big debate was, and still is, whether business would be able to evolve the technology enough to engage users and drive revenues. The mobile operators led the way in locating users, Google then led the way on location based mapping and more recently a number of apps have embraced free to user geocoded content, but none have yet managed to move beyond the simple act of discovery - namely the ability to help users discover things nearby.

So I suppose the questions to be answered are what will make users become loyal to these applications, and is there a sustainable business model around providing such applications.

Until recently LBS has evolved slowly, with each advance overcoming a technical barrier. First came network based location to identify the location of the handset. That costs money each time you asked the network to locate someone and when number portability arrived that cost increased, requiring multiple network queries to, first identify the users new network and then their location. Then as Smartphones arrived, based on platforms such as the iPhone and most recently Android, we saw handset based location, by computing the longitude and latitude on GPS equipped handsets.

However someone’s location only has true benefit to the user, when the device or network geodata can be matched with appropriate geotagged content. Only in the last 2 years has sufficient geocoded content become available as the content world has woken up to the potential of LBS. Now we have a proliferation of LBS apps – most of which are free to the user - addressing the question “I’m here, where’s my nearest...”

Competing in an overcrowded LBS apps market means an ever increasing need to differentiate. With everyone offering similar content categories for users to discover things, the LBS app space is quickly becoming diluted with users spoilt for choice. I passionately believe that the way to win in LBS is to develop apps around the user’s needs. As we have seen, they already have a wealth of information addressing what’s near to them, but what do they do then? How do they organize all that information and how do they let their friends know what they’re doing?

It is in addressing these areas – planning and sharing - that the answer to differentiation lies and where I believe the market will evolve to.

People’s lives don’t only exist on their mobile. When I’m at home I use my PC and laptop. It’s also in the comfort of my home that I tend to organize what I’m doing. This might be surfing the web whilst watching the TV to organize a night out with mates, a weekend away with my wife or as seems increasingly frequent of late a stag do. The issue I have with doing this is constantly having multiple web pages open at the same time, covering multiple themes such as places to stay, places to eat, travel, weather, activities the list goes on. When it comes to finalizing the details, I tend to spend an age finding the relevant information and then collating it into a single plan.

People need a means to organize all the information they discover, moving it into a single and dedicated space that ultimately becomes the plan. Something they can share with themselves by pushing to their mobile so that it’s there when they need it most – when out and about – and something that they can share with those they need to; their friends, wife or even fellow stags. And as people get closer to the event, they need the means to get feedback and alternatives from those they are meeting, to edit that plan, and the ability to share the updated plan with everyone.

Through the ability to share, LBS can optimize reach as users share their plans with their personal networks. This viral effect will introduce new people to the application. By initially engaging them via the credibility of a message from someone they know and trust, they are more likely to view the plan. From there they can link back into the full service to have a look for themselves thus continually driving traffic – the key metric that drives the predominantly advertising based business models we see today.

Recently, Tim O'Reilly and John Battelle, the creators of the Web 2.0 Summit, released a paper focusing on the intersection of social web technologies with the emerging Internet of things (real world objects connected to the Internet). They argue that humans are producing sensor data of their own, in particular on their mobile phones via microphones, cameras, and recently compasses, so applications are no longer being driven solely by humans typing on keyboards but, increasingly, by sensors.

This provides another means of driving the business model. By collating human input and sensory data as people use a service, we can understand a user’s preferences, meaning applications can proactively suggest things users will like. The more relevant recommendations become and the more information finds the user rather than the other way round, the more people will engage, thus driving revenues. Of course privacy will provide the next major barrier for LBS to overcome, but if apps provide users value and respect the use of their data via an opt-in approach, then that barrier will ultimately be overcome.

So LBS are finally here and given current popularity, seem here to stay. But business needs to evolve apps to address the needs of their audiences. In extending the current focus on discovery by adding capability to create and manage plans and to share with others, business will better engage their target audiences and increase traffic to drive their business models.