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July 7, 2009

Gartner tips LBS success in 2009

Market will double this year, says analyst firm

By Steve Evans

Analyst house Gartner believes the market for location-based services (LBS) will more than double in 2009, despite an expected dip in mobile device sales.

LBS subscribers are tipped to grow from 41 million in 2008 to 95.7 million this year, Gartner reported. Revenue is anticipated to increase from $998.3m (£615.6m) in 2008 to $2.2bn (£1.35bn) in 2009.

Gartner defines LBS, also known as location-aware services, as “services that use information about the location of mobile devices, derived from cellular networks, Wi-Fi access points or via satellite links to receivers in (or connected to) the handsets themselves.”

Uses include mapping and navigation information as well as searching for information on local business from cash machines to pubs and bars.

“The LBS industry has matured rapidly in recent months through a mixture of consolidation, improved price/performance of the enabling technologies and compelling location applications,” said Annette Zimmermann, senior research analyst at Gartner. “Factors driving the increase in the next year or so include higher availability of GPS-enabled phones, reduced prices and appearance of application stores.”

LBS revenue for Western Europe is forecast to increase from $69.5m (£42.8m) in 2008 to $303.5m (£187.1m) in 2009, while North America is set to see an increase from $327.2m (£201.7m) to $713.7m (£440m).

“The competitive landscape will change and most mobile carriers need to alter their approach toward offering LBS and dealing with developers,” said Zimmermann. “Subscriber growth will hinge on free – disregarding data charges – services. Mobile operators’ initiatives to open up the application programming interface (API) to third-party developers will help them compete against other players in the market and will also be beneficial to the different parties involved, down to the end user.”

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The report warned that mobile carriers who stick to the traditional method of charging users $5 to $10 per month plus data plans are more likely to lose customers who are after free alternatives. Current figures suggest that 10-15% of users take advantage of free offerings, but Gartner expects that number to increase to 40-50% in 2013.



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