Location Based Services Still Searching For A Market

by Carlo Longino on August 20th, 2007 in Mobile Society

I noted a little while ago that Russell Beattie is back from his blogging hiatus, and if you haven’t bookmarked his site or subscribed to his feed, you should. He’s got a great post on consumer-focused location based services this week, which he succinctly sums up by saying “Most LBS applications are a black hole of wasted time, effort, money, and opportunity.”

As Russ notes, there are some obvious bright spots in the LBS market. Mapping and navigation are great services that are quickly becoming more accessible and better. I’d add commercial applications as well — the combination of mobile data connectivity and location information holds a ton of promise in the business space. But he also rightly questions the next-big-thing, party-line thinking that’s dogged consumer LBS for some time — that adding location automatically makes good services great and any service good.

That’s simply not the case. Perhaps the best example is one we’ve discussed many times, the Starbucks example of mobile marketing. You’ve heard it before, how it’ll be so awesome when consumers get a Starbucks coupon sent to their mobile phone every time they pass by one of their shops, and they’ll come streaming in to throw their money at baristas. Only that’s a pretty stupid example: location isn’t the only context marketers should consider, nor will many consumers enjoy being hit with a barrage of ads every time they walk down the high street or pass by a strip mall.

So despite the hype, the LBS market remains an unfulfilled one. Technology, though improving, still lags behind, but is the real problem a lack of creativity? Navigation and “finder” services (ie the “find the nearest…” type of thing) are largely tapped out. The friend finder/buddy locator market has plenty of entrants, as does the kid tracker one, and what’s holding them back more than anything is lack of interest. People simply don’t care, and don’t understand how it’s useful to know where their friends or to broadcast their own location all the time. Whether that’s a marketing problem or something deeper is probably a topic for another post.

I agree with Russ that what’s going to move this market forward isn’t general, widely appealing LBS — since these are generally just techy versions of existing offline services like the yellow pages — but niche applications. Commercially, this obviously isn’t as attractive since the target market will be smaller than “every mobile user”, but it can allow for more focused development, and ultimately, better services for users in the targeted niche.

So, to sum up, generalist consumer LBS look like a dead-end market, but niche ones could have an interesting future. I’m sure there are some LBS developers out there, and I’m very interested to hear their thoughts on this. Also, what are the biggest obstacles to the LBS market? Consumer apathy, technology struggles, or something else?