Location Based Services - Entry Strategy
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Transcript of Location Based Services - Entry Strategy
8/7/2019 Location Based Services - Entry Strategy
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2011
Debesh Majumdar 09BM8016
Kumar Bipallav Mani 09BM8068
Vinod Gupta School of Management
4/15/2011
Entry Strategy for
Location Based Services
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Table of Contents
Introduction««««««««««««««««««««««««««. 3
Positioning Technology«««««««««««««««««««««...5
LBS Value Chain««««««««««««««««««««««««.5
Business Models««««««««««««««««««««««««..7
Players««««««««««««««««««««««««««««.7
LBS Usage in Android & iPhone««««««««««««««««««9
Forecasts for the LBS Industry««««««««««««««««««...11
Porter¶s Five Forces Analysis«««««««««««««««««««.15
Sources of uncertainty««««««««««««««««««««««16
LBS Strategy Framework««««««««««««««««««««...17
Conclusion««««««««««««««««««««««««««..18
References««««««««««««««««««««««««««..19
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Int ti n
ti n i i t nology i tiliz t ility of obil i to t
it own location to p ovi information and nt r tainment ervices. ey give peo ple t e
ability to share where they are with fr iends and with businesses around them. ome of the
most po pular exam ples of location based services are f inding out the nearest business or
service such as a restaurant or theatre and dr iving directions and traff ic u pdates. Other
exam ples include personalised weather forecasts based on one¶s location, or the ability to
play mobile games against peo ple in one¶s locality. ty pical technology conf iguration of
location based services would look like
n B requires f ive basic com ponents
. Service provider¶s sof tware a pplication
2. Mobile network to transmit data and requests for service
. Content provider to su pply the subscr i ber with location s pecif ic information
4. A positioning com ponent, most likely a G S
. Subscr i ber¶s mobile device
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Location based services can be categorised into three grou s
1. Emergency services ± A cellular o erator can track the location of a mobile user.
Such information becomes very im ortant in emergency situations. Countries such as
US and Ja an have enacted laws which makes it com ulsory for all carriers to be able
to rovide the information if it is available. No such law has been enacted in India.
. Consumer services :
a. Navigation ± Using navigation software, a user will be able to get the most
o timal route from one lace to another. Modern navigation systems take into
account traffic congestions and rovide routes which take the least time.
b. Location based advertising ± This is ush advertising in which a user is alerted
of discounts or cou ons from businesses in the vicinity of the user.
c. Family and friend finder ± It allows users to kee track of the location of other
users. It requires consent of the subscriber being tracked.
d. Location based reminders ± A user u dates a to-do list and each item in the to-
do list is tagged to a s ecific location. When the user nears a location, he is
alerted of the to-do items tagged to that location. For exam le, a user may
have tagged a market to a to-do item called ³Buy vegetables .́ Whenever the
user is in the vicinity of the market, he will be alerted that he needs to buy
vegetables.
e.
Location based search ± It allows users to search for roducts and serviceswithin a s ecific geogra hic area. Exam les include searching for s eciality
restaurants in the city or movies laying in the city theatres.
3. Enter rise Services ± Location based services can hel firms in fleet management,
asset tracking, route and delivery o timi ation and mobile workforce management.
Location based services can also categorised into ull and ush services based on whether the
information is delivered on user interaction or not.
Pull services are services which deliver information to the user based on user requests. Pull
services can be further divided into functional services, like ordering for a taxi or
informational service like searching for the nearest fish market.
Push services deliver information which either has not been requested by the user. Such ush
services are activated when a articular event occurs like a user enters a articular area. An
exam le of a ush service is discount cou ons offered when a user enters a sho ing mall.
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Positioning technology
ver the years, various technologies have evolved to locate a mobile subscriber. We take a
look at some of these technologies
1. Cell of origin ± This is the most rimitive method of locating a user. In this method,
the base station to which a cell hone is connected is assumed to be the location of the
user. It has the least accuracy among all the known methods.
. Time of arrival ± This is a location determination technology which uses the time it
takes for the signal to reach the base station from the cell hone. It is a refinement of
the cell of origin method and rovides a relatively better accuracy.
3. Angle of arrival ± The angle at which signal from a cell hone arrives at two base
stations is calculated and then triangulation is used to in oint the location of the user.
. Enhanced observed time difference (E- TD) ± Handsets having this ca ability
measure the time difference between neighbouring synchroni ed base stations.
Accuracy of 100 to 300 metres can be achieved using this method.
5. Standalone lobal Positioning System ( PS) ± The United States De artment of
Defence started the system of geosynchronous satellites. A satellite sends a signal
to a PS receiver to determine its location. A minimum of 3 satellites is needed to
accurately find out the osition of the user.
6.
Assisted PS (A- PS) ± This system gives an accuracy of 5 to 10 metres. It fixesosition within seconds, has better coverage and can be used indoors. The only
disadvantage of this system is that the handsets are relatively ex ensive.
LBS Value Chain
Location based services rovides o ortunities for a large number of layers. A art from
the mobile o erators, a lication develo ers, location determination technology (LDT)
and gra hical resentation are some who stand to benefit from the roliferation of
location based services. The value chain of LBS is best described by the diagram below
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ere the roles played by the var ious entities are denoted by the rectangles, the revenue
streams are denoted by the arrows and the text on the arrows denotes the way the revenue
is generated. he red dotted line denotes the current s phere of inf luence of a mobile
o perator. oday a mobile o perator plays the role of network provider, service provider
and BS provider. But this may change in the years to come.
he end user may get location based services from a BS rovider. he BS rovider
gets location information and network access from a network o perator. Itgets content and
a pplications from three sources either directly from an a pplication, from a content
provider or from an a pplication service provider. he a pplication service provider in turn
sources from a pplication develo pers and content providers. A s ponsor pays the BS
provider for adver tisements. he BS provides pays to a payment facilitator for enabling
payments. On the other hand, the end user pays for accessing the network through the
service provider which in turn pays for using the network of a network o perator. A
network provider purchases network ing equipment from a network manufacturer and gets
the location determination technology from a rovider. Sometimes an end user,
instead of a cellphone, may use a terminal from a terminal vendor who sources it from a
network manufacturer. In this case, the network manufacturer buys license from a
rovider and uses the technology to provide location based services to the end user.
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Business Models
. Location aware offers In this scheme, the adver tiser pays the LBS rovider for
pushing discount cou pons and offers whenever the user enters a par ticular area. It is
very useful for sho pping malls and highway restaurants.
2. Claim and s ponsor It is a hybr id of the direct adver tising and freemium models. In
this scheme, businesses pay the LBS rovider for claiming a par ticular location. In
turn, the LBS rovider helps the businesses with additional promotion o ppor tunities.
. S ponsored game elements ere some of the game play as pects of the LBS rovider
are s ponsored by the business. or exam ple, in the case of oursquare, par tners pay
oursquare for creation of branded badges which are given to users when have an
accom plishment. A hy pothetical exam ple may be Café Coffee ay paying oursquare
for creation of a badge called CC an´ for users who frequently visit CC outlets.
4. Vir tual goods In this model, vir tual goods are dis played whenever a user is near a
business. he user is given discounts if he checks in and buys the real goods.
. Collective buying s pace Com panies like Grou pon negotiate stee p discounts with
local businesses in return for volume guarantees. hese deals can be pushed to users
in a cer tain location.
. Mobile Adver tisement networks Location based services which do not have their
own adver tisers bank u pon mobile adver tisement networks to feed them with location
based adver tisements. he revenue generated from such adver tisements are shared
between the LBS rovider and the ad network.
. White Label Model his is a B2B2C model in which a pplication develo pers create
a pplications for enter pr ises which the enter pr ise then allow the users to use.
layers
acebook laces
Who, What, When, and now ... Where´. his is how acebook
laces descr i bes itself. It allows users of acebook to u pdate
their location on a real time basis. If the user is at a place which
he likes, like a restaurant, he announces to his fr iends about the
place. Status u pdates can be tagged to a place. or exam ple, if someone is attending a
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concert, he checks in to the concert and sends a status message. He would also be able to see
some of his friends have also checked in to the same lace.
Although it was a late starter in the LBS field, it enjoyed a huge ca tive audience of 500
million users. Detractors say that out of this 500 million, only 50 million are mobile users and
even out of these, only a miniscule ercentage use Places.
Foursquare
Foursquare is a location aware a lication launched in
March 009. It has more than 6.5 million users. It is based
on checking into various locations. The various conce ts
used with Foursquare are
a. Badges ± Badges are created by the administrators and assigned to users based on
s ecific accom lishments within the Foursquare ecosystem. The badges earned by the
users are dis layed on the user¶s rofile.
b. Mayorshi ± Mayorshi of a location is given based on frequency of visit to a
location. If a user checks into a venue more than anyone else in the last 60 days, he is
crowned the mayor of the venue. In order to increase com etition, Foursquare notifies
users of the number of days left before he becomes the mayor of a venue.
owalla
Although owalla is similar to Foursquare, there are im ortant
differences. First, users don¶t have friends on owalla. It is more of a
game. Users go around the city, checking into different laces and in the
rocess collect ³stam s´, ³icons´ and ³ ins of glory´. A stam is
similar to ass ort stam ing. ne gets a stam whenever one visits a
lace. When one checks into a lace, various icons may be available. For exam le, if one
checks into a ub during ha y hours, a Ha y Hours icon may be icked u from the ub.
Pins of glory are icons that re resent significant achievements such as com leting a tri . A
tri can be made by checking into at most 0 different venues of the same category such as
shrines or nature hikes. Second, owalla is more recise in geolocating than Foursquare.
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Yelp
Yelp runs a local search and review ca pability for its users.
or exam ple, when a user searches for a Chinese restaurant
in ark Street, he is shown all Chinese restaurants in that
area, peo ple who have visited those restaurants and the
reviews they have wr itten. All business sites registered with
Yelp contain address, hours o pen and other details such as park ing. Yelp also has a social
as pect.
Google Latitude
Google Latitude is a location aware mobile
a pplication develo ped by Google. With Google Latitude
a user can allow cer tain peo ple to view their current
location. sers can o pt into the G S feature or allow
only s pecif ic fr iends or family members to follow their
travels. Once an agreement is reached, users will be able
to see their fr iends' prof ile pictures a ppear on a ma p through their mobile device or desk to p
com puter. What differentiates Latitude from other services is that it can be used to contact
other users with SMS, Google alk or Gmail.
LBS sage in Android and i hone
Android and i hone form a large por tion of the current o perating systems on which LBS
a pplications run. It is im por tant to understand that users of Android and i hone have distinct
tastes and this is ref lected in their usage of LBS a pplications as well. Any LBS a pplication
develo per will have to take into account this difference before he designs an LBS a pplication.
irst let us look at the most po pular LBS categor ies in Android and i hone.
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he above diagram de picts the different a pplication ty pes andtheir po pular ity in the Android
ecosystem. We note that travel is the most po pular, followed by tools, lifestyle and social
network ing.
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The above diagram de picts the usage of LBS on the i hone platform. otice that the usage is
considerably different from what it is in the Android platform. ere local search forms the
bulk of the usage, followed by routing and travel.
So de pending on the target platform, you would have to create a pplications which are most
po pular on that platform.
Let us now look at the free and paid a pplications on both these platforms.
Even in terms of paid versus free a pplication, the Android and i hone platforms differ
signif icantly. Around % of the a pplications in the Android platform are free and the rest
2 % are paid. Quite the o pposite is seen in the case of i hone. ere % of the a pplications
are paid a pplications while only 2 % are free LBS a pplications.
orecasts for the LBS industry
Gar tner predicts that location based services will be the 2nd
most po pular consumer mobile
a pplication for 2 2. According to the agency the to p consumer mobile a pplications are
. Money transfer
2. Location based services
. Mobile search
4. Mobile browsing
. Mobile health monitor ing
. Mobile payment
. Near ield Communication services
. Mobile adver tising
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9. Mobile instant messaging
10. Mobile music
In its re ort, the agency says ³Location-based services (LBS) form art of context-aware
services, a service that artner ex ects will be one of the most disru tive in the next few
years. artner redicts that the LBS user base will grow globally from 96 million in 009 to
more than 5 6 million in 01 . LBS is ranked No. in artner¶s to 10 because of its
erceived high user value and its influence on user loyalty. Its high user value is the result of
its ability to meet a range of needs, ranging from roductivity and goal fulfilment to social
networking and entertainment.´
Forrester believes that location based a lication users are
y Influential - eolocation users are 38 more likely than the average US online adult
to say that friends and family ask their o inions before making a urchase decision.
y An interesting target grou - They are ty ically young adult males with college
degrees.
y Heavy mobile researchers - They are also far more likely to search for information
about businesses and roducts, as well as read customer ratings/reviews of roducts
and services
In terms of generation and demogra hics, the LBS users can be broken down as follows
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Total LBS service revenues in E 2 +2 2 Euro pean nion countr ies and two candidate
countr ies) was Euro 2 4 million in 2 . Berg Insight forecasts LBS revenues to grow to
about Euro million in 2 4.
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E-Marketer estimates that there were 63 million location based services users world-wide in
008 and that this number is going to rise to 86 million in 01 .
Year LBS Users, mn % Change
2007 18.9
2008 61.3 224.1
2009 134.0 118.8
2010 215.3 60.7
2011 329.0 52.8
2012 486.0 47.7
The overall mobile search and mobile advertising market will be growing ex onentially as
shown in the gra hics below. Along with it, will grow the LBS revenues.
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Porter¶s five forces analysis
Threat of new entrants: High
The threat of new entrants is very high in this industry. This is because very little investment
is required to set u an ecommerce business based on LBS. The time to market is low. A
business can be set u in less than 3 months. The entry and exit barriers are also very low.
Bargaining power of buyers: High
The bargaining power of buyers is high because there is availability of com peting products in
the market place. Each of them provide very similar features. Switching cost is very low.
Users can very easily switch from one LBS a pplication to another.
Threat of substitutes: High
The number of products fulfilling the same need is very high. There is very high uncertainty
over future technologies. Disru ptive future technologies may make the current cro p of LBS
a pplications com pletely redundant.
Rivalry in the industry: Moderate
The rivalry in the industry is moderate because each player in the market is trying to position
itself in a niche area.
Threat of su ppliers: Low
Here telecom o perators, handset manufacturers and mobile OS develo pers act as facilitators.
Since LBS a pplication develo pers do not directly interact with any of these entities, threat
from these su ppliers to interru pt the business is low.
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Sources of uncertainty
Any business model based on LBS presents uncertainties on all dimensions. These
uncertainties are tabulated under each of the dimensions.
L B S
M a r k e t p l a c e
Demand for mobile services historically difficult to predict (voice,
SMS, WAP) ± driven by mix of market pull and tech push
Little mass market ex perience with LBS and widely varying estimates
of future market si e
Privacy and security concerns
S e r v i c e s
Requirements definition due to the unknown user context, device diversity and ability to match with technical ca pabilities
Delivering wrong value pro position
O r g C a p a b i l i t i e s
I n t e r n a l Availability of relevant skill sets
Ability of organi ation to communicate value pro position
Ability to reach decision makers in target consumer segments
P a r t n e r s
Availability of partners with the right ca pabilities Com petition from potential partners
Incom patible strategies and visions Ability to reach an acce ptable revenue and cost sharing arrangements
T e c h n i c a l
C a p a b i l i t i e s
Infrastructure is ex pensive, takes time to de ploy and cost is front
loaded Un proven ca pability, reliability and availability of technologies
Rolling out of positioning ca pabilities by o perators
Integration of networks and other infrastructure
C o n t e x t
Economic growth
Privacy/security regulation
Legal liability for service failure
Unantici pated social/behavioural im pact
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LBS strategy framework
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Conclusion
Location based services is one of most promising business o pportunities in the Web 2.0
s phere. A major chunk of advertising revenues in the future will be s pent on location based
services. There are a few major players in the market but unlike the search market, there is no
clear leader in this s pace. Com panies are still jostling for s pace, coming u p with new and
innovative ideas. There still is sco pe for some more players in the market. Like in any other
business, it is im portant to satisfy customer needs in this industry as well. The key is that here
the needs are local and the solutions have to be local as well. Unlike the search market,
revenue generation in the location based services industry is rather easy. As ex plained in our
re port, there are various avenues through which revenues can be generated. Before entering
the location based services industry, one must use the LBS strategy framework given earlier
to find out the suitable business model.
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References
1. A framework for selecting a Location Based Services strategy and Service Portfolio ±
David Tilson, K alle Lyytinen, Ryan Baxter
2. http://www.ibm.c
m/deve¡
pe ¢ works/ibm/library/i-lbs/
3. White pa per on Location Based Services on Mobile in India ± Indicus Analytics Pvt
Ltd.
4. Location based services market and trend analysis ± Enter prise Mobility Ex perts