Future Perfect

Location-based services (LBS) are finding their way to the heart of the mobile value proposition. According to the analyst firm Forrester, 30 per cent of European online consumers with mobile phones are interested in using mobile GPS/navigation services, while 52 per cent of smartphone owners with unlimited mobile internet packages already do so. Very strong uptake of smartphones, most of which are equipped with GPS, continues, and just less than three years ago, Nokia acquired LBS provider NAVTEQ.

But LBS is not a new phenomenon. In fact, there was a lot of hype around LBS a decade ago, fuelled by the froth in the mobile telco market - remember the billions that were bid for UK 3G licences? So what gives me the confidence to say that LBS will become mainstream over the coming years? 

Ubiquitous access
In my view, it's all down to the rise of the GPS-equipped smartphone, and the fact that fairly reliable mobile internet access is now ubiquitous. The growth in mobile data is projected to be staggering. According to the recent Cisco Visual Networking Index report, mobile data traffic is set for a 108 per cent compound annual growth rate from 2009-2014. This will result in global traffic totalling 40 exabytes (40bn billion gigabytes). That’s 50,000 times the amount of data in the US Library of Congress.

These mind-boggling numbers alone will mean that as GPS-equipped smartphone usage takes off, applications that use the location information won’t be far behind. Mapping is perhaps the most obvious example - dynamically updating a map, centered on the user's current location, as the user moves around. More than useful when you're trying to find the nearest cashpoint in an unfamiliar area, a scenario we're all familiar with.

The impact of Web 2.0
Beyond mapping, a range of alternative location-based services are emerging, based around social networking, with applications such as Foursquare, Gowalla, and Brightkite. Rather than use conventional mapping information, they rely upon their user community to create locations - a bar or restaurant for example - where users can check-in and broadcast their whereabouts to other users.

Facebook has started to support location - its privacy policy has been changed to allow this. With the recent launch of Facebook Places, users can share their location information with their friends, or with everyone, if they choose to do so. Twitter is also beginning to support location information. Updates to the microblogging site can be tagged with the phone's location. Shortly, users will be able to browse tweets by location, or identify when people they follow are near them. With all these examples, it's important to recognise that the use of location is more than the simple adding of a feature. Location information will significantly change the way in which applications that support it are used.

Business benefits
But how will all this transcend to the enterprise space? The rise of the smartphone is already enabling new, business-focused, location-based applications. App developer match2blue currently runs interest- and location-based customer relationship management systems for its customers. The company recently signed a deal with Lufthansa Airlines to offer location-based community services to its loyalty programme customers. This will help Lufthansa communicate better with its customers to alert them to changes in flight schedules, upgrades and other news. It is also intended to provide a community environment for like-minded professionals to find and meet each other. Similarly, retailers such as Starbucks are launching location-based loyalty schemes, which provide bonuses to customers who check-in to their stores.

The privacy issue
This is all great, but there is a skeleton in the closet: privacy. Indeed, there are many legitimate issues when it comes to privacy with LBS, and many people would have good reason not to publish their physical location in the public domain.

However, I believe the problem of creating policies on whom and what to share location information with is solvable. Location is just another piece of private information, and the popularity of existing social networking applications shows that people are willing to share such information with people they trust, whether in a social or business context. Privacy policies will need to evolve and adjust to deal with location information appropriately, but evolve successfully they will. Which then just leaves the question troubling the operators, which is: how do they get their slice of this potentially lucrative location based pie?

Mobile operators can benefit from LBS, if they choose to get involved. With the consumer having more personalised features and increased communication convenience, operators can potentially address discrete market segments, based on different service portfolios.

There are several operators worldwide who are currently offering location-based services for a wide range of applications. But the increased uptake of third-party applications has meant that the number of market players has increased, thus removing the operator from the traditional mobile value chain. So, with this field generating healthy competition, operators need to have a better understanding of the market. These days, it’s not about just the operator but about how the whole system is going to benefit individual consumers and businesses.

In summary, the smartphone is here to stay. Soon, location-based apps will be as commonplace as SMS, and we’ll wonder how we ever survived without them. The potential upside for businesses that successfully ride the LBS wave will be huge.

Dr Giles Nelson is deputy CTO of Progress Software