Location Trends Over The Next Five years

1. Strategy Analytics
Collision Course: How will the Location
Market Evolve in the next 3-5 years?
David Kerr
Vice President, Global Wireless Practice
dkerr@strategyanalytics.com

2. Agenda
Where are we today?
Major issues impacting location services market
On portal to off portal – who has the upper hand?
Monetization strategies & challenges
LBS users & revenue flows
Conclusions
www.strategyanalytics.com 2

3. Custom Insights to Support Client Business Planning
Connected Home RF Components
Defence
Devices Systems
Multiplay
Networks GaAs
Advice Services
Digital Wireless Handset
Media Work Components
shops Proprietary Strategic
Automotive Consulting Advisory
Multimedia Insights Wireless
Enterprise
for Reports
Navigation Projects
Success Emerging
Automotive User Markets
Electronics Experience Smartphones
Consumer Bench Best Wireless
Energy marking Practice Devices
Virtual Worlds
Wireless
Tariffs Media
www.strategyanalytics.com 3

4. LBS Market: Current Status
Global LBS Revenues 2009 - $1 billion
People Tracker
6% Search
2% Other LBS
Map Data Overlay 4% • LBS has been over–hyped in the past
1%
• CDMA markets more advanced than GSM
Mobile Maps
1%
• US carriers controlling LBS
• Revenues dominated by TBT Navigation:
Pedestrian TBT Nav.
3% • Navitime: +4 million subscribers (July 09)
In Car TBT Nav. • NIM: 3.5 million licenses end 2008
83%
• Telmap: 400k paying customers (2Q08)
• Other LBS contribute to <20% of revenues
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5. Opportunity for LBS is Expanding
GPS Pene tration of Handsets Sold (% )
80% GPS on handsets set to
70% expand significantly
60% • GSM markets
50% • WiFi
40% Cell Tower databases
30% • Google, Skyhook,
Spotigo, Nokia
20%
Application Stores
10%
• Off portal
0%
distribution
07
08
09
10
11
12
13
14
20
20
20
20
20
20
20
North America Western Europe 20
Asia Pacific
Central & LatAm CE Europe Africa Middle East
Total
Source: Strategy Analytics Global Wireless Practice Jun-09
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6. GPS Beyond the Wireless Handset
Non Mobile Phones devices
250 offer GPS Opportunities too
• MIDs and Netbooks
200
• Cameras
Shipments (m)
150 Connected PNDs and Other
Devices Emerging
100 • WiFi and Cellular
50
• 23% of PNDs connected in
2014
0 • 15% of cameras WiFi in 2014
GPS offers good combination
07
08
09
10
11
12
13
14
20
20
20
20
20
20
20
20 technology
Digital Camera Portable iPod/MP3 Player
Portable Media Player Mobile Internet Device (MID)
• robust technology, next
Netbook Portable Nav Device (PND) generation development
limited
Source: Strategy Analytics Digital Consumer Practice May-09
• $0.50 cost point in in
www.strategyanalytics.com mainstream handset markets 6

7. Other Consumer Market Drivers
Monthly Data Plan Adoption as a Penetration of Total Cellular Users
monthly data plan penetration of cell. users
35% Consumer data package adoption
30%
• Rising mobile data adoption
• Mobile browsing, access to social
25% networks e.g MySpace, Facebook,
20% email
(%)
‘All you can eat data’ plans
15%
• iPhone model has been catalyst
10%
• Japan leads, NA and Europe strong
5% Increasing consumer use of
0%
application stores
2008 2009 2010 2011 2012 2013 • Apple, Android Market and Nokia
Ovi Store
W.Europe N.America C.E.Europe CALA
APAC MEA Japan • +60% Apple users and +50%
Blackberry users downloaded
Source: Strategy Analytics ‘majority of their apps for free’
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8. Consumer Interest in LBS
US Interest in Location Enabled Services
Sports Tracker 16%
Social Apps
Time Tables 20%
Picture Geo-Tagging 21%
Friend Finder 24%
News 24%
Business Search 36%
City Guide 37%
Practical Apps
Car Locator 39%
Traffic 41%
Weather 43%
Maps 49%
Routes 53%
0% 10% 20% 30% 40% 50% 60%
interest (%)
Wireless Media Labs, End-User Survey, July 2009 www.strategyanalytics.com 8

9. Power is in the hand(sets) of consumers
•Operator
Consumer •OpenNetwork
internet Publisher IP Owner
Operator
•Handset
manufacturer
services
• Carrier walled garden approach breaking down – GPS and cell tower
databases opening up LBS
• Who has the upper hand?
– The operator has an important relationship with the consumer
– Internet players have the brand
– Handset manufacturers can integrate access
• Consumers have more power than ever before
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10. Mobile LBS Competitor Positioning
Strong competition within LBS apps retailing and own LBS applications
Role Within Location Services
Location Acquisition Retailing LBS Own LBS Apps
Internet
Companies Google MyLocation Extend internet apps to mobile
Operators
Network location data Portal, app stores White label premium apps
Handset
Vendors Enabling GPS, location APIs App stores & on device Nokia
PND
Extend navigation to handsets
App
Developers Focus on own LBS apps
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11. Who Will Win?
Operators remain a strong player in LBS as they leverage their strengths:
• Preinstall, bundle and zero-rate own applications
• Developing own app stores and take share of billing revenues
Handset vendors increasingly important for LBS distribution:
• Application stores & device integration
• Preinstall own or partner applications – e.g. Wayfinder and Sony Ericsson
Independent provider with strong brands will gain traction in mobile:
• Strong brand recognition e.g. Google, TomTom
– Smaller players without brand likely to struggle
• Branded players good partner for operators and handset vendors
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12. Smartphone App Stores A New Route To Market
Growth in LBS availability though application stores has been impressive:
• 2.8k location aware applications in Apple App Store
• 400 location enabled apps in Android Marketplace,
• 23 location enabled apps in Nokia Ovi Store.
• Operators typically offering a handful of location enabled applications.
Company Application Type Pricing Model
Networks in Gokivo Navigation & $0.99 application download with $9.99 per month for voice
Motion Local Search guidance through App Store.
Intermap AccuTerra Outdoor Terrain $0.59 per application with additional map bundles purchased
Maps in application through App Store
uLocate Where LBS Aggregation Free application available through App Store, App World and
for Palm Pre.
TomTom TomTom Navigation £60-£80 for a lifetime user license.
Yelp Yelp Local Search Free. Internet model based on advertising.
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13. Off Portal Application Stores Gaining Upper Hand
App Stores: Volume Market Share 2008 - Global App Stores: Volume Market Share 1H09 - Global
Handango, Android, 3% RIM, 1%
2%
Handango, Palm, 1%
Nokia Stores,
3%
9%
Nokia Stores,
Get Jar, 10%
11%
Operators,
Get Jar, 12% 40%
Apple App Operators,
Store, 12% 67%
Apple App
Store, 29%
Source: Strategy Analytics
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14. Clear LBS Applications Opportunities Emerging
500
450
400
350
sers (m)
300
250
LBS U
200
150
100
50
0
07
08
09
10
11
12
13
20
20
20
20
20
20
20
In Car Navigation Pedestrian Navigation Maps
Map Data Overlay People Tracker Other LBS
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15. Show me the money –
Pricing varies by application
Subs A la Carte Rental Ads Free
Maps/
Routing Nokia, Google
Intermap Vodafone, Orange
Navigation
(TBT)
Nokia TomTom, Verizon locationet,
Garmin Wireless Skrobbler
Social
Location
Loopt, Where, GyPSii Loopt, Where,
GyPSii GyPSii
Safety
Location
VZW, AT&T, Sprint
Search
Yelp, Google Yelp, Google
Utility LBS
Verizon Wireless G-Park
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16. Monetization Challenges
Pricing options include free, freemium, a la carte, subscription and advertising:
– Subscription: Preferred model for carriers. However, adoption has been low and
willingness to pay is segmented.
– Free & Freemium: Ideal for driving downloads, promoting other channels and
awareness building. Nokia Maps a major example of this. Challenge to up sell and
provide value-add.
– A la carte: Low ($0.5-3.0) price points proving ideal for impulse purchase within
application stores. Not ideal for applications generating ongoing costs, e.g. TBT
navigation.
– Advertising: Currently nascent and experimental. Unproven on mobile.
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17. Other Pricing Strategy Considerations
Other factors to consider:
• Costs? People
TBT
• User segment? Tracking
High Vehicle
• Competition/ substitutes? (Safety)
Nav.
• Willingness to pay?
• Frequency of use?
• Ease of use?
Value to user
Value to user
Med Routing
Local
Map Sports
Car Locator
Tracker
City Guide
Local
News & Search & Advertising
Low Buddy Finder
Weather
(Social)
City Local 5-20 meters
Location Accuracy
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18. Monetization Conclusions
Different monetization models will co-exist, but SA predicts:
• Increased bundling together of distinct location applications
improves value-add.
– uLocate’s WHERE application
– Google Maps Layers
• Use of freemium type models will gain traction. Hybrid examples:
– Gokivo - $0.99 for basic application with $9.99 per month for navigation
– Intermap - $0.59 application with additional charge for additional map
bundles
• Revenues from advertising will generate over $3.5 billion for LBS,
the vast majority through location enabled search.
– Advertising linked to location enabled search represents a strong proposition for
local advertisers.
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19. LBS Search and Advertising – the Hot Topic
• Location enabled search will drive LBS advertising
• But still need to prove effectiveness to advertisers
• Opportunities for local advertising
– Customised solutions emerging – Yelp, Sherpa, Cha Cha
• Growing momentum behind connecting mobile advertising with
location enabled services
– Navteq acquires location based advertising network Acuity (Sept 09)
– Alcatel Lucent (location and messaging platform) and 1020 Placecast (advertising
engine) launch a hosted service to wireless operators (May-09)
– Advertising network Quattro Wireless teams up with uLocate to deliver ad targeted
units into uLocate’s WHERE iPhone application
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20. $7.5B Global LBS Revenue Opportunity in 2013
8,000
Other LBS
7,000
Location Enabled Search
6,000
LBS Revenues ($m)
People Tracker/ Locator
5,000 Spending
Map Data Overlay
4,000
3,000 Mobile Maps
2,000 Pedestrian Navigation
1,000 In Car Navigation
0
07
08
09
10
11
12
13
20
20
20
20
20
20
20
• Location enabled search including advertising will emerge quickly: approach $3.6B in 2013
• Navigation and map applications will remain strong: $2.9B in 2013
• Monetization key challenge impacting rate of market development
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21. Revenue Flows in the Value-Chain
• Advertising
63% 37%
LBS APP • Subscription
Digital Content LBS Location
Developer/ LBS Retail • A la Carte
Maps Providers Platform Acquisition
Publisher
• Freemium
• TeleAtlas • InfoUSA • Google • Operator • uLocate • Operator
• NavTeq • ViaMIchellin • Nokia (Ovi Maps) • Skyhook • Wavemarket • Device Vendor
• Intermap • Inrix • TCS • Google • Nokia • D2C
• DeCarta • Google
• Retailing LBS will generate almost $1.3B (37%) by 2013: Operators and device
vendors in strong position to capture this opportunity.
• LBS publishers will generate just over $2B (63%) by 2013: Navigation the
primary opportunity. Revenue distributed across other value-chain partners.
• Search will drive location advertising revenues to reach $3.6B: Search giants
Google, Yahoo and MSFT well positioned.
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22. Conclusions
• Opportunity is large
– Navigation and search will drive total LBS revenue to $7.5B by 2013.
• Routes to market are changing
– Carrier wall garden around LBS has broken down
• Application stores are becoming a significant route to market
• Operators remain strong retail partner
• Monetizing LBS remains complex outside navigation and search
– Maps, Navigation & Routing will generate $2.9B
– Search will generate $3.6B by 2013, dominated by giants Google, Yahoo/MSFT
– Other categories hindered by lack of established business models
• Companies have to be responsive and nimble over the next
couple of years as the market matures to make the most of the
opportunity.
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