Consumer LBS market will more than double in 2009

Worldwide consumer location-based services (LBS) subscribers and revenue are on pace to double in 2009, according to Gartner, Inc. Despite an expected 4 per cent decrease in mobile device sales, LBS subscribers are forecast to grow from 41.0 million in 2008 to 95.7 million in 2009 while revenue is anticipated to increase from $998.3 million in 2008 to $2.2 billion in 2009.

Gartner defines LBS 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. Examples are services that enable friends to find each other, parents to locate their children, mapping and navigation. Location-based services may be offered by mobile network carriers or other providers. They are also known as location-aware services.

Gartner predicts that advertising-based or ‘free’ LBS (disregarding data charges by mobile carriers) will gain more traction as users adopt it as a way to limit costs. Mobile carriers that stick to the current predominant business model of charging users $5 to $10 per month plus data plans will experience high churn rates as users will look for free alternatives. In North America and Western Europe, the share of users taking advantage of free services is approximately 10-15 per cent today and is expected to grow to 40-50 per cent in 2013.

Gartner expects more compelling and useful applications and services to come to market in the next 12 to 18 months such as digital coupons to be redeemed in a nearby shop and points-of-interest search services. Smaller niche players will survive in local markets only when they have an established user base and unique offering that larger players cannot compete with. Other players will be acquisition targets for larger vendors.

Consumer Location-Based Services, Revenue Forecast by Region, 2008-2009 (Millions of Dollars):

Region

2008

2009

North America

327.2

713.7

Asia/Pacific

327.1

607.4

Japan

268.8

524.7

Western Europe

69.5

303.5

Middle East

4.1

22.7

Eastern Europe

0.2

13.6

Latin America

1.2

12.7

Africa

0.1

2.8

TOTAL

998.3

2,201.1

See press release here.

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