Location-based services to double in 2009

Gartner predicts an increase to $2.2 billion globally

Worldwide consumer location-based services (LBS) subscribers and revenue are on pace to double in 2009, says Gartner.

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.

“The LBS industry has matured rapidly in recent months through a mixture of consolidation, improved price/performance of the enabling technologies and compelling location applications,” said Annette Zimmermann, senior research analyst at Gartner. “Factors driving the increase in the next year or so include higher availability of GPS-enabled phones, reduced prices and appearance of application stores.”

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.

Gartner analysts said LBS market dynamics vary by region. For example, North America is the largest market due to mobile carriers’ strong efforts in navigation services and family-safety solutions. In Western Europe, navigation is currently the most used application, followed by local search and “friend finder.” There is still no significant uptake of safety applications.

“The competitive landscape will change and most mobile carriers need to alter their approach toward offering LBS and dealing with developers,” concluded Ms Zimmermann. “Subscriber growth will hinge on “free” – disregarding data charges – services.”