People have been saying, for some time, that the European cellular market is on the edge of finally embracing location based services (LBS); but, is this true?
Taking a quick look at the market, this would seem to be the case. All the pieces seem to be finally falling into place; including a portfolio of GPS-enabled handsets, mainstream services offered by major operators and the European Commission imposing cheap data roaming rates.
There is, however, one main issue that must be taken into the equation: LBS, at the moment, generally equates to Sat-Nav, for most people. In Europe there are just over 260 million light vehicles, at the latest count. The addressable market for Sat-Nav is therefore limited to this and by mid-2009 over 60 million PNDs will have been sold on the continent. Therefore, it is clear that the (cellular) Sat-Nav market in Europe will face some serious challenges in getting of the ground.
As Matia Grossi, co-author of a new report from IMS Research, says "Potentially, LBS is a very powerful marketing tool, but Europe is still in the very early stages and it will take at least 18 months before we can see any significant installed base of GPS-enabled handsets". By then, most people that want navigation capabilities in their car will already have a PND or a factory-fitted system. Furthermore by the time GPS-enabled phones reach significant volumes, a new generation of connected PNDs will be able to download real time, travel and traffic information (TTI), therefore eliminating the main competitive advantage that handsets have on PNDs in the Sat-Nav space.
Operators have started offering Sat-Nav solutions on €300-400 handsets, often subsidized through expensive contracts, with a €8-10 monthly subscription fee for the service. At the same time European customers are able to buy a PND for a one-off purchase of €100-150. In IMS Research’s opinion the latter is an extremely compelling offer.
Grossi comments on this "it looks clear that operators should start looking beyond Sat-Nav and seek innovative business models for leveraging the huge potential interaction between Web2.0 and LBS, as Google is".
Posted to the site on 20th March 2008
Posted to: www.cellular-news.com/story/30044.php