Blog Post

Watch out for (ongoing) LBS Hype

There’s yet another report on location-based services from the offices of ABI research this week, stating that 20 million cell phone subscribers in North America will be using “personal locator services” in 2011 — that’s up from 500,000 this year, they say. Whoah, that’s a pretty big number! Personal locator services are the much-hyped social mobile GPS services applications like Helio’s new “buddy beacon,” startup Loopt or some of the carrier’s kid-tracking services.

These services are the most fun to discuss and write about, but likely won’t make half the revenues that mobile navigation or business-based mobile GPS applications will generate in North America. They are interesting services nonetheless, not necessarily because of their potential to make money, but because they will be more about helping carriers differentiate and creating a buzz for a carrier brand — that’s why the non-traditional carriers Boost and Helio are the first ones to push “friend finders” in the U.S.

In Japan and Korea, where mobile friend finder services have more traction, carriers found around $3 was an acceptable subscription rate for a friend-finder service. Loopt will charge $2.99 per month to use the service starting in 2007, and they say they have already brought in 40,000 users over Boost during the free trial. Three dollars is not really enough for a carrier to make a lot of money just through subscriptions (maybe decent for a startup), but a nice thing to differentiate a brand.

That’s why the more traditional carriers haven’t been falling all over themselves to offer $3 friend finders. Plus the privacy concerns involved. “Family finders” or kid-tracking services, can manage to charge more, around $10, by appealing to parents fears of knowing where there kids are at all times.

For some reason ABI is particularly bullish on the Helio service, though we’re not sure why:

“Helio’s Buddy Beacon is going to be very popular,” says ABI Research senior analyst Ken Hyers. “It’s innovative. This is the first service of its kind in North America.”

Mark Jacobstein, Loopt’s EVP Corporate Development and Marketing, says Loopt’s service was out before Helio’s and Loopts 40,000 users are already more subscribers to their service than Helio has total subs.

6 Responses to “Watch out for (ongoing) LBS Hype”

  1. Jesse, you’re absolutely right, but why is there no way to make it move faster? There are so many interesting, useful, wonderful LBS apps that want to be developed, but the monopolistic telcos seem like they’ll be dragging their feet for years.

    It’s driving me crazy. Who’s going to be the first to step up?

  2. Jesse Kopelman

    Shawn, unlimited always rubs telcos the wrong way. To them, every application is a separate paid service. Remember these people used to charge you a reocurring fee for the privilege of having touch-tone dailing back when you had to buy a landline phone from Ma Bell. Eventually reality will seep in and they will offer exactly the service you describe, but not before dragging their feet and missing out on lots of revenue.

  3. I don’t think paying for individual LBS services is going to foster growth and innovation. What i’d like to see is a flat rate from the carrier that will enable LBS over the mobile web for any site with user consent. That way the users can try out services without having to pay every time and the carriers can keep the flat rate for themselves. The application vendor would then either make they’re money via ads and charge for premium services if the user signs up.

    I’d rather pay for functionality that can be used in many forms rather then a specific service. I can get “unlimited” data from the carrier, why not “unlimited” LBS.

  4. $3 for a carrier that is generating $25-30 ARPU for a prepay subscriber (or even say a person that is part of a family service) is a pretty nice bump. Margins are high on these LBS kinds of service.