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Are Location-Based Services Ready to Turn the Corner?

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Despite reports that location-based services are far from mainstream, new research by Microsoft (s msft) suggests the technology is gaining adoption and may be poised to follow in the footsteps of the ATM, which took some time to dispel safety concerns on its way to being universally used. In an online survey of 1,500 people around the world last month, 51 percent report having used a location-based service including 50 percent in the U.S.

That’s considerably higher than what the Pew Research Center found when it reported in November that only 7 percent of online U.S. adults use location-based services regularly. The Microsoft study suggests that usage is growing as people learn about the benefits of location, with 94 percent of those who use LBS considering them valuable. The top uses for LBS are GPS navigation (70 percent), weather alerts (46 percent), traffic updates (38 percent), restaurant reviews/info (38 percent) and locating nearby convenience services (36 percent).

Respondents cited concerns about privacy as the main reason preventing LBS adoption. The biggest concerns about LBS revolve around sharing location with unspecified organizations or people, or location sharing without consent. Respondents were also worried about loss of personal information or identity and overall loss of privacy.

As consumer LBS adoption grows, the benefits to businesses are significant, according to the survey. Almost one in five respondents report seeing a location-based retail ad, and of that group, 46 percent said they acted on the ad by visiting a store or making use of a coupon. The U.S. appears to be one of the most welcoming markets for LBS, with the highest frequency of usage (55 percent), the highest likelihood to take action after seeing a location-based ad (55 percent), and the highest percent of people who see LBS as valuable (99 percent of users).

These numbers may seem high compared to previous reports. But if true, this study suggests LBS is making progress, especially as it solves practical concerns for people. Interestingly, only 18 percent of users use LBS for social networking and 10 percent for gaming. Those could be more popular uses down the road, but right now, people seem to see the promise of LBS in helping them get through their day and finding discounts and coupons. That’s why it makes sense for services like Foursquare and other location companies to focus on discounts, recommendations and other practical features.

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13 Responses to “Are Location-Based Services Ready to Turn the Corner?”

  1. I don’t disagree that Microsoft’s definition is appropriate and that we should be thinking broadly about how to put location to use, however we can’t conclude that the *location SHARING services* that the Pew study was focused on have reached widespread adoption based on the Microsoft study.

  2. Something that provides you a SERVICE (directions) BASED on your LOCATION, is by definition, a Location Based Service. Therefore, Microsoft is correct in including that and Pew is not if it does not. And ther is no indication that Pew DOESN’T include GPS. There is a big difference with “have ever used” and “use regularly”

  3. one thought: the “check-in” forms the foundation for how most LBS’s are executed, whether for coupons or promotions or for other commerce-related apps. To the comment on GPS — GPS is not a LBS any more than NFC or WiFi is an LBS, really. Until we have a standard for checking in that allows advertisers to reliably and precisely target their marketing spend, commerce-based LBS will be a challenge. Fortunately there is a clear path to arriving at a check-in/check-out standard outlined here

  4. There’s a world of difference between, “I’ve used a GPS” or “I’ve searched for a restaurant review on Google Maps” and “I use foursquare all the time”. It’s like the difference between, “I read the paper online” and “I tweet every day”

    The demographic profile of people who use our ekit Travel Journal is very broad, but I think there are likely to be more people who are willing to share coarse location information about their holiday, than are interested in sharing detailed location information in their day to day life.

    I won’t be surprised to see lots of growth in services that use location (particularly with smartphone penetration growing), but much slower take up of services that _share_ location.

  5. I agree with Alexa, I don’t consider a tool such as navigation to be inherently LBS. It’s navigation 2.0 – where the user explicity *interacts* with his location and the services available that it becomes LBS as we (should) know it today.

    That latter adoption curve remains to be seen, IMO.

  6. I wonder how Microsoft is defining “location based services” compared to Pew. From the list of most popular uses, it seems pretty broad. GPS navigation? My dad, in his 60s, uses maps/local search on his Blackberry and car, but that by no means reflects on his propensity to check in or share location or look for location based deals.

    Not that thinking broadly isn’t helpful — as perhaps thinking about the “location based” services the mass market DOES regularly engage with could broaden our thinking about the opportunity space — things like wifi hotspot landing pages and hotel kiosks and TVs are “location based” in that sense.

    But I wouldn’t necessarily draw the conclusion that LBS as we Silicon Valley types think of them have saturated the mainstream quite yet.