I've made many statements about location-based services here on this blog and in my books and often with a repeat of my "throw-away line" that of course location-based services will fail in the market.
Now that the iPhone 3G hype is strong and one of its new features is the assisted GPS positioning (a wonderfully accurate system by the way), there are very many new pilgrims arriving to pray at the altar of LBS (Location Based Services). I've seen many new reports and tons of blog postings and semi-credible experts comment on LBS. The business and tech press has been re-energized to revisit this much-maligned area. And some who never lost faith, have said - but yes, we always said you needed precision in LBS, and now with GPS on top phones like say a Nokia N95 or N82 or Apple iPhone 3G - now we can do LBS right, and the customers will love it and use it and the money will finally come.
This will not happen.
I hate to burst this bubble, but there is now so much hype around LBS, that I have to step in with a major word of caution. Please please do not build your business around LBS as its primary element. Yes, sometimes location information can add value to your service. But if you make the location positioning as the primary benefit of any mass market service, your service will fail in the market place.
I am very serious about this. Mass market services will not survive if their primary benefit is based around positioning, and having assisted GPS and near-perfect pin-point accuracy will not fix the issue. If your business is currently built around an LBS concept, please trust me that much, that you read this essay and re-consider.
TOMI AND LBS
So first why should you care about me and my view. Fine, we are a well-trusted and well-read blog on mobile-related topics and yes, once Tomi Ahonen was the head of Nokia's global telecoms consulting unit. Fine. Lets see how well I know this space. My first book. Services for UMTS, on mobile services - a global telecoms bestseller in 2002 - was not only the first book published about mobile services, it was the first book to cover location-based services, and has more than a full chapter on LBS and several dozen actual LBS service concepts outlined. My second book, m-Profits, a global telecoms bestseller in 2003, also had also more than a chapter on LBS. I developed the mobile services short course for Oxford University around these books and we featured LBS prominently there. Its not that this Tomi T Ahonen started to think about GPS a few months ago; I have been quite legitimately one of the world-leading authorities on LBS for most of this decade. I really know this stuff.
So lets go back. In 2002 this is what I wrote expressly about location information when discussing "movement" as one of the attributes of mobile services and applications:
"Location will often be an integral part of the service to the point that without it the service would not exist. Positional information is one of the key knowledge factors that Mobile Internet operators will use to add additional value to their mobile service offerings."
I am sure that is a mouth-watering endorsement for any LBS product manager or business development executive today. It certainly echoes many current statements coming from the West Coast of America. But that was written in 2001, when almost no LBS services had launched commercially. Now, lets see how I phrased it in my follow-up book, that was written with much actual market insights from early LBS services hitting the market. This is my thought on positioning on the same Movement attribute from my follow-up book m-Profits:
"Positioning rarely provides direct benefit to the user, unless the person is totally lost and wants to know where he is. Nevertheless, positioning can be used to guide and to provide assistance in finding friends and colleagues for example in a crowded place."
This was a change in my view, over just about one year in my understanding, from the pure theory view - before commercial launches - to the practical honest analyst's first view after dozens of the concepts I had outlined in my first book had now launched and were not succeeding in the market place.
Understand please where I come from. I went on record in my first book to state that positional info was a key factor, and so much an integral part of mobile services that they would not survive without it. So once I have believed whole-heartedly in this myth. I devoted more than a chapter for all kinds of LBS services. Trust me on this - I was a self-employed consultant in 2002 when the reality started to hit in. It would have been in my interest to find ANY silver lining on the LBS cloud, any slightest bit of it, for my second book. I had said positioning was a key factor and that many services would not survive without it. For me to shift this dramatically in one year - I had to have heard time and again. And time and again. And again. And again, that every one of the early LBS services was failing in the marketplace. Every one of them.
So already in my second book I turned cautious about LBS, and said "positioning rarely provides direct benefit". I saw the inevitable facts on several continents, on every concept I had outlined, failing. I have to be truthful to my craft, and report the facts, even if that means I was wrong in my book. Trust me I did not WANT to write that in m-Profits. But I did. And since then I have repeatedly said whenever discussing mobile service creation - that Movement the attribute (one of the Six M's theory, the industry-standard service creation theory for mobile apps, developed together with Joe Barrett of Nokia and Paul Golding of Motorola) has several factors and positioning is only one of them. And focusing on Movement alone, tends to lead to an over-emphasis of LBS. An over-emphasis of LBS.
LBS WEATHER TRACKER, LBS FRIENDS FINDER, LBS DOG TRACKER
We as an industry somewhat learned that lesson (in very costly launches and trials) during this decade in most leading mobile markets, with Italy launching the LBS based tourist guide in 2001 to help you know which church or bridge or statue or fountain you are near - "you are not near any historical landmark" it will tell mobile phone owners if they request the service in the woods for example. I was talking to the product manager of an operator who testing their soon-to-be-launched friends-tracker in 2001 and had his wife's phone on it (and his wife did not know) to see when she was shopping. This is not a new idea! An Israeli friend of mine said in 2002 that the first killer app for LBS is not the child-tracker or wife-tracker, it is the mother-in-law tracker - wouldn't we want to know when our mother-in-law is coming for an un-announced visit?
We had the French launch the LBS based doctor service making house calls in 2002. We had the Finnish hunting dog service - track your hunting dog via LBS (GPS) collar in 2003. The Japanese offered the haunted house finder in 2003 and in Cambridge they had an LBS based virtual treasure hunt in 2003. We had the Germans offer the personalized weather service - how long does this rain last from 2002 - individual radar-based rain cloud tracker with pin-point positioning to where you are. The Germans later added the real-time allergy warnings to the personalized weather (the direction of the wind, and allergen warnings, based on pollen counts, and your personal allergies - certainly that must now make it a killer application. No. It has 100,000 registered users several years after launch - in a country of 80 million people. Every conceivable LBS service has been tried - and failed or only very weakly adopted - as a mass market service.
There are many niche apps, most of all in the vehicle, parcel and employee tracking areas. Yes. But for mass markets, please, any concept you can think of - I've already seen it written about, and launched commercially - and usually to dismal success. This cool GPS maps (Google maps etc) guidance feature we now have on say the N82 and the iPhone 3G. Nothing new about that - they had this in South Korea back in 2006 on Samsung SPHS 1100 phone. Incidentially, to show how much I've moved beyond LBS, my fifth book Digital Korea has only one page devoted to LBS.. This is NOT our big opportunity when we enter the vast and profitable eldorado of mobile services.
FAILED IN JAPAN
So, maybe Tomi is the eternal pessimist and has some personal grudge against the LBS industry? Yeah, perhaps this industry does have promise after all. So let me give my clinching argument. When I heard this, I personally admitted, LBS is not ever going to fulfill its promise.
Japan. An amazing country. In Tokyo - an enormous city where it takes you 3 hours to take the express train from one edge of the metropolis to another. First time tourists are always bewildered by the sheer size of the expanse, the immense scale, how enormous amounts of time have to be allocated to move from "our hotel which is quite near".. So. Here is the really nutty part. The house numbers are not in numerical order on any given street! Yes. This is true. On any given street you might find house number 17, followed by 22, then by 5, then by 61, then 18, then 44, then 131. There is no logic. Not odd/even logic. Not increasing numerical order nor declining numerical order. No pattern (every other number or doubling the previous number or whatever). They are not based on the block, as many American addresses are. Nor are they based on the crossing street number as in some places. No. There is NO logic. Taxi drivers will go to the right street, and then just cruise slowly up and down looking at literally every house number until they discover the number you are seeking. This is why in Japan people will always give landmarks, it is near the MacDonalds etc..
So. If ever there was a city where we NEED location-based guidance, it is Tokyo. And yes, KDDI was among the worlds' first mobile operators to launch LBS guidance and mapping in 2000. The system has gotten progressively better with fantastic guidance and info and services to it. Today there are dozens of maps and guidance and navigation systems, including full 3D renderings of all of Tokyo's main districts, so you can look at the building on the phone, and compare it to the view you have, to see is it the building you want, etc. We reported here just a few days ago, that they have such features as "give me the route that has least steps to climb" or the route with most overhang and inside routes to avoid the rain etc. The world's most advanced location-based mapping and guidance system, with pin-point accuracy, and 3D maps. This in the country with the most advanced mobile internet, and the biggest need for guidance!!!Surely it must be a hit today? No. They are not mass market hits.
When we get a hit service - like we reported here on CDB a few months ago, about the Japanese innovation of Otetsudai Networks, the location-based short term work finder - that is primarily a work finder (or temporary worker-labour finder from the view-point of the prospective employer), where LBS is a minor additional benefit. The service would work just fine without LBS, but its better with LBS. The service is not built to be an LBS service, it helps match temporary work offers to people with sudden free time, as I happen to have this morning in Hong Kong when my meeting got moved and now I'm blogging...
If LBS services will not work in Tokyo, where even the house numbers are not in numerical order - and where today more than half of all internet users access the web on their mobile phones - then, it should be clear that the EVIDENCE suggests that this Tomi Ahonen is right - mobile services will not thrive if built on LBS principles. LBS is an additional extra. We have the Six M's to build mobile services, and Movement is certainly one of the Six M's, but it is not the most compelling attribute, by any means. And even Movement itself is far more than positioning...
So yes, if the evidence suggests LBS is not the key to big killer applications, then why not. Ha-ha, now we get to the meat of the issue. Yes, I've asked this question hundreds of times myself in 2001-2003, and have been answering those questions myself since 2002... I think I know most of why.
One. We are rarely lost. Think of the normal adult employed person. Not you and me, high tech specialists who may jetset around the world, but the average working person. A secretary at an office, a factory worker, a waitress at a restaurant, a nurse at a hospital, a teacher etc.. Average normal workers all around the world. Every one has a mobile phone today (all employed people in the western world now have mobile phones, and most of the economically viable population in the developing world have a mobile phone).
But how do they move. Almost every morning they take the exact same route to work, using the same method. The bus, the tram, the subway or train; the car, a bicycle, or perhaps walk if the job is close to home. But the factory or office building or hospital or school - the place of employment - did not suddenly move last night. It is the same place for years (we may change jobs far more often than our employer moves to a new building). So, on our morning, we have no need for guidance (except perhaps, for some car drivers who have traffic issues, fine, a congested route indicator is a good service yes, but not a mass market offer - not enough commuters in traffic when calculated globally. Yes, perhaps Manhattan or Los Angeles, but not in the majority of the USA which is, after all, the suburbs or small town USA etc..)
Same for coming home. Here we have some variety, some days we take the shortest route home, other days we go do some grocery shopping, etc. Some days we go out to have some drinks after work with mates from work or meet up with other family or friends downtown, etc.
And if you say "but the kids" - same story again. They go to school in the morning (no deviation) and most days they go to familiar places on their way back home, or in their evening play with friends. The familiar park for football, the familiar Burger King, the familiar cinema, the familiar ice cream parlour etc. Kids do the same, most days, most of the time, they are in familiar places on a routine. Perhaps more variety in their routines, but then, again, they tend to roam around in small groups, where one of the group knows where that cool new store is with the wild skateboarding tee-shirts etc..
GO TO FAMILIAR PLACES
Now, comes the second part. Almost always, almost always, in our home town, when we don't go directly home - we go to familiar places. The favourite pub or bar or cafe after work; the favourite shop or store or shopping mall near our home; or the same address where our brother has lived for the past seven years.. We are not "lost" during a typical week, not once. We may be "lost" briefly, perhaps once per month... and then almost always we knew of that beforehand, and we had OTHERS with us, who knew where we were going.. So if we go to check out the new Spanish restaurant that opened down town, and don't know where it is, the person we are going with, most likely does know.
But then the second big lesson to understand. We don't "find ourselves lost" most of the time. Even if we go to a totally unfamiliar place - we tend to know this beforehand, and we prepare. We take out a map (if we are men) or we ask our friend for instructions how to get there using landmarks (like women, ha-ha) but we plan beforehand to make sure we know where we need to go.
Most of the time, we are not lost. When we need to go to the post office, we know fully well, where is the nearest post office to our home, and the one nearest to our office, or along the route when we go home. We don't need to find a post office except when we move to a new home or job (excepting vacations and travel, I'll get to that later).
NOT USED DAILY
So. Now another insight. If a mobile service is used daily or weekly, it gets rapid adoption. If the service is used less often, it often strongly disappoints in adoption. Compare movies and parking. Both can be paid for by mobile. Both were launched in many countries in 2000-2001. Today in Estonia all parking is paid by mobile. In no country is anywhere near half of movies paid by mobile. If you think parking or Estonia is somehow an exceptional case, take public transportation. Helsinki Finland launched mobile ticketing as a trial for payments for their trams the start of 2002, and by 2005, 55% of all single tickets sold to trams in Helsinki were by mobile phone. In four years, 55%. If we use the mobile service daily or weekly, it can take off dramatically. If we use it a couple of times per year, it has a very hard time to gain adoption.
So. Where does this leave us. You want to do LBS based ads, LBS based games, LBS based child-trackers (of course parents would love to know where the kids are - but kids are not stupid. As we saw with the Disney MVNO and its child-tracker feature, if kids notice that a given phone brand or operator/carrier brand is spying on them - that phone - and that kid! - becomes toxic. NOBODY wants to be friends of the kid whose parents snoop on that kid...)
HOLIDAYS AND TRAVEL
Ok, then the final element. When we travel, go to vacations, and certainly then we need maps and guidance, don't we?
Again, the evidence is contrary to that. Yes, when we travel, we are more likely to need occasional guidance. But consider your last trip. When did you first pull out a map of Paris? Not in Paris when you were lost? No. You started to explore Paris when you booked your hotel online!! We start our journey to a new destination weeks or even months beforehand. If we've never been there, we buy a guidebook like Forbidden Planet or Lonely Guide to get to know that place. Yes, such a guide could - and should - and actually even is - migrate to mobile phones. But then we have far more value than "just positioning". Most of the time we may be in unfamiliar terrain but "not lost". We are inside a taxi cab, which knows where we need to go. Yes, it may be of interest to some nerdy map-freak (like myself) to know every moment where we are moving, is this taxi driver taking the direct route - but most people are perfectly happy to surrender their lack of local knowledge to that of the taxi driver, to get us to the museum, and then back to our hotel.
Even when we travel, we are not mostly lost, and when we are, we don't care. It is rare, that we need to "position ourselves". When we leave our hotel lobby for the nearby shopping mall, we ask the conscierge for direction.. We look at the hotel and on our way back from the shopping mall, we use the landmarks to get back to the hotel, or we may ask (well, of course men don't ask for directions.. ha-ha).
The worst part of travel and LBS, is that operators tend not to serve international traveller needs with LBS based tourist guides. And when they happen to do so, there often are severe international data roaming charges making them prohibitive, and then the perception by users that it is far too expensive.
A good example is the GPS mapping feature on my N82. Great. I love it (but I'm a maps freak). But - I am in a different country essentially every week and could use it every time. Except, that I need to download the local country map every time in every country - at hideous international data roaming charges. By the time I'm at the hotel and perhaps could use the WiFi of the hotel room, by that time my only need to navigate a given country has passed - I've found my hotel, I do my gig here, and fly out tomorrow, so its into the taxi and to the airport, no need to navigate anymore...
IF YOU BUILD IT, LBS WILL NOT COME
These LBS concepts are fantasies. Dreamt up by technologists, who pray to the altar of LBS, thinking simplistically, that if I only make it more accurate, they will come.
The customers will NOT come. Since 2000, I have discussed more than 300 LBS based service concepts in the public domain (among the more than 1,200 "Pearls" that I've shown into the public domain; my books have over 600 of them). I have discussed and debated and analyzed and tracked them since. They are singularly the biggest failure of our industry. The biggest failure. This has nothing to do with GPS accuracy. These concepts simply do not find a loving customer response.
Yes, we can do business/enterprise applications with LBS functions - they manage forests in Finland with GPS/GSM chips on every single tree - millions of trees tracked this way. Now, do these trees move about a lot? No. They tend to be planted down, so they tend not to move about a lot. Not until they are cut down. Then yes, they move once - on a death-journey to the saw mills on the beds of the wood-hauling trucks. At that time we get brief utility if one tree is accidentially headed to the wrong sasw mill, so for example headed to the pulp saw mill, when it was supposed to go to the furniture quality wood saw mill, but that is it. And trees live what 40 years... One use in 40 years. That is typical of LBS.
USE THE OTHER OF THE 6 M'S
We have six M's (Movement, Moment, Me, Multi-User, Money and Machines) to build services for mobile. Movement is but one of them, and from having run hundreds of service creation workshops and seeing them deliver hundreds of commercially launched services and applications, I know - and I always say this - that Movement is the least relevant of the Six M's. Moment, Me and Multi-User are all far more powerful attributes that can generate far more compelling and attractive services, that can deliver far more money for you. Don't focus and fixate on Movement.
Further, that Location/Positioning (GPS) is only ONE of the elements in Movement. Back in my second book M-Profits I aleady pointed out that "Positioning rarely provides direct benefit to the user, unless the person is totally lost."
We are mostly not lost. If we drive our car, then yes, there is good use for a mapping/guiding system - but that already exists, in TomTom and its clones. Nothing new here. And that model does not transfer well to pedestrians.
MAYBE TOMI IS WRONG..
Now one last bit of wisdom from the old consultant... I am old, and grumpy, and very negative about LBS. I am not pessimistic about all mobile services, I am very enthusiastic about for example mobile social networking and mobile advertising (but not the spam LBS ads). So I am not the "glass is always half empty" kind of guy. But yes, I once believed in LBS, very passionately, and have changed my tune. That should give my view more credence than the view of a random "expert" who has recently discovered this supposed opportunity and hasn't written extensively about it and engaged in countless debates in Japan and South Korea and Scandinavia and other advanced markets about LBS.
But, it is of course possible that I am wrong. I have been wrong many times in the past. I do not discourage you from experimenting in this space. Please just do not base the basic premise of your service on LBS.
As much as I am a pessimist about mass market LBS services, I believe a lot in niche LBS services (Long Tail and all that). And Movement is one of the attributes of MY theory on the 6 M's, and I still teach it, so yes, we can add value with LBS.
But if you do find true commercial success in LBS, please do tell me, I'll be happy for you, and celebrate it here at our blog and in my upcoming books. But so far, all the evidence suggests that LBS is driven by technologists in love with positioning technology, and it is an idea where a commercial opportunity for mass markets does not exist. Most of the time, most of the people, are in locations that they know perfectly well. If they are not lost, they are not willing to pay you to let them now where is the nearest cash machine or pizza hut.
UPDATE July 2009: I have taken 2 excerpts from my latest book to illustrate specifically LBS ads, what won't work and what can work.