Satnav, GPS, LBS: Where are we going?

Since its launched in 1978, GPS – the Global Positioning System – has become an indispensable aid to navigation around the world.

Developed and run by the United States Department of Defense, it is based on more than two dozen satellites in orbit, transmitting signals allowing GPS receivers to determine the unit’s location, speed and direction. GPS receivers need signals from at least three satellites to work out their position – which they can do to an accuracy of around 15m.

GPS costs approximately $750m per year in total; despite this, GPS is free for civilian use.

GPS is not the only system of navigation satellites; the Russians already have a less accurate version, and the EU is developing a system called Galileo which could be considerably more accurate. It won’t be ready before 2010, however, and even that;s optimistic given the history of delays in EU projects.

The world has become a remarkably small place, with people travelling nationally and internationally more frequently. At the micro level, there’s a lot of emphasis on finding the right local supplier or the best local entertainment. Consumers are demanding the ability to find out where they are, to find out how to get to where they want to go, and how to get the information they need when they get there. Satnav, GPS, location-based services – it’s boom time, and there’s a major opportunity here for mobile resellers.

The online channel is big in the UK, where web stores provide more than 10% of sales of mobile navigation devices (according to Canalys). Many buyers research online and a growing number do their purchasing online too; they’ll generally find the best prices, often a broad range of brands and products, and of course the convenience of shopping from home or office.

But there will always be the classic online objections – notably a reluctance to enter personal information and credit card details into a website form, plus the desire to see and touch. That’s particularly important to emphasise when the product is essentially visual (can the web demonstrate how good the screen is? How heavy the unit feels?)

For those reasons, an in-person sale is often easier and safer. “The fact that white-goods chains, motor accessory suppliers and online retailers currently dominate the market should not act as a disincentive to smaller retailers," says Mario Zuccaro of LBS specialist mobiles2go. “More and more GPS-based products are entering the market, each of which represents an excellent sales opportunity for small retailers looking to extend their reach beyond their existing customer base.

“Falling hardware costs also mean that margins of more than £100 can be enjoyed on some products, which is certainly an attractive prospect for small retailers that may not have the customer through-flow that large retailers enjoy."

Andrew Little, NAVTEQ Director and General Manager for Retail Marketing, is also sound on the touch-and-feel angle. “People want to be shown how the systems work and to ‘play with them’ before buying and this is, of course, never possible online and rarely possible in stores with dozens of dummy products on show and a reluctance to take products out of their boxes and power them up."

He also sees real advantages in the limitations. “With fewer brands in stock, it becomes realistic to have working models available for demonstrating to customers.

“By focusing on a few key brands and models, and taking the time to learn about them in depth, smaller retailers would have a clear advantage over those outlets choosing to offer such a breadth of products that it is difficult for staff to develop expertise on all of them."

Mobile phone retailers are well placed to sell MNDs (Mobile Navigation Devices) direct, both because of their location (typically in or near city centres) and because of their typical sales techniques – explanation, assessment, demonstration, discussion. That’s the view of Mario Zuccaro: “By educating their staff on the benefits of GPS and location-based services, smaller retailers can set themselves apart from national retail chains, motor accessory suppliers and online retailers, who are unlikely to be able to offer the same level of personal customer service and product expertise."

The emphasis on product knowledge is echoed by Leo Exter, marketing & communications manager EMEA for Mio Technology. What does the retailer have to do to compete effectively in this market? “Know and believe in the products you sell. Ensure staff know what they’re talking about. Be prepared to tackle customers that might have read scare stories about dirt tracks and trucks stuck in small villages. Focus on the fact that people can trust satnav devices if they set up the products to their needs. Listen to the client’s needs and based on this information select the right product for the client …"

MNDs also score simply because they’re another product line and one that is quite buzzy: they represent a way to get more consumers into the stores. The logical approach is of course to sell smartphones with on-board GPS navigation bundles, but standalone and transferable MNDs are also a reasonable fit with the business model – sourced via distributors, though obviously free of network contracts (no hassle, but also no extra revenue).

Canalys believes that the mobile phone channels will become increasingly important simply because more handsets and PDAS are including GPS. In the short term, the conventional in-car setup will continue to be the MND of choice for most buyers; but increasingly there will be a natural second choice in the form of the GPS-enabled phone. That applies especially for location-based services other than driving directions, so it covers everything from addressmaps and pedestrian directions to local searches and proximity-based advertising.

David Quin, Marketing Director for EMEA at CoPilot maker ALK, agrees on the value of pre-purchase advice to prospective customers. “People perceive that navigation is a generic term, and retailers can demonstrate that in fact there are significant differences between them – for example inclusion of real-time location tracking, speed of route calculation, driver safety."

Andrew Little of NAVTEQ is another who sees a real opportunity in the knowledge gap. “The ability to advise customers on software and map updates would also provide a competitive edge.  How old is the map data in each system?  When is the next update due for a given system?  Where can I get a software or map update? Which other countries are covered by this system?  These are all important questions which are often difficult for consumers to get answered in store or online."

To make the most of the opportunity requires a degree of investment, however – especially in training staff to understand and then sell the benefits of GPS and related services. Mario Zuccaro thinks small retailers should not be expected to take on this cost – “any mobile location based services provider worth its salt will offer as much training as possible at its own expense. For example, mobiles2go offers training, sales collateral and point of sale material to all of its retailers as part of the package. We also offer a full support service, which enables retailers to focus on selling the device, while the service registration, system setup and ongoing technical support are handled by mobiles2go."

Mio Technology’s Leo Exter points out that satnav can be a technical sell: “Use the resources a supplier like Mio offers you to increase the visibility of your products. We have point of sale materials that can effectively be used as aids to explain the products and their features and can be used as a sales tool."

Selling to business
The B2B option is clearly an opportunity for the mobile navigation market in general and the specialist mobile retailer in particular. Time and information are important to business: an MND can save time and provide relevant information.

A phone with GPS and navigation software should be the product of choice for the mobile business professional, who in theory will make much more frequent use of the device: the ability to navigate to any contact address or any appointment should be a killer app.
Combine voice with push email and navigation functionality, and you should have the perfect productivity tool for the busy white-collar professional.

But it’s not a straightforward issue.

For a start, more than 85% of the MNDs solid in Europe today are bought by individuals rather than companies, and the mass market option is the transferable device.

Then there’s the design and user interface. The device itself must have the form factor, battery performance, usability and styling to appeal to business users; some or all of those will be different in a product aimed at the mass market.

On top of that, larger businesses will delegate the selection and operation of MND systems to a procurement manager, often the IT manager. They will be looking at the cost of ownership, ease of deployment, upgradeability and scalability, how simple it is to support and manage.

Crucially, the channel needs to be able to sell the MND – not so much a product, more a relatively complex voice/data/GPS system and/or service – to the decision maker.

Still, David Quin of ALK thinks phone dealers can realistically target the small business market. “By combining a phone with navigation, small businesses can get dual use from a single piece of hardware, as well as being able to obtain the entire system with a mobile contract for less than a dedicated satnav system.

“The benefits of selling mobile navigation go beyond just meeting customer needs. Dealers can use mobile navigation as a way of encouraging purchase of high-end data-centric smartphones, which will generate increased usage and the potential for increased revenues accordingly."

ALK’s CoPilot Live mobile phone navigation also incorporates real-time location tracking and fleet management which enables businesses to view the location of their mobile team in real-time on the Internet, send them messages and even send new stops to drivers, replacing or adding to the existing itinerary. As Quin puts it, “All that is required is a phone with CoPilot Live".

The networks
Location technology in handsets is important because it is not just a feature – it can also be an important functional tool. Certainly it can provide turn-by-turn directions and help you find the nearest restaurant, but there is also potential for so much more. When you combine mobility, the Internet, and exact location awareness in a package smaller than a deck of cards, the possibilities really are almost endless.

Location technology is increasingly available in phones, either in the form of the precise positioning available with GPS or via the cruder triangulation provided in GSM cells. So the networks are doing everything they can to promote it and make money from location-based services? Er – not exactly.

It’s true that Orange has the Orange Location API that will allow a third-party’s product or service to identify the location of an individual Orange user (or rather, their handset’s location). “Location-based technology can be used to contextualise and enhance SMS, WAP, voice, MMS and video services to make them more relevant to the user," says Orange.

Orange itself has been running such a service for three years. Text the word “pub” to the shortcode and you’ll get a reply telling you where the nearest pub is. It’s powered by Webraska Mobile Technologies, something of a pioneer in GPS and LBS. The Orange “Find Nearest” service can also tell you where you are if you’re lost.

But Orange is a rarity: most of the operators have something similar, but nothing more advanced. And how often do you hear about them?

The networks have generally failed to innovate, and then they have failed to promote the services. Carriers are so obsessed with convincing subscribers how few dropped calls they have or how big their network is that they fail to bring attention to new technology such as location technology and few subscribers are even aware of what services are available.

The problem is that the networks are largely stuck in the mindset that they have to make incremental revenue from every service the subscriber uses. Instead they need to combine technologies and make the handset into much more than just the sum of the parts.

In the meantime, Telmap for one argues that the best way to make satnav services available to a mass market is through the mobile operator, rather than place the onus on the user to buy and install updated software or data. Oren Nissim argues that the network has a service relationship with the customer and so has the ability to offer new services (such as GPS mobile navigation) “in all kind of packages and models best suited to the particular customer".

He also points out the financial incentive: “a mobile navigation solution will help the operator to retain existing subscribers and attract new ones by offering the last word in value-added services with no extra investment in hardware or software.

“This will also help to increase ARPU, by giving subscribers more compelling reasons to use their phones."

The handsets
Separate GPS modules have been available for some time from the bigger names (especially Nokia), and Bluetooth connectivity makes them a reasonable wire-free proposition.

Bluetooth GPS add-ons aren’t too expensive, and fully featured navigation software is available for modern phones at reasonable cost – which in the case of Nokia’s Smart2go is zero (it’s a free download). Better-specified packages such as the market leader, ALK’s CoPilot, are often bundled with a GPS receiver.

But it’s still one more gismo to find, to attach, and then to lose. Most GPS devices are lumpy if not actually bulky, and you wouldn’t want to carry one around in your pocket alongside your mobile.

It’s neater and more logical to build the GPS functionality into the phone itself, provided the market exists – and we seem to be approaching that point now.

For a while back there, the number of handsets with a built-in GPS module were strictly limited. They hailed from specialist companies like Mio Technology and Benefon rather than the major players; and they were bulky and unlovely, thanks in part to the GPS componentry available at the time.

But GPS chips are finally getting smaller and cheaper, the buying public is being softened up by the near-relentless promotion of in-car satnavs, and the idea of GPS functionality in mobile phones is finally becoming reality.
The HTC P3300 (aka O2 Orbit and T-Mobile MDA Compact III) is the pick of the options for Windows Mobile.

On the Symbian front there’s the Nokia N95, which has GPS inside but also a better camera and better connectivity – 3G with HSDPA. At 3GSM, Nokia also unveiled the Nokia 6110 , a mass-market mobile phone with integrated GPS, easy-to-use maps, and full turn-by-turn navigation. (Most of the newer Nokias have some mapping software installed, but they do need an external GPS unit to pick up the signals.)

Also at 3GSM was the new BlackBerry 8800, which has built-in GPS and basic mapping and navigation in the form of the BlackBerry Maps application that comes with each device. To get more comprehensive satnav functionality such as spoken directions and 3D maps, RIM partners with companies such as Telmap.

ALK’s David Quin also points out that a phone-based satnav package can compare well on cost with a standalone. “Offer customers one of the several phone models with built-in GPS plus fully-featured navigation software like CoPilot Live. When offered with a contract, dealers are able to provide a complete phone/PDA/satnav solution for less than a dedicated or standalone system.

“Indeed it is even possible to offer a complete solution for free on some 18-month contracts."

And as he says, these phone-based solutions offer the same customer experience as a dedicated satnav –  “It’s more than just a gimmick".

The real kickstart for GPS-inside handsets might come from a EU requirement for high location accuracy for mobile emergency calls. This is already a standard requirement of cellphones in the States, and similar requirements have been announced in Japan. Around 2010, the EU’s Galileo positioning system should go live, and it’s likely that new regulations for Europe will be advanced at that time. (Or maybe a bit later – Galileo has already been delayed a couple of times.)

Galileo is a satellite positioning system that aims to provide a higher precision to all users than is currently available through GPS or the Russian GLONASS system.

“Galileo is the most advanced pan-European technology project to date," notes André Malm, telecom analyst at Berg Insight. “Obviously, there is going to be a strong political interest within the EU to demonstrate the benefits of the project for the public as quickly as possible. A future EU directive calling for Galileo positioning of all mobile emergency calls would at the same time improve public safety and create a mass market for European high technology."

The applications
There are also basic commercial pressures and user demand. Berg Insight reckons that revenues from mobile location-based services in the European market will grow by 34% annually to reach €622m in 2010, with conventional navigation accounting for only half the total.

Child-finder applications are regularly mentioned and have immediate, obvious value to the customer as well as recurring revenue for the provider. An interesting extension is geo-fencing, creating a theoretical boundary around say a home or school such that a text is automatically generated if the child has arrived safely or if it strays beyond the line.

In business, workforce and fleet management are the obvious applications – finding out where people and vehicles actually are, and routing them to their next destination.

Location-based billing plans are another interesting application. Over a third of O2’s users in Germany have opted for the Genion service, which offers a discounted tariff at their home location. For this to work, of course, the handset has to be able to let the network know where it is. Right now that’s done quite crudely; in the future location based billing plans could be really quite sophisticated.

Top digital mapping company Telmap believes that mobile mapping is the kind of service that users will come to rely on having in their mobile phone. Says Oren Nissim, Telmap’s CEO: “Having the capabilities of mapping and navigation worldwide is a must-have for all mobile operators and mobile retailers if they want to succeed in the mobile marketplace".

There are limitations to what GPS can do, of course. It doesn’t work well indoors; it doesn’t work well in dense urban areas, especially when you’re surrounded by very tall buildings.
GPS will allow better accuracy when used with a kind of hybrid approach that involves a fallback to cell triangulation. Since that works wherever the phone can get a signal, it’s fine for cities. You still won’t get the kind of turn-by-turn information that takes movie action heroes through the corridors and hallways of a building, but even that is not entirely impossible.

GPS is still streets ahead of GSM-mast based triangulation in terms of accuracy. WiFi helps a bit, but it’s still cruder and of course you can’t guarantee that you’ll get a decent WiFi signal wherever you are.

The other practical problem is that GPS is a bit of a power hog. While GPS chips are getting faster at finding the satellite signals, it can still take several minutes for a satnav device to tune itself into the signals; so there’s a tendency to leave it on all the time, which obviously hammers the battery. Faster tracking, more economical processors and better batteries would all help.

• Accuracy is a critical issue. The satnav business understands the requirements of in-vehicle navigation pretty well now, including for instance the need to tell the driver to make a turn several hundred metres before the geographical location in question.
Increasing use of GPS-enabled phones changes the game a bit. Pedestrians need their turn instructions just a few metres ahead. And their needs are likely to be much more precise: the satnav information will have to provide pinpoint locations tied to specific point addresses.  

• Allied to that, more clarity will also be required. Simple A-to-B routing won’t be enough; the application will have to take road type into question – intelligently routing the pedestrian away from motorways and the vehicle driver away from rural footpaths, allowing the user to distinguish and express a preference either way on different types of routing.

• There’s also a need to accommodate user-contributed content. At its most basic this means enabling users to correct maps and then to offer location feedback – both time-related (the M40 is solid both ways, no spaces left in the multi-storey car park, the ATM on the High Street is out of cash) and more social (Kings Head pub is now much improved, A4193 over the moors offers great views, today’s special at your favourite restaurant is salmon and it’s excellent).  

• A richer POI experience is promised by some developers. This means a broader range of POIs, covering for instance more sports and entertainment venues and perhaps including short-term POIs such as city marathon or an art show. Some standardisation on POI icons would help, especially for urban maps that can get pretty cluttered with POIs. And it makes sense to present specific brand icons for commercial POIs like restaurant chains; these could perhaps be supplemented with extra information, for instance restaurant reviews or offers from merchants.

• They’re also looking to better graphics for mapping, for instance showing gradients and dips in the road, bridge heights, verbatim signpost displays (especially variable signing like motorway warnings), and other details.
As one industry player puts it: “Ultimately, maps will become interactive portals that enable users to explore and find their way around their worlds, according to their preferences".  
David Sym-Smith, Chief Marketing Officer for mapping specialist Tele Atlas, went on: “These maps are more than maps or simple navigation tools – they are windows on the world that enable users to find every place they want and need; explore and plan ahead; get the most out of every trip; and know their destinations before they even get there.

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