Navigation systems and services for car and pedestrian navigation can be divided into multiple categories. Car manufacturers offer factory installed in-dash navigation systems as standard or optional equipment on a majority of their models sold in developed markets. Drivers that want to add navigation to their existing vehicle can choose among a number of aftermarket solutions. Examples include in-dash navigation systems, Personal Navigation Devices (PNDs) and navigation apps for mobile phones. New device categories such as Internet tablets are also being equipped with GPS and navigation software. At the end of 2011, there were 340 million navigation systems in use worldwide, including an estimated 60 million factory installed and aftermarket in-dash navigation systems, about 150 million PNDs and an estimated 130 million navigation-enabled mobile phones.
Even though the share of new cars fitted with factory installed in-dash navigation systems will grow fast as prices decline, the actual penetration of in-dash navigation systems will grow slowly. The average age of vehicles in North America and Europe has grown to about 9 years and is even higher in most other markets. Aftermarket navigation solutions will thus account for a majority of navigation systems sold in the foreseeable future. Since the different solutions are tailored for slightly different use-cases, multiple navigation-capable device solutions can be expected to co-exist in the future. Many consumers are also likely to use more than one category of navigation capable device.
In many developed markets such as Europe and North America where the PND penetration is already high, the PND device category is facing increasing competition from handset-based navigation services and low cost in-dash navigation systems. Worldwide shipments of PNDs fell to about 33 million units in 2011, down from nearly 38 million in 2010. Berg Insight believes that PND shipments in Europe and North America have peaked and will gradually decline to about 7 and 6 million units per annum respectively in 2016. New markets in other parts of the world will only partly compensate for the decline in the mature markets. Worldwide shipments of PNDs are forecasted to gradually decline to 23 million units in 2016.
Increasing competition has already forced several vendors to exit the PND segment - either in the most competitive markets or altogether. There is also a consolidation trend among the remaining PND vendors. MiTAC has acquired the PND operations of Navman and the assets of the consumer product division of Magellan Navigation. Garmin completed the acquisition of Navigon in July 2011. United Navigation, which began operations in early 2010, has licensed the rights to use the Falk and Becker brands for navigation solutions. The PND market is now dominated by the three vendors Garmin, TomTom and MiTAC that together maintain a 75 percent market share. These companies have highly integrated operations ranging from hardware and software development to distribution. Moreover, these companies are now increasingly focusing on in-dash navigation systems.
Installed base of PNDs and active mobile turn-by-turn navigation users
(World 2010 - 2016)
The adoption of handset-based navigation apps and services is increasing along with the popularity of smartphones. The global active installed base of smartphones surpassed 700 million units at the 2011, which is approximately 15 percent of all mobile phones in use. Berg Insight forecasts that smartphone shipments will grow from an estimated 450 million units in 2011 to 1,300 million units in 2016. In the future, virtually all GPS-enabled handsets can be expected to have mapping and navigation software as part of the standard feature set.
Today, handset navigation solutions are primarily available as on-board apps with map data stored in the memory of the handset and off-board services that rely on maps stored on a server. Over time, many solutions will converge into hybrid services that store frequently used maps in the internal memory and leverage wireless connectivity to access dynamic content. The main distribution channels for handset navigation apps include mobile network operators, handset vendors and on-device application stores. Free turn-by-turn navigation services have been available for several years from niche players, but the launch of Google Maps Navigation for Android handsets in late 2009 and Nokia Maps with free navigation in early 2010 started a major transformation of the handset navigation market in both Europe and North America. White-label navigation developers are now working with mobile operators to create unique localised offerings and service bundles. Increasingly, navigation service providers are focusing on the freemium business model where the core turn-by-turn navigation service is free and users have the option to purchase additional content and features.
Mobile location-based services (LBS) are gradually achieving mainstream market acceptance. Popular service categories include mapping and navigation, search and information, social networking and entertainment, recreation and fitness as well as tracking. Mapping and navigation is the leading segment in terms of revenues and the second largest in terms of number of active users. Despite continued growth of active users driven by rising adoption of smartphones, revenues for mapping and navigation services are only growing slowly as competition from free and low cost services has intensified. White-label navigation developers are now working with mobile operators to create unique localised offerings and attractive service bundles. Some navigation service providers are focusing on freemium apps where the core turn-by-turn navigation service is free and users have the option to purchase additional content and features. Usage of search and information services is growing fast as more subscribers adopt mobile Internet services and handsets with improved capabilities. Local search is now the leading LBS category in terms of unique users. The popular social networking services are also experiencing rapidly growing uptake from mobile users. Increasingly, these services add various forms of location support.
Berg Insight estimates that the number of active users of location-based services and apps more than doubled in 2011. At the end of the year, about 20 percent of mobile subscribers in Europe are frequent users of location-based services. In North America where adoption of smartphones and GPS-enabled handsets is higher, an estimated one third of all handset users now access location-based services regularly. However, the significant growth in usage and number of active LBS users have not yet resulted in substantial growth in revenues. Total LBS service revenues in the EU 27+2 reached € 205 million in 2010 and Berg Insight forecasts LBS revenues to grow to about € 435 million in 2016. In North America, revenues are forecasted to grow from US$ 620 million in 2010 to an estimated US$ 710 million in 2016.
Ad-funding is already the main source of revenues in many consumer LBS categories. Notable exceptions include the mapping and navigation as well as tracking service categories where ad revenues now account for less than 10 percent of total revenues. Along with increasing usage and a maturing advertising ecosystem, ad revenues will grow both in absolute terms and as a share of total revenues also in the mapping and navigation segment. Many actors in the mobile value chain show great interest in location targeted ads. Although location can be a very valuable targeting attribute for some brands and campaigns, many other attributes are available that can be more relevant. Moreover, several issues - such as user privacy and pricing of location data - need to be resolved before location-based ad campaigns can leave the trial stage and contribute significantly to overall revenues.
Mobile LBS revenue forecast, € million (2010 - 2016)
Historically, mobile operators have been key partners and the main distribution channel for app and service developers. Operators have had a unique position with a direct relationship with a large user base, allowing them to market services, pre-install applications on new handsets, present links to services from their portals and handle end-user billing. This central role is now being challenged by the rising smartphone ecosystems such as Android, iOS and Windows Phone that in many cases integrate key location-based services and give developers access to location data, distribution channels in the form of on-device app stores as well as billing and advertising solutions for monetisation. Developers can also access location data from numerous independent Wi-Fi and cellular base station location database providers. These location services are well suited for a range of consumer-oriented services primarily targeting smartphone users.
Many operators are now opening their location platforms to third party developers and location aggregators that play an important role as intermediaries between mobile operators and developers. Network-based location data is valuable for developers and third parties that need to locate any device, not only GPS-enabled smartphones, without the need to install a client app that collects location data on each device. Most operators' location platforms have a limited capacity and operators therefore maintain relatively high prices for each location look-up. This is a justifiable cost for services where a successful location look-up adds significant value and the developer can charge their customers accordingly. This is the case for a range of enterprise and B2B services including asset tracking, workforce management, authentication and fraud prevention.
Mobile location platforms enable mobile network operators to offer location-based services (LBS). Location platforms typically comprise software extensions to network infrastructure components that together can calculate the position of a handset. Many mobile operators also deploy location middleware that functions as a mediator between the location platform, applications and support systems - and more importantly, provides centralised control of privacy settings for all applications.
Mobile location platforms enable three categories of services: public safety services, national security and law enforcement applications, as well as commercial LBS. Nearly 70 percent of all emergency calls are today placed from mobile phones and it can often be difficult for the caller to convey their location accurately to first responders. Automatic location platforms can reduce the time to find the location of the caller. They also enable more efficient handling of simultaneous calls from people reporting the same incident to distinguish single accidents from multiple events. Another use area is public warning systems that can locate and send messages to all mobile users within a geo-fenced area. Government agencies can also use location platforms and data mining systems for border security, critical infrastructure protection and location-enhanced lawful intercept.
LBS are services that in some way utilise the geographic location of a handset, either to enhance existing applications, or enable new types of applications. An example of the first case is search services that use the subscriber's known location as a filter for presenting relevant content. In the second case, location is used as an enabler for new applications that are fully dependent on knowing the location of a user or an asset; examples include navigation and tracking services. Today, countless consumer and corporate services make use of automatic location of handsets or other assets. However, a majority of the services use location data obtained directly from GPS receivers in the handset or various third party location databases rather than directly from operators.
Location technologies can be divided into handset-based technologies (such as GPS) with intelligence in the handset, network-based technologies (for instance Cell-ID, Enhanced Cell- ID and U-TDOA) with intelligence in the network and hybrid technologies (for instance A-GPS) with intelligence in both the handset and the network. Handset-based and hybrid technologies often require additional hardware and software in the handset, while networkbased technologies require deployment of hardware and software in the mobile network. Each technology has different characteristics and ultimately, no single technology performs best in every aspect.
Location platform and middleware revenue forecast, € million
(World 2010 - 2016)
The Federal Communications Commission's (FCC) E911 mandates for location of mobile emergency calls released in 1996 was a major driver behind the development of location platforms for the North American market. In Europe, as well as in other developed countries such as Japan and South Korea, the early deployment of location platforms focused on supporting commercial services due to the lack of a clear mandate for emergency services. In the first deployment phase, lasting from 2000 to 2003, operators invested in platforms and ready-made location services. The results were in many cases limited uptake whereby many operators lost interest in LBS as a mass-market proposition. However, governments and telecom regulators in many regions worldwide are now introducing some form of emergency call and lawful intercept mandates that require at least basic location platforms and technologies. Although the regulators have typically not yet imposed any specific location accuracy requirements as part of the mandates, it is highly likely that more stringent location accuracy will be demanded in the future as technologies mature and costs decrease.
An estimated 30 percent of the mobile network operators worldwide have now deployed at least some type of basic location platform. Additional deployments and updates of existing platforms can be expected in most markets in the coming years, primarily driven by government mandates since commercial LBS increasingly rely on alternative location sources including GNSS, Wi-Fi location and third party Cell-ID databases. Berg Insight forecasts that total global annual revenues for GMLC/MPC, SMLC/PDE and SUPL A-GNSS location systems and services will grow from € 150 million in 2010 to € 300 million in 2016. These revenues comprise integration fees and licenses for new platform deployments as well as capacity and technology upgrades, maintenance and associated services.
The mobile channel is getting established as an integral part of the marketing media mix, a process which is eased by the booming smartphone adoption and increasing mobile media consumption. One of the key developments in mobile advertising is the increasing integration of location-sensitivity, which releases the full potential of the mobile channel. A notable divide can be made between static and real-time location-based advertising (LBA). Targeting by static variables involves using information which is part of specific user profiles such as place of residence and work. Real-time location targeting instead uses location information which is gathered when an ad is delivered to a mobile user. Such location-based advertising programs and campaigns leverage the same type of technologies to determine user location as other location-based services (LBS). Common methods include GPS, Cell-ID and Wi-Fi positioning which are all based on real-time information.
Targeting by location in combination with other contextual and behavioural segmentation greatly enhances the relevance of mobile advertising. It has been demonstrated that locationtargeted ads generate considerably higher return than conventional mobile advertising, and the associated eCPM levels are several times higher. Berg Insight estimates that the total global value of the real-time mobile LBA market was € 192 million in 2011, representing 5.0 percent of the total mobile ad spend. Growing at a compound annual growth rate of 90.9 percent, the real-time LBA market is forecasted to be worth € 4.9 billion in 2016, corresponding to 28.3 percent of all mobile advertising and marketing. This means that location-based advertising and marketing will represent more than 4 percent of digital advertising, or 1 percent of the total global ad spend for all media. Asia-Pacific is estimated to be the largest LBA market in 2016, followed by Europe and North America.
Key drivers for LBA include the growing attach rates of location technologies in handsets, as well as the increasing consumer acceptance of LBS in general. Local advertising is further a major market, and LBA opens up the mobile channel for new advertisers such as local merchants. The fact that location targeting has higher performance has moreover induced premium rates for publishers and developers. The main barriers to adoption are related to the inherently limited reach of LBA which acts as a mental hurdle for advertisers. Education of advertisers and new methods for campaign performance evaluation are thus called for. Privacy issues can further not be ignored, but can be beneficially handled by privacy control options beyond simple opt-in mechanisms. The demand for hyper-local targeting of ads is so far limited among advertisers, but is bound to increase given the considerable impact such campaigns generate.
LBA revenue forecast, € million (Worldwide 2010 - 2016)
The LBA value chain is still forming and there are a large number of players involved in the ecosystem. The industry is fragmented and has not yet reached maturity. Many different companies are involved, ranging from LBA specialists such as Placecast, xAd and LEMON Mobile, to operators including SFR, AT&T and O2, and LBS players such as Telmap, TeleNav and Waze. There is furthermore an abundance of location-aware applications and media which serve geo-targeted ads, with examples such as WHERE, Loopt and Shopkick. Included in the marketplace are moreover coupons and deals providers including Yowza!!, GeoAd and COUPIES, search solutions such as Poynt and Qype, and proximity marketing providers like Qwikker, Proximus Mobility and Scanbuy. A number of traditional mobile advertising players are also active in the LBA space, for example Millennial Media, Madvertise and Nexage, as well as major digital and telecom players such as Google, Apple and Nokia.
There are a number of key takeaways from the latest developments in LBA. It has been established that location-targeting improves the effectiveness of mobile marketing campaigns, and greater shares of ad budgets are devoted to LBA among marketers. It is however crucial to ensure sound opt-in procedures and individual privacy measures for consumers. Location is further only one of many components in successful targeting, and marketers must also strive to leverage other contextual and behavioural information. Highprecision real-time geotargeting is today sparsely used, and rightly so as most campaigns do not require targeting with an accuracy of a few meters. Hyper-local campaigns are nevertheless becoming more common. Current important high-volume LBA formats include mobile search and SMS campaigns. Berg Insight however anticipates that geotargeting gradually will become ubiquitous and available across the entire mobile channel.
People tracking solutions that enable a third party to locate a person were introduced in the late 1990s. Today, most people tracking solutions rely on GNSS and mobile communication technologies to determine the location of a person and transmit the data to a third party. Technological advancements have enabled substantial improvements in GPS receiver performance and cost. Small, dedicated battery powered GPS tracking devices suitable for the mass market has become a reality. There are also a growing number of people location apps that leverage the growing installed base of GPS-enabled smartphones.
People tracking solutions aimed at the consumer market range from family locator services that provide peace of mind for parents of children and teenagers, to solutions that assist caregivers of seniors and people suffering from various medical conditions. Family locator services have been part of mobile operators' LBS portfolios for many years, but are now facing competition from app developers. The willingness to pay for operator services is declining as consumers' awareness of free people location apps for smartphones has increased significantly in the past 12 - 18 months. Berg Insight estimates that there were about 20 million users of family locator apps in Europe and North America in August 2012.
The demand for dedicated location devices targeting the child and teenager segment is generally low as many parents adopt handset-based solutions. Numerous device vendors are therefore looking to address the needs of people caring for persons of all ages suffering from various medical conditions, such as autism and other cognitive limitations, epilepsy, cardiac problems and diabetes. These companies are also addressing the market for systems that assist seniors living at home or in care homes. The assistance systems are commonly called telecare systems or social alarms in Europe and Personal Emergency Response Systems (PERS) in the US. Berg Insight estimates that there are already up to 5 million users of the first generation social alarms connected to PSTN networks in Europe and North America. The addressable market for the next generation mobile social alarms is therefore large.
Companies from various industries such as fleet management, asset tracking and application development now provide people location services that address the needs of business customers. Mobile workforce management services aim to improve operational efficiency and focus on managing individual employees. Industry sectors leading the adoption of workforce management solutions include construction, distribution and companies with extensive field services. Mobile workforce management is frequently part of fleet management solutions for light commercial vehicle fleets. Applications can in addition be delivered via smartphones. Two-way communication saves time by enabling field staff to be directed to go from one place to another without returning to the central location for receiving new work orders. Cost savings can also be achieved through more efficient time verification and data collection in the field. Lone worker protection services primarily focus on ensuring the security of employees through features such as two-way communication and automatic location. Many lone worker protection services rely on dedicated location devices featuring alarm buttons and man down detection sensors. These devices are typically programmed to send alarms to supervisors or alarm receiving centres in case of emergency. Berg Insight forecasts that the number of active users of workforce management and dedicated lone worker protection services in Europe and North America will grow from 1.1 million in 2011 to 2.8 million in 2016.
Family locator users, (EU27+2 and North America)
Electronic monitoring (EM) of offenders is gradually being adopted globally. EM is used to provide alternative ways of sentencing offenders and reduce the escalating costs for the corrective systems. EM is employed at various stages of the criminal justice system, including at pre-trial, at sentencing and following a period of incarceration. The aim of EM programmes is to increase offender accountability, reduce recidivism rates and enhance public safety by providing an additional tool to traditional methods of community supervision. However, there is still debate over the effectiveness of EM and how to best implement the technologies in various programmes to achieve the goals. The most common forms of EM equipment in use today are RF systems that comprise a transmitter worn by the person being monitored, often in the form of an ankle bracelet. The RF transmitter sends out a signal to a receiver unit that communicates with a monitoring centre to report signal interruptions during curfews or any attempts to tamper with the equipment. Systems using GPS location that allow near real time location of the offender as well as creation of geographic inclusion and exclusion zones are also being used.