Global LBS revenues to reach $2.6 billion in 2009

LONDON, UK: ABI Research expects location based services revenues to grow at 156% from $1.7 billion in 2008 to $2.6 billion in 2009. By 2014 global LBS revenues will have surpassed $14 billion.

“One of the main drivers of the strong growth in LBS is the popularity of an impressive number of off-deck LBS applications available for a one-off fee on smartphone platforms,” says ABI Research practice director Dominique Bonte.

“Apple’s iPhone is leading the way, followed by Blackberry, Nokia, and Android. There seems to be no limit to developers’ creativity in using location for functions such as search, social networking, messaging, micro-blogging and augmented reality. Combined with the astonishing popularity of the new generation of GPS-enabled touch screen smartphones, this will continue to constitute the lifeblood of LBS in the coming years.”

A more open strategy
Many carriers in both the US and Europe are waking up to this reality by gradually adopting a more open LBS strategy with Verizon increasing the number of unlocked GPS phones and Vodafone having acquired navigation software vendor Wayfinder. Both carriers are also making their networks accessible via open API platforms. Other carriers such as Sprint have opted to partner with location aggregators as a way to play a role in the LBS ecosystem.

Which models?
While there is no doubt LBS is heading towards mass market adoption, it remains unclear which pricing and business models will emerge successfully. Currently subscription-based models are making way for one-off pricing or free hardware-subsidized offers, but expectations for advertising revenues in the longer term remain high despite privacy and fragmentation issues.

Bonte concludes, “ABI Research expects many business models will continue to coexist with recurring fees for many enterprise, navigation and safety services, but free models for most other consumer applications.”