They seek him here....locating location based services

I was chatting to a tech journalist last week who was writing a piece on location based services, and during the conversation I opined that - in my observation - the promise of location based services has always been huge but 5 years out, even 8 years ago or so when I heard the first "look up the local restaurants on your mobile" pitch.

However judging by the resulting article this is not the downbeat news people want to hear. Location is cool, its sexy, its now, and its the future. And is it ever the future - Silicon Alley reports on a $3.3bn market for location based social networking by 2013:

Research firm ABI Research predicts the nascent industry will turn into a $3.3 billion market worldwide by 2013. Where will that money come from? Location-based mobile advertising "holds a lot of promise," notes ABI analyst Dominique Bonte, in a statement. But "the current reality" suggests licensing and subscription revenue-sharing -- like Loopt's recent deal with Verizon Wireless -- the most likely near-term revenue streams.

I think the Silicon Alley boys and girls have also been around this block a few times, as their comments are pretty much my view as well - if there is a market, its repurposing of existing revenue. And it is an if:

It's hard to put much weight in pie-in-the-sky predictions like this: It's one thing to take an existing market and plot out a growth chart. But right now the industry is a goose egg, give or take a couple million. We'd hold off before predicting a huge boom.

Id agree - too often in mobile the new new thing is noisily trumpeted with a big hockey stick growth prediction, to be quietly scaled down few months later. In fact I'm sure I have a report somewhere from a few years back promising a similar size industry by 2010 - I must try and find it......

To be fair, the industry has stymied itself to date on a paucity of smart enough user devices and (too) high transaction costs, and those are getting better (ironically enough more for Laptops than Smartphones). And don't get us wrong - there are high potential location based services out there - but by and large the startups are still relatively small and losing money, with no viable scalable business models in the sector as yet (We don't think Ad support will be a panacea on mobile).

Yes there are exceptons, but we thus don't think the overall market is in any state yet for mass uptake, there are just not enough smart enough devices out there and transaction costs are still high for mobile - and even if they were to respectively rise and fall in the next 2 years, service takeup will still lag the infrastructure improvement. What is viable today is fairly high value services (maps, search, navigation) paid for via device/connection subscription deals.

SAI thinks the main push will be from current fixed/convergent line incumbents:

More interesting to us: Whether today's location-based mobile social networks -- like Loopt, Whrrl, etc. -- will be able to outlast more established social networks like Facebook, MySpace, Twitter, and maybe LinkedIn, once location becomes a feature on those platforms

And to moderate our view a bit - this is one of those areas that could tip rapidly, so its worth watching closely. For bellweathers signalling a shift I'm looking for well funded services like Twitter starting to adopt location based functions organically (say a Dopplr-like capability), or for some sort of explosive community growth coming out of Fire Eagle.

As to our favourite Location based service - well, we use MizPee in every presentation on the subject we do. Check 'em out. That is what I call a high value point of need service - how much would you pay to spend a penny?