Jon Swartz of USA Today published a nice little reminder of the great opportunities and potential LBS offers:
Such services are part of a rising wave in mobile advertising, which is expected to soar in the U.S. to $3.1 billion in 2013 from $320 million in 2009, according to market researcher BIA/Kelsey.
Driving the growth are smartphone sales, which are expected to account for a majority of phones in the U.S. by the end of 2011, market researcher Nielsen says. About 5% of the more than 225,000 iPhone apps have location services.
Analysts say the appeal of location-based services goes far beyond game-playing and seeing where your friends are. “Location is such an important tool for local merchants and marketers to more deeply connect with customers,” says Michael Boland, an analyst at BIA/Kelsey.
Crowded Mobile Networks
It’s really very fascinating to see the different ways people are using mobile to enhance everyday activities, and search seems to be a big component of that. For example, if you are out and about in an unfamiliar area, you can download apps to help you see what’s around or just use “old fashioned” search engines via mobile web.
The same applies for retail. Julia Tang of the Google Retail Team recently posted a snippet of video from Google’s “Future of Multi-Channel” panel in which Alex Barza, Google’s Mobile Ad Sales Lead, and Surojit Chatterjee, Google’s Product Manager, discussed examples of why mobile is the next ‘big bet.’
The segment is rather short, but they do get in some key points, including “54% of users who researched online but bought offline used their mobile device to conduct their search.” They also cited growth of augmented reality as a part of searches. Also, they stated that 20% of consumers are using smartphones, which plays a key role in such dynamic search adoption.
With such promising and interesting growth in terms of ways smartphones are used beyond calls and texting, I’m led to my next point: actual usage. For every mobile advance that gets adopted, the “OMG TOO MANY USERS” seems to come up. For instance, USA Today reported that new subscribers to AT&T that have smartphones will not be able to get unlimited data packages.
Newcomers will have two options: Under the DataPlus plan, subscribers can pay $15 a month for 200 megabytes of data; that would handle about 400 photos or 100 minutes of streaming video. The DataPro plan offers 10 times that capacity, 2 gigabytes, for $25.
Here’s the part I found most interesting:
AT&T says 65% of its smartphone customers use less than 200 MB a month, and 98% use less than 2 GB.
But, largely due to the success of the iPhone, AT&T “has the most loaded and most used data network in the U.S.,” says Roger Entner, head of telecom research at Nielsen.
And just 3% of AT&T’s smartphone customers account for as much as 40% of its data traffic, contributing to slow transmissions and dropped calls. AT&T must control heavy users, or at least get them to pay more, Entner says.
In a February GigaOm article, streaming video is cited as the biggest bandwidth hog, causing carriers to drive up these price plans. So I wonder then, why not address that problem directly? There seems to be quite a few solutions the carriers can take advantage of right away:
If the pipes are too small and what’s going through them too big — which is the case on many mobile data networks (hey AT&T, how’s that iPhone traffic treating you?) — then wouldn’t it make sense to add some compression algorithms to the mix?
It makes sense certainly, and something operators — not to mention mobile phone users — have experimented with. On the vendor side, players like OpenWave and Bytemobile offer network-based solutions that operators can deploy to “optimize” mobile data delivery via a variety of techniques. Meanwhile, a handful of mobile Web browsers, such as Skyfire, have tried to drive compression right down to the handset, utilizing proxy servers and compression algorithms on the back-end and specialty browser clients on the phone.
So, will other carriers follow AT&T? Or will they look for other answers that aren’t going to hurt consumers and stifle mobile growth in areas like retail? Hopefully they will before getting in over their heads much like AT&T did with the iPhone.
But of course, like everything else, we’ll have to see how this all plays out.
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