Location-based services to become $10-billion industry by 2016, report says

Location-based services could become a $10-billion-a-year business by 2016, despite recent concerns over privacy and what companies do with location data once they have it, according to a new study.

“The recent kerfuffle over Apple iPhone tracking and other privacy concerns will barely be a speed bump in the evolution of location-based services (LBS) because there is simply too much money at stake,” research firm Strategy Analytics said in its new study called “The $10 Billion Rule: Location, Location, Location.”

Location-based services such as Google Maps and Foursquare enable smartphone users to get directions or let others know their whereabouts.

“Consumers are increasingly demanding services such as search, maps or navigation, for which location information is either fundamental to or provides greater context, utility and therefore appeal,” the firm said. “For advertisers, location data provides opportunities for ad targeting and optimization.”


Location providers must become more transparent with users about how location data are captured, managed and stored, but that won’t stop the growth of location-based services for mobile phone and tablet users, the firm said.

“For advertisers, location data provides opportunities for targeting and optimizing ads,” said Nitesh Patel, a senior analyst at the company. “Strategy Analytics sees strong evidence of consumer demand for LBS in line with rising smartphone and data plan penetration.”

An example, Patel noted, is Google Inc. recently disclosed that 40% of all Google Maps use occurs on mobile phones.

Google and Microsoft Corp., the current leaders in Web search, will likely end up dominating the market for advertising associated with location-based services, despite challenges from smaller players such as AT&T Inc.'s Yellow Pages, Telmap Ltd., TeleNav Inc. and Aloqa, the firm said.