Some Thoughts on the Developments in LBS Value Chain

LBS value chain includes carriers, device manufacturers, application developers, and data providers. And the whole value chain is in the state of flux.

Carriers: used to control it all - decided mobile phone specs, what carrier data the apps can access (e.g. location), what apps get on the phones and to their customers (consumers). Now they are fighting to prevent becoming just "pipes", as the Internet ISPs did. iPhone and Android broke their control of phone specs and applications. They still have a lot of power if they decide to use it. For example, by controlling what apps get pre-loaded on phones and by making sure the right and the best apps are developed for their phones, they can assure value is provided to their customers. But the time to do it is limited.

Phone manufacturers: freed to determine their own specs, they are wrestling the control over applications from carriers. But they are also dependent on software application developers to develop for their platform and have to court them aggressively. (PND manufacturers are somewhat different.)

Application providers: The challenge changed from getting in bed with carriers to developing software for myriads of platforms/versions of devices and then market it to consumers. May the upcoming browser-based applications resolve this issue? On the desktop, certain applications are still client(PC)-based but most have moved to browser-based UI, even some heavy apps like SAAS.

Consumers: The ultimate value for consumers is in what they can do and that largely depends on applications. Therefore the devices with best applications and carriers with best devices and applications will win. (Of course, quality / coverage of the network and usability / features of the phone are still critical.)

Where do data providers fit in? Some create original data and others are data aggregators or both. Many LBS applications require data, be it maps, traffic, or POIs. An interesting phenomenon is when an app provider that acquires / aggregates data for its own purpose starts reselling this data to others in the ecosystem.

As (almost) everybody seems to compete with everybody, coopetition is the name of the game. This makes for very interesting times with the economy in doldrums, LBS ecosystem in the flux, and companies trying new business models trying to survive and some out stronger.

Peter Braun