Looking back at 2012, and this is our last column of the year, a number of stories in the location industry spring to the front. The rise of indoor positioning as a potential lucrative market is one. Another is perhaps Samsung’s purchase of CSR to give a major consumer electronics manufacturer even more location capability. Or the continued story of Google as the 800-pound gorilla in the location room. But, resoundingly, the top story probably has to be the controversy surrounding Apple Maps, which caused a shake-up at the company and industry. The incident made manufacturers realize that digital maps are a very important feature for smartphones. It also made many of these giant companies, who believe that location isn’t that big of a deal, sober up to the fact it is hard to make quality maps.
The top location industry story of 2012 may be a cautionary one for the industry. The big story was the release of Apple Maps in September, which was criticized by consumers for inaccurate driving directions, among other problems.
Apple had replaced Google Maps on its iPhone 5. But the criticism for the phone’s maps forced Apple CEO Tim Cook to apologize and even tell consumers to use such competitor’s maps as Waze, MapQuest or Microsoft’s Bing.
Since the last LBS Insider column, Apple fired Richard Williamson, who oversaw the company’s Maps team, according to Bloomberg. The initial report indicated that Eddy Cue, Apple senior vice president, is looking for a new management team to replace Williamson. The company is putting pressure on Apple partner TomTom to update mapping data and consulting with third-party mapping experts.
Marc Prioleau, managing director of Prioleau Advisors, said there are two basically two key points surrounding Apple Maps: “Maps are really hard to do. Maps were deemed to be an important asset for a major platform to own versus rent from Google.”
So what does that mean for Facebook, Amazon, Twitter and others dabbling in the location industry? “Can they get [quality] by using a potential competitors maps/local search or do they have to build their own? And if they build their own, how do they avoid the problems Apple has had?” Prioleau said.
The Apple Maps fiasco proved how important maps and navigation are to users of mobile phones, said Mike Dobson, TeleMapics president and author of an industry blog, which received huge readership during the incident. “In doing so, the company generated more ill will than I thought was possible when dealing with maps and navigation,” he said.
Industry Expert Looks Back on 2012
There were two significant trends in LBS in 2012, Dobson said. “The first was that the industry has transformed from a domain of specialists who seemed to be working underground to an industry that has caught the world’s eye as one of the most important technology families now in existence. It is a rare year when The Economist magazine writes an analysis that is focused on location as it did in its 2012 Technology and Geography Special Report,” he said.
Economist’s Annual Innovation Awards were dominated by people in the location industry, Dobson said. Computing and Telecommunications awards went to Jack Dangermond (ESRI) and John Hanke (Google), while Gary Burrell and Min Kao (both from Garmin) won awards for Consumer Products, he said.
“The second biggest trend in 2012 was the inexorable rise of Google to the top of the location chain. While Google quietly improved its databases, tools and location services, most other players in the location industry were slipping further behind, apparently involved in a frenzy of disorganization prompted by a lack of skills in strategic planning,” Dobson said. “What this torpor has led to is an apparent inability to produce market-leading products, as Apple has shown with Apple Maps and Nokia has shown with its negatively received mapping service. I suppose the rumor that the company is considering renaming the service ‘Here?’ is untrue.”
Through hard work related to early disappointments with the accuracy of its mapping products, Google has managed to learn a number of important lessons related to map compilation and data quality, Dobson said. “Perhaps the greatest lesson it had to learn was that algorithms used in mapping and navigation often need the intervention of an operator who understands geography, mapping and navigation. In addition, map compilation systems often need the assistance of a human with local knowledge to prioritize data solutions. Put simply, Google has confronted map accuracy issues and is rounding the curve on improved product quality.” To most everyone else, the main exception being ESRI, Dobson said he awards a hearty “shame on you.”
A final 2012 trend is that numerous capable leaders who led the “Location Revolution” are now on the sidelines or out of the industry completely, Dobson said. “For example, the majority of the ‘brain trust’ from Navteq, those contributors who understood the nature of mapping and navigation, are no longer with Nokia, a company that appears rudderless in the location marketplace. Just as it shows that most of the people who understood mapping and navigation at Tele Atlas are no longer with TomTom,” he said. “Other acquisitions produced similar results, as they always do. However, the crucial issue here is that losing history often means losing perspective and I am concerned that LBS is on this destructive path. While we always would like to think that as an industry we have institutionalized or memorialized personal contributions, problem-solving methods and other individually oriented contribution to products, this is never really true.
“While each new management team should have the right to rearrange the pebbles on the beach and say that the new organization of pebbles solves the problems of the previous organization, this is rarely the case. Innovation, not reorganization, are what makes a difference in all industry segments. As 2012 closes, I am tempted to ask, “Where are these market-making innovations in LBS?”
2013 and Beyond
While it was a big part of the LBS landscape in 2012, Dobson believes the current emphasis on indoor location is both overblown and being overhyped, but it will remain the focus of the industry in 2013. “This is yet another example of smaller players in the location world trying to find something new that they feel might help to get them acquired, while the larger players are hoping it is something that might provide a sustainable competitive advantage over Google,” he said. “I suspect that Nokia and Apple might now know what Microsoft knows — that in order to catch Google in location, you need to have a search engine that can successfully perform local queries that is tied to a source of revenue such as mobile advertising. My belief is that Google will continue forward integrating location as part of its effort to dominate advertising globally and locally. Until the other players catch on to this differentiator and field a powerful advertising-based competitor, they cannot be considered in the same league as Google.”
As a final shot, Dobson said he brought a lump of coal for those who enjoy “free” maps and navigation services. “My belief is that within the next decade mapping and navigation services will be fee-based. The addition of all the bells and whistles to online mapping services, in addition to other negative factors, are making the game too expensive to continue to give the product away for free,” he said. “Consider this bit of history. In the United States, before the Arab oil embargo of the 1970s, paper maps were given away free at gas stations. Also forgotten by many is the fact that someone pumped the gas, cleaned the car’s windows, checked the engine oil level and inflated tires to their proper pressure.
“After the oil embargo, price increases helped to beat the profit out of the system, as well as all of the other services it once offered such as free maps. Issues of net neutrality, telecom’s desire to recover infrastructure costs related to providing Internet services, indoor location infrastructure, and the decline of competition in the world of map and navigation data will inexorably lead to maps and navigation services that we will be required to pay for with real money, at least if we want the premium blend with all the bells and whistles.”
2013 Will Be a Big Year for Indoor Positioning
Because “outdoor” map solutions may be done because solutions only tell consumers how to get from Point A to Point B, indoor positioning is the future for LBS, said Kris Kolodziej, aisle411 vice president of location services. “Google already has about 10,000 maps worldwide. Aisle411 has 10,000 in the United States alone. It shows that retailers/indoor venues are using LBS and maps to engage the consumers and fight off the likes of Amazon,” he said. “Finding things indoors, inside stores and malls like products and offers. Retailers will need to get even more engaged and relevant if they want the consumer to shop at their store versus Amazon.”
Indoor positioning will be the big deal in 2013, said Mike Flom, LBS/Wireless App Consulting managing director. “Given its incorporation by major OS/smartphone manufacturers in their maps products and at least some progress on indoor location precision and quality, the usage growth and indoor map quality and coverage improvements should be exponential by year end,” he said. “A runner up to indoor positioning is built-in rich wireless maps and navigation for automobiles. There’s probably a higher expectation from consumers due to smartphones than delivery by automakers, but since when has the auto industry operated at consumer electronics speed?”
Smartphone Market Still Going to Drive LBS
The biggest trend of 2012 was the adoption of wireless GPS maps and navigation as a standard and differentiated feature on smartphone operating systems, said Flom, who believes that Apple’s introduction of their own free maps and navigation on iOS was the biggest event of 2012, along with Microsoft’s use of Bing Maps/Nokia Maps on Windows Phone 8.
“Why is this important? Approximately 85 percent to 90 percent of the U.S. smartphone OS market now has access to exceptionally rich, free wireless voice navigation. Penetration is similar in developed and growing fast in many developing countries,” Flom said. “The enormous penetration of smartphones means wireless voice navigation has gone from a crude novelty in 2002 to a sophisticated service with widespread penetration in under 10 years. The implication is all tablets, an extraordinarily fast growing product, now has rich, location-based map support. While only a small percentage currently have precision location functionality, such as a GPS chip or bluetooth GPS receiver, this is destined to change over time. Now that the basics are in place, more sophisticated features and content have a huge path to an enormous market,” Flom said.
Flom does not believe that the industry has been overhyped. “Given the extraordinary expense Google, Apple and Microsoft have gone to generate their own maps and voice navigation features, and the high rates of adoption, the hype was if anything too low. Each OS manufacturer could have simply let third parties continue to offer an app in their store,” he said. “The decision not to give third parties including Google the traffic indicates the importance of location and maps. The Apple Maps quality debacle, which eclipsed almost every controversy in the smartphone world, including patent wars and Siri limitations, showed that great maps are difficult and expensive. Apple’s adoption of their own map product cemented Google’s introduction of wireless GPS navigation as an essential and differentiated standard feature of smartphones.”
Mobile Advertising Still Looking for Market Share
Mobile advertising still is searching for a successful business formula, Prioleau said. “Every year it gets better but there is no sense that that has been cracked, at least if you look at advertising spend on mobile. The mismatch between time spent on mobile and ad spend on mobile has been well documented, but the gap isn’t closing fast,” he said.
In terms of location context, many companies don’t get it, but some do, Prioleau said. “It’s not just about where you are, and what’s nearby, but what does your location tell you about why you’re there, what you’re doing, and what or who you might be interested in,” he said. “Many companies are working on using location, along with other signals, to define context and from that pushing interesting information to the user — Highlight, PlaceIQ, Niantic, etc. It is early and it isn’t clear that anyone has got it right, but this will be an area of evolution going forward.”
In other LBS news:
- Sprint Nextel rolled out its in-vehicle platform, Velocity, which allows auto manufacturers to offer buyers navigation, security, remote diagnostics, emergency services and infotainment. The unit, which was rolled out at the 2012 Los Angeles Auto Show, will be available worldwide to allow network providers to add connectivity, the company said. Sprint has been getting into the auto arena in a big way this year with its partnership with Chrysler Group’s Uconnect voice-activated vehicle communications system.