More than maps: the evolution of location-based applications
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1 More than maps: the evolution of location-based applications Peter Crocker August 11, 2014 This report is underwritten by decarta.
2 TABLE OF CONTENTS Executive summary... 3 Introduction: the early days of LBS... 4 Emergence of Google Maps API... 4 Open source and alternative LBS platforms... 5 Disruptive forces driving opportunity in LBS... 7 Context... 7 IoT and automotive... 7 Emerging underlying positioning technologies... 8 Current technological and business challenges... 9 Dominant mapping providers offer limited control to developers... 9 Differentiation of maps and the user experience... 9 Challenges of integrating multiple data sources into maps Limitations of open source Solutions Innovators in the LBS market Frameworks for creating long-term LBS strategy Key takeaways About Peter Crocker About decarta About Gigaom Research More than maps: the evolution of location-based applications 2
3 Executive summary Over the years, mobile navigation and mapping applications have evolved, and the method in which they are built has changed as well. Early location-based services (LBS) apps were difficult to build and required specialized skills, but over the years, leading map and geospatial technology vendors have simplified the development of location-focused mobile apps. As a tradeoff for simpler app development tools and services, developers have relinquished some control and flexibility. Innovation and change in the industry is driving demand for increased control of data and the user experience of location-based apps. New tools and approaches are emerging to meet this demand. Mobile developers and marketing executives need to understand the capabilities of emerging technologies and the strategic implications of sticking with the status quo. Key findings include: 1. Hyperlocal location services and the connected car are driving disruption. 2. Developers need to take more control of the mapping experience within their apps to create differentiation and promote their brands. 3. Understanding the usage context as well as proximity will differentiate location-based applications. 4. Current and future contextual capabilities will be another key differentiator. 5. Flexible, comprehensive LBS platforms are providing new alternatives. 6. Open-source maps and software are challenging the dominance of traditional map content vendors. More than maps: the evolution of location-based applications 3
4 Introduction: the early days of LBS The development of early location-based mobile applications and services was challenging, requiring specialized geospatial skills such as geocoding, routing algorithms, search, and cartography. Tools and services for building LBS apps were available but limited and targeted at these sophisticated geospatial developers. With the barriers to developing mobile LBS applications so high, the majority of apps were navigation and fleet management applications focused on specific enterprise and automotive OEM requirements. To create typical LBS applications, developers needed to build a number of processes: 1. Determine current location by accessing current latitude and longitude from the GPS chip and operator-based location services. 2. Execute a local search to find an address or a point of interest (POI) in order to determine directions to it. 3. Parse address information, and match it against a geocode database. Geocode or translate destination address, place name, or unique identifier into latitude and longitude coordinates. With problems interpreting addresses and erroneous databases, geocodes need to be crosschecked. 4. Calculate a route, leveraging map content and turn restriction data. This server-side process also needed to be scalable to support millions of concurrent users. 5. Import and render base map, and plot current location, destination, and route. Base maps and geographic information systems (GIS) data are provided by large companies such as Nokia HERE (formerly NAVTEQ) and TomTom (formerly Tele Atlas). 6. Build custom controls to manipulate the map, such as zoom, pan, or layer-switching. Emergence of Google Maps API Google Maps API abstracted away the complexity of building location-based apps, replacing it with a simple API. This drastically simplified the process of accessing LBS and opened the market to a much broader audience. The Google Maps API enabled developers to access driving directions, retrieve map More than maps: the evolution of location-based applications 4
5 images, and perform geocoding with just an API call to Google mapping services. Google s open API also meant that developers did not have to negotiate terms with large map data vendors but just had to adhere to the terms dictated by Google. With the success of Google, competitors such as MapQuest, Bing, and Yahoo followed suit. While Google simplified the process of integrating maps on the front end, the technology required to deliver the service was still quite difficult. When first launched in 2005, Google Maps licensed decarta s LBS platform technology for core capabilities such as geocoding, reverse geocoding, and route calculations. decarta in turn sourced the third-party map data from NAVTEQ (now Nokia) for North America and TeleAtlas (now TomTom) for the rest of the world. decarta s own RMF data format enabled the application to be abstracted from the map data source. Through significant R&D investment, Google four years later launched its own LBS platform and then later created its own map database. As developers experimented, the market moved beyond navigation applications, and location quickly became a prominent feature in many types of apps. New business models and applications soon emerged, mashing up location data with other data sources. The biggest trend was the integration of location and social networking on mobile devices, leading to the SoLoMo trend that spawned new businesses such as Foursquare and Yelp as well as a plethora of location-based advertising services and daily deal apps such as Groupon and LivingSocial. The quality and ease of use of the Google Maps APIs positioned the company as the market leader, and it continues to dominate the market today. While Google Maps simplified development and drastically reduced costs, developers had to relinquish some control over the look and feel of their maps. Often developers also had to compromise on how their content was used by Google. Google still does not provide the ability to customize maps completely or to add new features to their maps and location services. Open source and alternative LBS platforms The simplicity and sophistication of the Google APIs was an immense benefit to developers. That combined with the fact that it was free contributed significantly to adoption. In 2011, Google began assessing heavy users of the mapping API with license fees. More recently Google has also imposed restrictions on certain use cases and on how quickly and often applications can access the API. In addition, Google s ever-expanding business operations have caused more companies to regard it as a competitor. The increased cost, newer restrictions, and competitive conflicts have been catalysts for developers to begin thinking about alternatives. More than maps: the evolution of location-based applications 5
6 Sophisticated developers seeking to build more creative and differentiated LBS applications are beginning to demand more flexibility from their LBS providers. The market has replied with a variety of more flexible and open solutions at both an LBS platform layer and at the map data layer. Vendors are bringing to market open source software stacks, crowdsourced data sets, and best-of-breed platform components, which developers can combine and manipulate. The growth of open source technology in mapping is providing developers with greater access to the mapping and geospatial software stack. With access to the source code and no commercial entity controlling the business model, the open source movement in the LBS market is reenergizing innovation and opportunities. The open source software trend also encompasses crowdsourcing for data collection. Open source project OpenStreetMap (OSM) is relying on citizens to document the areas in which they live and travel to build a geospatial database. Waze is another example of real-time crowdsourced data generated by travelers who document traffic patterns. Open source JavaScript libraries such as Leaflet are also providing developers with complete access to map creation tools so they can build and integrate custom maps into their applications. More than maps: the evolution of location-based applications 6
7 Disruptive forces driving opportunity in LBS A number of forces are converging on the market that will drive continued change and demand for more flexible LBS and mapping applications. Context Location provides fundamental context for almost every mobile application. The capability to search for places near a current location has been available to developers for some time, but the ability to search for places near a future location has more transformative implications. For example, users could save time by searching for parking near their eventual destination rather than waiting until they arrive to search for parking nearby. Finding the closest gas station to a moving vehicle has value, but a more helpful solution would be to find a gas station conveniently along the driver s route ahead of them rather than behind the current position of the car. Contextual search represents a significant opportunity for developers, but doing it well is a challenge. Using bad data, small data sets, or poor data integration will lead to inaccurate results that will only frustrate users. Search algorithms must also be capable of much more advanced contextual search queries. As developers and advertisers begin to integrate context into their applications, getting it right will bring significant rewards. Yahoo CEO Marissa Mayer sees contextual search as the company s opportunity to catch up with Google and as what will push the envelope and drive the technology forward. At a Goldman Sachs technology and internet conference, Mayer said, "When I look at things like contextual search, I get really excited." IoT and automotive As auto manufacturers develop more connected cars, their executives fear losing control of the platform to Silicon Valley in much the same way that handset original equipment manufacturers (OEMs) and wireless carriers relinquished control to OS vendors. Location-based services present an enormous opportunity for automakers to differentiate their offerings and diversify revenue models. Consequently we see auto manufacturers making large investments in LBS and mapping technology that will help shift business models and control away from the current dominant players. With more capital in the system, More than maps: the evolution of location-based applications 7
8 new revenue streams will be available to app developers with less reliance on advertising-based business models. The Internet of Things (IoT) is also driving new demand and applications for location-based services due to easily understood use cases, from optimizing transit using real-time congestion data to turning on lights and heat when a visitor arrives at a destination. Much of the IoT ecosystem is made up of sensors that are situated and moving throughout the world. Understanding where these sensors are in relationship to each other and how they map against the physical world will be an important driver in growth and innovation. Emerging underlying positioning technologies Core to location-based services is the ability to accurately know the user s location at all times and in all environments. This has been limited by the capabilities of various positioning technologies, the power required to drive those technologies, and the challenge of accurately locating users indoors. However, recent advances in positioning technologies are making this a reality. Enabling persistent location capability dramatically shifts the playing field for LBS. Broadcom has launched its Global Navigation Satellite System (GNSS) location chip that enables alwayson location-aware applications using 60 times less power. Qualcomm is improving location accuracy and coverage with its IZat technology that determines location from a variety of sources including wi-fi, satellites, wireless networks, and sensors. The emergence of ibeacon and Bluetooth low energy technology has also enhanced indoor location, giving retailers a simple way to determine mobile consumers proximity. Retailers have taken notice and are beginning to look at implementing the indoor proximity-sensing capability of ibeacon to digitally engage customers while they are in the store. Daily deal vendors are also leveraging hyper-local location and search capabilities to present deals on products nearby. The emergence of these new technologies is enabling new use cases and applications that leverage hyperlocation and maps. Savvy marketers are learning to engage multiple channels and merge real-world and digital experiences. The ability of app developers to know a current location and predict a physical location of a user can be a huge asset in ad targeting. Too many developers that use generic LBS APIs such as Google are giving away this valuable asset to Google for their own targeting in return for the use of their API. More than maps: the evolution of location-based applications 8
9 Current technological and business challenges While location-based services have come a long way over the years and new opportunities are emerging, developers still face challenges. Dominant mapping providers offer limited control to developers While alternatives exist, the mapping and geocoding services market is still dominated by commercial services with tightly integrated closed systems. While these offerings generally provide solid performance and data quality, some important drawbacks are becoming problems for developers. Differentiation of maps and the user experience Differentiating an app from its competitors is vital but increasingly challenging. As feature sets converge, user interface remains the primary method of differentiation. With the industry dominated by Google s mapping API, the map style rendered on one app is essentially the same as another. But sophisticated developers are looking for more control over mapping user interfaces (UIs). Brands want mapping to be more integrated into their experience with colors, fonts, and other visual assets that are consistent with their brands. Beyond map styles, developers want more control of the functionality and capabilities of the map and its associated features of local search and routing. They also want to control the user experience and control the data to understand user location patterns. This lack of brand and data control was a key catalyst for Apple s decision to launch its own mapping platform. Google refused to provide Apple with access to data to support voice-guided navigation. After Apple had worked hard at developing and promoting Siri, they could not leverage this branded technology for voice-guided navigation. Mobile application developers spend significant amounts of money and expend lots of energy to attract users and create a brand around their applications. By integrating dominant/generic mapping APIs such as Google into their apps, developers are essentially promoting the brands of these providers. Companies that see mobile as an intricate component to their broader strategy are beginning to rethink the brand equity they are losing by promoting a third-party s trademark. More than maps: the evolution of location-based applications 9
10 Data control and competitive forces Auxiliary business and commercial interests of leading map API providers can also present a threat to application developers. In some cases, mobile developers may possess data and content that is a competitive differentiator. These app providers will want to keep that content proprietary on their sight, as loading their data into a leading vendor s map API could compromise their competitive position. For example, Yelp and Groupon both use Google Maps, yet Google services such as Google Places and Google Offers compete directly with their core offerings. Foursquare, by contrast, has chosen to use OSM data in their maps. Flexibility of licensing terms Leading mapping API vendors often build integrated offerings and business models around their architecture. For example, Google has built its business around advertising and generates revenues from the Google data it displays. Consequently, the company has restricted third-party data from being displayed on its maps. Developers are forced to uses Google s Geocoding API if they want to display data on Google Maps. Furthermore, Google has recently been adamant about not letting Google local search results be displayed on a non-google map as it makes it harder for them to monetize their advertising model. Similarly, Nokia HERE wants to control the entire stack and will not allow third-party POI content on their maps. Google s advertising-based business model can also be a challenge for government entities that need to stay impartial and not support particular brands with apps that they develop. Adding features The closed nature of leading mapping vendors also makes it difficult to incorporate new features into the system. For example, many features required by enterprises are not available via the Google API. Some market sectors such as fleet management are looking for key features including geofencing, exclusion zones, route compliance, or posted speed limits. Without access to the data in the geocoder, it also makes it hard to create a differentiated contextual experience. Challenges of integrating multiple data sources into maps While Google has made it easy to incorporate their maps into applications, the process of creating mapping and LBS services are still quite difficult. Apple s initial difficulty in the mapping business when it replaced Google Maps with their own service is a good example of the challenges of building quality geospatial technology from the ground up. More than maps: the evolution of location-based applications 10
11 One of the more complex processes of creating mapping applications is the geocoding process, which is the process of matching addresses with latitude and longitude coordinates. Some addresses are difficult to geocode, and the ambiguity of place names often creates problems. Different countries use various schemas for creating addresses, and in some cases, cities can have two separate streets with the same name. Also, the same place often will have multiple names. These are just some of the issues that come up when building LBS applications. Integrating multiple data sources into a map experience can also lead to headaches. Points of interest from content providers do not follow a standard process for delivering data. Consequently, developers need to standardize data so it can be implemented in a uniform way. They must also standardize to support more complex features, such as local search or complex routing. Weaving together map data from various sources also requires some experience understanding the nuance of each set of maps. This is particularly important and difficult given the variety of map data suppliers across multiple countries. Limitations of open source While the emergence of open source software and data in the LBS market has provided developers more flexible options, there are also some drawbacks to relying on open source software and crowdsourced data. The quality and quantity of data in crowdsourced databases can be an issue. Due to smaller or lessengaged populations, the coverage of more rural areas by OpenStreetMap is thin, and data can also be sketchy. With data being collected by individuals, each individual address or place has to be documented. Algorithms have not been developed to create ranges of addresses to fill in the holes in the database. Individuals sometimes neglect to document traffic rules, such as one-way streets or speed limits. Incidents of vandalism or deliberate submission of inaccurate data has also been reported. For example, two Israeli students faked a traffic jam on Waze in March 2014, and an individual with a Google IP address was rumored to have vandalized the OSM database. These issues have led many to believe that, while OSM data is good for local search applications, it is not robust enough for driving directions and navigation. For example, it has not been used by a major automotive OEM yet. While errors can be problematic, errors and deliberate sabotage are quickly discovered and fixed as more participants provide data. More than maps: the evolution of location-based applications 11
12 Solutions As the market for location-based services changes, innovators are creating tools and services to support new requirements. Open source stacks: technology A number of companies are building businesses around complete mapping and geocoding stacks based on open source technology. Most of these stacks are designed to sit on top of OSM data but are flexible enough to integrate with multiple data sources. The open nature of these platforms also enables developers to easily use the entire stack or just a piece. Mapbox: An open source vendor that provides high-quality customizable mapping using OSM content and some limited routing but does not include a geocoder or local search OpenLayers: Open-source JavaScript library for displaying maps in a web browser. Limited mobile support but developers are integrating it with mobile frameworks and toolkits. The library is designed so developers can use map tiles and markers from any source. This breadth enables developers to switch out map data without having to rewrite code. Flexible proprietary LBS platforms These platforms do not provide open source software but are flexible enough to work with various map vendors. decarta: Offers all core geospatial capabilities, including map rendering, geocoding, local search, routing, and navigation to enable scalable, customizable LBS apps. The platform supports global map data coverage through relationships with all major map, POI, and traffic data vendors. Developers can also index/search on their own custom data via decarta s L2 search engine. Pitney Bowes: A high-quality geocoder and map-rendering engine. Minimal POI search or routing Smaller JavaScript libraries for manipulating maps and building apps Along with compete stacks, a number of smaller JavaScript libraries and tools are available that specialize in supporting developers in building maps. Leaflet: Tools for building mobile-friendly interactive maps TileMill: Tools for styling maps More than maps: the evolution of location-based applications 12
13 Innovators in the LBS market A number of app developers in various market segments are leveraging more flexible LBS technology to create innovative mobile experiences. We believe that these leaders will set the bar for location-based applications. Tool providers and competitors will need to keep up. Branding and customizing apps San Francisco-based scooter-rental service Scoot Networks has integrated the smartphone and mapping and navigation app into the entire customer experience. Similar to Zipcar, Scoot is a short-term rental service for Vespas and scooters. With the Scoot smartphone app, users gain access to the navigation features of the app to help route riders around the city. Scoot not only wanted to control the look of their app to fit with the branding but they also needed to understand and control where the scooters were, requiring custom features. Since patrons are required to keep the scooters within the city limits, the company needs to know if one of their scooters is heading over the San Francisco-Oakland Bay Bridge or Golden Gate Bridge, requiring geofencing. The company also provides customized routes through their app that keep riders off highways and avoid cable car tracks or hills. By customizing the navigation app so that it matched the company brand, the navigation service integrated well with the entire experience and provided Scoot with much more control over its users perception of the company. Apps leveraging future location A handful of innovative applications are integrating multiple data points to provide content based on future locations. Road Trip Weather is an app that allows users to get weather reports based on a particular route. Weather reports are calculated based on the time a user leaves on the trip, providing weather forecasts for the precise time and place that a user will be in the future. Using the same concept, iexit lets users see which services are at the next exit on the freeway as well as at the next 100 exits. Spot On Time is another innovative application that leverages predictive routing. The app will integrate with a user s schedule and, based on routing data and traffic conditions, can let a user know when to leave to reach a destination on time. The app also has a real-time navigation app to guide the user to their destination and will reroute if traffic conditions change. More than maps: the evolution of location-based applications 13
14 Location awareness A number of mobile applications are integrating contextual and location awareness into the core functionality of their applications. Aviate (a company recently acquired by Yahoo) surfaces mobile content to the homescreen based on the context or location of the user. When a commuter walks onto the subway platform, the technology can make the time of the next arriving train available on the homescreen. Another application innovating around location awareness is Local. This app lets user set phone settings based on their location. Users can set up their phone to turn on wi-fi when they enter their home or silence the ringer on their device when they enter the office. Telematics The interface for LBS applications will need to be rethought within the context of the connected car. The auto industry is stuck between two different models: point solutions such as core navigation that only have one function and the smartphone model of a collection of apps that are poorly adapted to the driving experience. Simple onboard navigation with no access to data outside the vehicle is clearly not dynamic enough to be interesting. However, the smartphone model, in which drivers fiddle with multiple apps to find data, is unsafe in an environment where the primary focus should be driving. Location-based services and data need to be more integrated into driver-centric applications to support the driving experience without excessive distraction. Voice recognition and voice-activated apps will be an important part of this experience. With limited manual control, applications will also need to be smarter and more aware of a driver s needs. For example, a driver should merely indicate their intention to travel to a destination and the car should be able to predict the tasks required to safely arrive at the destination. For example, the vehicle should be able to: Search for the address and calculate the optimum route while incorporating real-time traffic conditions Find parking close to the destination and route to that location, with corresponding pedestrianrouting pushed to the smartphone Know if enough fuel is in the tank to reach the destination. If fuel levels are insufficient, it should direct the driver to the most convenient and lowest-cost fueling station along the route before the fuel tank is empty. In real-time, incorporate weather and traffic conditions into ETA calculations and reroute when appropriate More than maps: the evolution of location-based applications 14
15 Warn of traffic/speed cameras along the route Let corresponding parties know if the user will be late through integration to social apps such as Glympse Researchers at the U.S. Department of Transportation are taking location awareness beyond people to the Internet of Things. In February 2014, the U.S. Department of Transportation announced that they would move forward with enabling vehicle-to-vehicle communications through which cars on the road can communicate with each other and exchange data based on location and speed, eventually predicting and avoiding accidents. Fraud protection In Europe, Visa first began incorporating location into identity fraud in The systems understood that if a customer s phone was not in the same location as an ATM where money was being withdrawn that the transaction could be fraudulent. Systems designed to protect corporate data are also leveraging location for security. CloudLock monitors where data is being accessed from and can set geofences around physical locations where data can and cannot be accessed. More than maps: the evolution of location-based applications 15
16 Frameworks for creating long-term LBS strategy Control the brand Progressive application developers who are integrating maps into their apps are taking control of the branding within their apps. While this process may be more involved than simply calling a Google API, the result is a slicker, better-looking, and more consistent experience. This will be the growing trend, and eventually apps that stick with generic maps in their apps will look less competitive. Focus on context Context will be a growing theme over the next few years, and location is a fundamental datapoint for establishing context in a mobile environment. Providing content based on context can be a tricky endeavor, and small mistakes can lead to user frustration. Integrating multiple reliable data sources and engaging with experienced resources that can manage nuance and ambiguity will be an important component. Location-aware apps that take into account not only the current location but future locations will also help differentiate experiences. Don t be boxed in by vendors The limited flexibility of leading generic mapping APIs will stifle innovation. Developers who take the road less traveled will have the flexibility to innovate and create new experiences and differentiate their apps. Some aspects of location-based services are still very tricky and require specialists, but developers have more control over which vendors to work with. More than maps: the evolution of location-based applications 16
17 Key takeaways 1. The market for LBS is changing, with hyperlocal location and the connected car driving disruption. New investment and change will help drive new opportunities. 2. Developers need to take more control of the mapping experience within their apps to promote their brand. Differentiating the look and feel of a mapping and local search experience will be important to the success of mapping apps and supporting businesses. Control of their data is also increasingly important. 3. Context will be another important differentiator in location-based applications. Understanding a user s current and future location will be key to providing a superior user experience. 4. Open source software and flexible LBS platforms are providing new alternatives for developers to use to differentiate the navigation experience within their LBS apps. Developers need to better understand the capabilities of these alternatives and the strategic implications of staying with the status quo. More than maps: the evolution of location-based applications 17
18 About Peter Crocker Peter Crocker is the founder and principal analyst at Smith s Point Analytics, a full-service market research and consulting firm focused on the mobile and wireless industry. Crocker has five years of experience in the mobile and wireless market, both as an analyst and as a marketing professional. Prior to founding Smith s Point Analytics, he was a senior analyst with VDC Research covering the enterprise mobility and mobile software markets. In addition to his experience following the market as an analyst, Crocker has been instrumental in building business and guiding strategy at mobile software startups including Pyxis Mobile and Medxforms. He also has a background in financial service and consulting and holds an MBA from the College of William and Mary. He has been a regular contributor to online and print publications such as Mobile Enterprise Magazine and Rethink Wireless. About decarta Headquartered in San Jose, Calif., decarta ( is the leading global independent LBS platform provider. Its enabling software technology powers high-volume LBS solutions across multiple industries, including mobile, local search, automotive, and fleet management. The technology includes advanced local search, geocoding, custom maps, routing, and white-label navigation applications/sdk. decarta s customers use its products to deploy their own customized LBS offerings, such as BlackBerry, INRIX, Samsung, GM OnStar, Ford, MiX Telematics, and FullPower s MotionX GPS Drive app. More than maps: the evolution of location-based applications 18
19 About Gigaom Research Gigaom Research gives you insider access to expert industry insights on emerging markets. Focused on delivering highly relevant and timely research to the people who need it most, our analysis, reports, and original research come from the most respected voices in the industry. Whether you re beginning to learn about a new market or are an industry insider, Gigaom Research addresses the need for relevant, illuminating insights into the industry s most dynamic markets. Visit us at: research.gigaom.com Giga Omni Media, Inc. All Rights Reserved. This publication may be used only as expressly permitted by license from Gigaom and may not be accessed, used, copied, distributed, published, sold, publicly displayed, or otherwise exploited without the express prior written permission of Gigaom. For licensing information, please contact us. More than maps: the evolution of location-based applications 19
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