There are various indicators that location based services (LBS) are gaining ground in emerging telecom markets. In Pakistan, for example, we see new services, increased activity with user generated location content and overall more devices with either GPS built in or using Google’s location approximation service. Related to all this is the proliferation of search services which give information about points of interest (POI) and ratings and reviews information. All this is happening when broadband (including wireless) choices are growing and prices are falling. Another trend is that social networking is more popular and sharing location based info is in demand.

Of course, for Pakistan this is just the start of services built around location and so the services are quite basic. The challenge for developing countries is the data availability, accuracy and the maintenance of information. GPS navigation in Pakistan is in its early stages as well.

Google map maker is making this better in this respect, allowing user generated content. As TechLahore puts it:Ever since Google opened up Map Maker allowing users to post location information and map data, individuals from Pakistan have outdone all others in volume and quality. This underlines the interest if the opportunity is there and huge potential of such collaborative work. See CIO Pakistan for report on the map convention 2008.

Local map sites with reviews and POI search
A few companies are active in the area of map development and providing map data in Pakistan, for personal navigation devices. We have covered a few of them before such as naqsha.net. Naqsha.net has teamed up with Tracking world to provide Garmin SatNav units preloaded with maps. These units are portable and can be placed in the car and taken out.

As noted before, Naqsha website could use improvements in user interface but its a decent start and provides search and contact info. The hard question for these companies is how to make money when maps are still not common and not affordable for the public in general.

Mobile Companies and LBS
When it comes to value-added services and making money, our mobile companies are eager to try all kinds of services. Location services are no exception. We saw some really basic ones come out and then the driving directions and detailed maps were introduced.

Ufone’s service is one example, Warid has a friend finder and place finder service and MobiTrack is another service by Mobilink World. MobiTrack provides turn-by-turn instructions and it only works on compatible handsets. It seems to be built on an existing third party product which has been customized for Mobilink. At least they have a full manual explaining how the app works. However the Mobilink World site is not very user friendly and it could use some improvements.

I’d be interested in knowing the total number of users who have tried these map/location services on their phone.

Before ending this roundup, I leave you with these interesting views about the state of companies providing location services.

The recent report on trends in location-aware apps from Apple’s App Store, Google’s Android Marketplace, and Blackberry’s App World released by Skyhook Wireless, itself a provider of a patented hybrid system of location awareness, reveals a buoyant market for LBS apps. Indeed, the Apple App Store was found to have the greatest number of location-based applications, at over 2,300, and the highest percentage of paid for location app, at over 75 percent. Sixty seven percent of Blackberry apps are paid and eighty percent of Android Marketplace apps are free.

Clearly, location apps are popular, as their increasing ubiquity and popularity across a variety of app stores demonstrates. But move past the hype and the excitement generated by the flurry of activity in the space and it becomes that clear location services – by themselves – are not game-changing.

Location-aware data is not enough

Indeed, mobile location-based services and social networking companies such as Loopt, Pelago, and Sense Networks have invested a great deal to achieve their vision, which revolves around the provision of an array of consumer and community services supported by socially-tagged, location-aware data stores. The data they have is impressive and the expansion plans they pursue are ambitious. However, they also face formidable competition from Internet giants (Google, mySpace, Facebook, and Yelp) that have already aggregated their own large sets of useful, social content, and are anxious to extend their reach to mobile.

Can companies compete on location data? Many players are positioning themselves to do just this. However, I submit that location services – and the structures and systems in place to deliver them – represent little more than an incremental innovation on top of the immense stockpiles of location data and content that are largely under the control of established Web companies and heavyweights. As a result, these Web giants are well-positioned to leverage location data to mobilise their offers and ultimately dominate the marketplace. There are, however, options and strategies mobile location services companies can employ to win the game – even though, as I argue in the title of this column, location services on their own are far from game-changing.

Admittedly, not everyone shares my view.

Sam Altman, founder of Loopt, told me in a recent interview that he strongly believes in the value of innovation in location-based services and their central position in personal mobility experiences. A prime example is the company’s iPhone app. Loopt’s Mix feature enables users to connect – without compromising their personal privacy – with other users nearby. What’s more, users can find places nearby on Yelp and find what their friends on Loopt are saying about those places.

Beyond this interesting user experience, Loopt’s location-related content is thin and, therefore isn’t terribly useful – yet. However, it’s not the company’s progress with its service offering that interests me as much as its business priorities.

Specifically, Loopt has correctly honed in on two features/functionalities that are fundamental to all location-based services moving forward.

1. Connecting users to each other (using location in addition to other social filtering parameters).
2. Connecting users to information (using location as an additional input to search).

The intersection between location and search on a mobile is particularly promising, and has caught the attention of location services providers including Loopt, Sense Networks (CitySense) and Pelago (Where service), as well as mobile search services providers, including ChaCha, a company that connects users to a human agents trained to provide answers to their SMS text search queries, and, more recently, voice-activated queries.

However, these players are all pursuing business models built around a broad but rather general vision of what location-based services are – and can be.

In their view, location can be to mobile search and social networking what PageRank currently is to Internet search. Put in this perspective, location is potentially disruptive. What’s more, the companies that control the data stores (thus the capabilities to connect users to information they require, and to each other) are positioned to rock the industry.

Location information is power, both to the companies that deliver it and the consumers, who benefit from the tremendous amount of utility it provides.

Love the restaurant where you just ate? Review it, post it online, and alert everyone (or just your friends) nearby to try the place, all while you’re waiting for the cheque. Want to find a good barber shop in Mountain View, California? Ask a question, direct it only to users in downtown Mountain View, and be alerted when you receive an answer from someone there. The immediacy, intimacy, relevance, and quality of such services make them very exciting for consumers.

And let’s not forget the potential for the delivery of more relevant, location-aware mobile advertising, which is the main attraction for local stores, clubs, restaurants, businesses and organisations hoping to attract consumers to their premises.

The location tools and technologies used here to record what we do and where we are (all the while paying careful attention to personal privacy concerns) as part of our day-to-day routine provide advertisers, agencies and mobile operators with a potentially much deeper understanding of consumer habits, insights that can greatly increase the value of mobile advertising linked to location-based services. Mobile contextual advertising is already de rigeur, but location has the potential to make mobile advertising more relevant, more personalized, and thus much more effective.

But it doesn’t stop there. Adding location on top of traditional information sources we know from the Internet provides online companies with further opportunity to personalise their content for their users on the move. Location can also boost the quality and value of online recommendations (where the system delivers suggestions based on am implicit understanding of user content preferences and requirements) and search (where an explicit query triggers the delivery of additional related results).

Why location-based services are an incremental innovation

Clearly, location services that connect users to each other, or information, or both, have the best chances for success. However, there are several major obstacles that make this a difficult space for companies – particularly startups – to gain traction.

1. Users can resist change: Connecting users to each other and introducing them to new social networking communities could be tough, particularly if they are already loyal to the communities where they are already members. The social networking space is already nearing saturation point, at least in the US and UK.
2. User-generated content matters: Without a large data store of geotagged content, there is little value to a location-based service. Yelp and CitySearch, companies that have large data stores of reviews, listings, phone numbers, and shop information, indexed by location, have the advantage here.
3. Search needs location: Developing effective mobile search will likely require heavy-duty algorithms and design (that factor location and context into the equation), and a large infrastructure to deliver.
4. Google is on an expansion course: Companies – particularly startups – face strong competition from Google. Latitude, a service that allows users to share their location with their friends on Gtalk, can be read as Google’s bid for market supremacy. Is Google over-reaching? Not if we consider the company’s ability, through Latitude, to leverage legions of clusters for search to deliver more relevant information culled from a wider data set than any startup could ever stockpile. Furthermore, Google’s dominance in contextual advertising, which it is trying to extend to the mobile space, allows it to reach out to a wide network of advertisers and businesses eager to attract traffic to their sites and tap in to the potentially lucrative Long Tail of search queries. While even Google will have difficulties as it sharpens its focus on selling paid search advertising to the hyperlocal market, its brand recognition and reach may allow it to make considerable inroads and thus pose a significant threat to a broad mix of location services providers and mobile ad networks.
5. Brands need trust: Users are generally not accustomed to sharing their location data with brands and merchants. To break the ice and convince consumers they can trust brands with their personal information, all communications (particularly brand messages delivered via mobile marketing campaigns) will need to be permission-based. Established brands will more likely be able to get users to trust them and surmount hurdles such as opt-in mechanisms and guidelines imposed by compliance measures from the Mobile Marketing Association. Brands best positioned to achieve their business objectives, and reach mainstream users instead of just early adopters, are ones that have brand trust.
6. Content without consent is spam: The avalanche of new content linked to contextual data (what we do and where) opens the door wide open to the delivery of spam and the spread of fraud. All companies have to do their utmost to attack this problem at the root. However, many startups will likely find they lack the infrastructure to keep this issue in check.

Put another way, making a mark in the location services space requires more than the ability to pick up on a user’s location. Location services require the professional and reliable interplay of systems and services enabling search, content delivery and discovery, social networking and communication, and mobile marketing and advertising. What’s more, players in this space must connect and collaborate with a complex value chain that includes advertisers, enablers, operators, consumers, and companies we have yet to identify.

Given these factors, the players that emerge dominant in this market are likely to be the names we know from the Internet: Facebook, mySpace, Google, and Yelp. Why? Because, as I have pointed out, it’s not about location; it’s about the data and the networks that power location services. Internet giants have experience, communities, content and search. Location is just another ingredient they can add to their already successful recipe for success. Put simply, location serves as an additional input, paving the way for these companies to provide interesting new applications – applications that fundamentally leverage the assets already out there on the Web.