Enter Google; Exit Microsoft, Stage Left
Sam Wormley
http://www.gpsworld.com/lbs/enter-google-exit-microsoft-stage-left-9128?print=1
November 11, 2009
By: Kevin Dennehy
LBS Insider Newsletter, November 2009
Google Maps Navigation will change the way the location-based services industry does
business. How it will change the industry remains to be seen, but a major player offering
the same services for free that companies are now enjoying much profit from is very
disconcerting.
In other company news, MSN Direct’s use of unused FM radio spectrum was a great idea in
2004. It effectively used unused portions of the FM radio spectrum to deliver such
location-based services as real-time traffic, weather, and other content. It was a victim
of low-cost and evolving technology for LBS delivery. Having Microsoft involved in LBS was
a big shot in the arm for the industry. However, it remains to be seen what the company’s
plans are to continue in the LBS space in the near future.
Despite industry observers and competitors who say otherwise, Google’s launch of its
Google Maps Navigation product will clearly change the players, services offered, and
financial stability of the location-based services market. The service, while being touted
as free, still requires initial users on the Verizon system to have requisite voice and
data plans.
With such capability as turn-by-turn navigation, voice guidance, and automatic re-routing,
Google Maps Navigation is no entry-level app that competitors should ignore. Google Maps
Navigation initially is being offered on the Android 2.0 series devices.
Companies have seen this type of service coming from Google for a long time and predicted
some dire times for both personal navigation device (PND) companies and handset navigation
vendors who offer services in a very lucrative market.
Some say that Google, which dropped Tele Atlas as its mapping company for North America in
early October (though kept the company’s mapping data for international markets), will
make money off of location-based ads that are sold in conjunction with the navigation
solution. The company purchased mobile advertising company, AdMob, for $750 million,
though it is not known whether it AdMob will be joining the location-based advertising
fray in conjunction with Google Maps Navigation — but the speculation is there.
Stay tuned, the fireworks and fallout from this announcement are yet to be determined.
MSN Direct to Be Shut Down in 2012
Microsoft’s recent decision to shut down MSN Direct in early 2012 not only means that a
major company’s location-based services offering is going away, but also signals that the
way LBS is delivered is rapidly evolving. MSN Direct, launched in early 2004, was offered
on several navigation devices, such as Garmin’s Nuvi line.
MSN Direct works with unused FM radio spectrum to broadcast such data as real-time
traffic, weather, stock quotes, and local gas prices. Microsoft said that the demand for
the service had decreased significantly with the rise of Wi-Fi cellular, FM RDS (Radio
Data System), and other digital networks.
The data networks that deliver traffic and other content to mobile and in-car devices are
going through a significant evolution, said Scott Sedlik, Inrix’ vice president of
marketing. “MSN Direct was an innovative service early on and did provide value-added
information, but ultimately is a casualty of getting stuck between other networks that
were able to deliver more scale…less expensively.”
Sedlik said that RDS-TMC (Traffic Message Service) continues to be the dominant broadcast
network for delivering traffic in North America and Europe. “Clear Channel’s Total Traffic
Network has the broadcast adoption with more than 1 million subs from BMW, Mini, TomTom
and other PNDs, OEMs. Navteq’s RDS-TMC network has grown from a few thousand subs to
several hundred thousand based on their ad-supported model that is bundled with Garmin
PNDs at retail,” he said.
Sedlik said that XM/Sirius traffic data services, delivered via satellite, have had some
success in automotive. “However, the high subscription price and Sirius’ financial
stability have created significant concerns at auto OEMs regarding the long-term viability
of the services,” he said. “HD radio broadcast data services, and [Digital Audio
Broadcasting] in Europe, are still in their infancy, but are expected to deliver broadcast
services next year. MSN Direct ultimately got squeezed between the various business
models and content of these one-way broadcast services.”
While one-way broadcast services may be dominant right now, the end-game is two-way
connectivity for delivery of traffic, navigation, and other services, Sedlik said. “The
iPhone and, soon, Android-based devices are creating a revolution in the classical mobile
value chains. They are spurring intense adoption of GPS-enable smartphones,” he said.
“Two-way connectivity and the evolving value chain allow application developers, and OEMs,
to deliver incredibly rich, up-to-date, and personalized traffic, navigation, weather and
other content in ways that were previously not financially viable.”
Microsoft said it will provide pro-rated refunds for existing MSN Direct customers,
including those in a one-time payment program.
So while MSN Direct is shutting down, Sedlik predicts that RDS-TMC continues to grow in
the next few years in terms of overall subscriptions, but will ultimately decline over
time. He said that HD radio will gain some adoption, particularly in automotive to steal a
share of the market from satellite operators. “GPRS and GSM, as well as hyrbird HD/GPRS
solutions, will gain the majority of the market opportunity,” he said.
Echoing Sedlik’s remarks about the rise of the smartphone as the platform of choice to
deliver traffic and other content, Andre Gueziec, Beat the Traffic CEO and founder, said
that wireless data plans are going down in cost for 3G and 4G service. “We see the
smartphone as the key client for traffic information. We are moving aggressively with
consumer and white-label products for Blackberry and the iPhone,” he said.