Phone makers cash in on location services

In a bold move to accelerate the adoption of location services for mobile devices, the world's two largest handset makers have each introduced their own navigation services, a move that could pit them against mobile operators.

Nokia and Motorola, the number one and number two handset makers in the world respectively, each introduced new products at the 3GSM World Congress in Barcelona this week. In addition to adding new hardware products that will be able to receive signals from satellites to fix a subscriber's exact location, the companies have also introduced their own navigation services, which they plan to sell directly to consumers.

While the business models on these services vary slightly, it's clear these companies are no longer content to wait for mobile operators to begin offering their own location services.

"The GSM carriers in particular have slept a little bit when it comes to location services," said Javier de Salas, vice president of international business development for Global Locate, a GPS chipmaker. "And now the handset makers, like Nokia, are putting together the ecosystem themselves. So I think there will be some competition between them."

For several years the mobile phone industry has been talking about using global positioning satellite (GPS) technology to help provide location services, such as turn-by-turn navigation, for mobile phone users. But these services have been slow to roll out through most of the world.

Mobile phone carriers using the CDMA (code division multiple access) standard have introduced handsets and services much faster than their GSM counterparts. Part of the reason is that embedding GPS technology into CDMA handsets is inherently easier and less expensive. But another major factor, at least in the US, was a mandate from the Federal Communications Commission, which required operators to add technology that would allow them to locate people in case of an emergency. As a result, all phones sold in the US today through the Verizon Wireless and Sprint Nextel networks have integrated GPS chips.

By contrast, GSM operators, which far outnumber CDMA operators on a worldwide basis, have struggled to introduce GPS handsets and location services. There are several reasons for this, including a lack of standards, expensive chipsets and a reluctance on the part of operators who still believe GPS technology doesn't provide accurate enough location fixes.

"European GSM operators were actually early adopters of location services," said Guylain Roy-MacHabee, CEO of RX Networks, a mobile positioning and services company. "Vodafone was very active at assessing location technology, but the promise of the technology didn't live up to expectations and the services flopped."

Finally the market is changing. A new standard for embedding GPS into GSM chips has been established. Prices on integrated chipsets are falling. And now carriers are envisioning new ways to use location services, such as for local search and mobile advertising.

As all the pieces fall into place, GSM operators will probably follow the lead of their CDMA counterparts who have already begun offering location services as a way to generate new streams of revenue. In the US market, for example, Verizon Wireless charges users an additional $9.99 (£5.10) a month or $2.99 per day to use its navigation service. Mobile virtual network operators Boost, Helio and Disney Mobile offer tracking services. Boost charges $2.99 per month for its service.

But mobile operators aren't the only companies going after this market. Personal-navigation software companies such as TomTom are already offering versions of their software for high-end smart phones.

And now Nokia and Motorola are getting in on location and navigation services. On Monday, Nokia introduced the 6110 Navigator, a slider phone with built-in GPS chip. Using the handset's embedded software, consumers can view their current location on a map, search for destinations, find specific routes, or locate services such as restaurants, hotels or shops that are nearby.

The first set of maps will be preinstalled on the phone, but Nokia has also set up a Web site where customers can download additional maps from around the world directly onto their handsets. The navigation software and maps are free. But Nokia will charge a subscription fee to access additional services, such as voice directions.

Eventually the service could include other location-oriented services, such as live traffic updates, said Sven Koerbitz, a spokesman for Nokia. The company also said this week that it plans to make application programming interfaces to its software available to third-party developers so that they also can develop new services and applications that leverage location through GPS.

Nokia also plans to embed GPS technology in a wide range of its N-series and E-series phones. The maps and software are available from Nokia now, and the Navigator 6100 is expected to be in stores in a few months, representatives said.

Motorola is taking a slightly different approach to the market. It introduced a separate GPS receiver, called the T815, that when coupled with its new MotoNav software turns a Bluetooth-enabled smart phone or Java handset into a navigation device. The receiver is small enough to fit into a pocket, or it can clip onto a car's sun visor. The product will come in two versions -- one for smart phones and one for mass-market Java-based phones.

The smart phone version will come with all the maps and navigation software installed on a memory card. Users pay a single fee for the memory card and simply slot it into the device. Users with Java-based phones can sign up for a 12-month subscription service that delivers maps and directions to their phone. In addition to navigation and local search capabilities, MotoNav also provides live traffic updates. Eric Schneider, a spokesman for Motorola, said that additional location services would be introduced through the MotoNav application. The T815 and MotoNav will be available in the second quarter of 2007.

As location technology improves, RX Networks' Roy-MacHabee said, other handset makers and the phone networks won't be the only companies vying for a piece of the location-service market. He also predicts that a large company, such as Google, Yahoo or Microsoft, will try to launch its own navigation and location services independent of mobile operators.

"With assisted GPS and predictive GPS, applications can be built from third parties that don't require information from a carrier about location," he said. "So it wouldn't surprise me if a big-name company came in and started offering their own service. And then the mobile operators will really be challenged."