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When the Phone Goes With You, Everyone Else Can Tag Along
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The market for location-based services is expanding rapidly, piggybacking on the cellphone revolution. About 43 million people worldwide will use location-based services on cellphones this year, almost triple the 16 million from last year, said William Clark, a researcher at Gartner, a technology consulting firm. Gartner projects that the market for such services will mushroom from $1.3 billion this year to $8.1 billion by 2011.
Boosting the market is online advertising, whose growth is likely to enable applications to be free. Greg Sterling, of Opus Research in San Francisco, forecasts that mobile advertising revenue for North America and Western Europe will hit $5 billion by 2012.
Google Chief Executive Eric Schmidt, whose company sends map information to iPhone users over AT&T's wireless network and dominates the online ad industry, heralded the trend. "If you think about it, a mobile phone is much more personal and therefore the advertising can be much more targeted," he said in a CNBC interview yesterday. "And we win when we have more targeted ads."
Such ads are desirable, Loopt's Knapp said, because they can be delivered based on where a person is, in real time. Take movies. "You could see a banner ad for a coupon to go to any old Loews theater. But what if that ad said, 'Hey, Brian, the new Batman is showing at the Loews in Alexandria, a couple of miles from where you're heading two hours from now. Click on this coupon, and it's half rate,' " he said. "Imagine the conversion rate."
Loopt is planning to offer targeted ads from CBS and others. But Loopt users must opt in, and Loopt will not share user location with advertisers, Knapp said.
The big issues are transparency and user control, said James X. Dempsey of the Center for Democracy and Technology.
"How easy is it for the user to turn the location function on and off, and how easy it is for the user to delete past location information?" he said. "What are the companies collecting? Who are they sharing it with? How long do they store it? And what control does the consumer have over the information? These are the fundamental questions."
The wireless industry, through CTIA The Wireless Association, has issued guidelines for location-based services that stress consumer notice and consent and data security. But, Dempsey said, self-regulation is only part of the solution. What is needed, he said, is baseline federal legislation covering all firms that collect personal electronic data.
Arispe, whose iPhone activation was delayed by system crashes, acknowledged that with geolocation, "anybody can really know where you're at." That might be disturbing, he said, but the same technology could also help find a missing child. "Like anything, it's good and bad."
