The location-based services market (hereafter referred to as LBS) was valued at USD 36.2 billion in 2019, and it is expected to reach USD 126.4 billion by 2025, registering a CAGR of 23.2%, during the period of 2020-2025. The proliferation of smartphone usage is driving the location-based services market. According to a report by the United Nations, nearly 41.5% of the total world population, as of 2019, were smartphone users.
- With advancements in technology, many industries are willing to adopt new systems, primarily to improve their transportation efficiency. With the advent of cloud and IoT systems, the enterprises now can automate most of their operations. The healthcare sector is also expected to witness a more significant number of applications. The growing IoT applications, devised with healthcare requirements, are expected to contribute to the growth of the market study for the healthcare vertical. For instance, Texas Health saved USD 412,000 using the real-time location-based system. Medical equipment is now easily located and maintained.
- Generation and storage of data have created further opportunities for the end-users, who can use the data for multiple purposes that include understanding fuel consumption patterns, the efficiency of drivers, position of products, and goods within a supply chain, in warehouse and estimation of best places for the product positioning. This opens opportunities that are limited to the visions of the user’s application needs.
- Furthermore, with the significant ongoing investments for integration of 3D maps applications with smartphones, market players, such as Nokia, Samsung, and other OEMs, are entering this market. Online web services providers, such as Amazon Inc. and Microsoft Corp., among others, have also started offering 3D maps on their platforms. For instance, Parrot, a prominent player providing wireless devices for mobile phones, has positioned its consumer drones, for 3D modeling, mapping, and agricultural uses. These instances are expected to drive market demand across emerging economies during the forecast period.
- In October 2018, GSMA Global data said that there were more than 9.166 billion mobile connections, including M2M connections and 5.169 billion unique mobile subscribers. With the increased penetration of mobile connectivity, technological advancement in network connectivity and economies of scale have impacted the market positively.
- Furthermore, many retail companies are already implementing geofencing in their marketing strategy. For instance, Walgreens is using geofencing to promote customer loyalty by pushing a notification that allows the user to open their app every time they enter the geofenced area. The user can further view promotional offers by looking at their account details. The implementation of geo-marketing in retail is, thus, boosting the market for location-based services.
- The location-based services currently face tremendous risks from government policies and regulations on consumer privacy. Most of the software application developers are becoming aware of the increasing international privacy laws, as well as industry codes of self-regulation, that govern its usage.Google is planning to implement a new policy change that will require all of the app developers to undergo an approval process before their apps collect the user's location information while running in the background. This policy is applied for all new apps from August 2020.
Key Market Trends
FMCG and E-Commerce Sector Expected to Witness Significant Growth
- There is an increasing trend in e-commerce establishments since the past decade. Mobile apps have contributed to their greater success, due to personalization features. They are easier to use and form a direct link between brands and customers, thus, enabling high levels of consumer engagement.
- Mobile apps help e-commerce stores analyze the current market and consumer behavior, resulting in forming better market strategies. LBS is essential to popular ride-sharing apps, like Uber and Lyft, and navigation apps, like Waze and Google Maps. US-based Uber is the most popular carpooling app globally. It gets the request of the passenger rides based on the GPS location of the passengers. The app uses two-way LBS technology, so the driver knows where to pick up the user, and the user is able to see the live location of the driver on a map.
- Beyond food and restaurants, all the nations are witnessing a trend of location-based food delivery services. LBS has proved to be of utmost advantage for food delivery platforms, due to the introduction of GPS and mapping.
- Germany-based Foodpanda has partnered with Open Street Map and Google to use the customers’ geo-location. The company also uses geofencing to mark the restaurant’s geolocation and then mark about three to ten radius where the restaurant can deliver.
- To retain customers, restaurants are opting for online food ordering app development. Munchery is a US-based full-service delivery model, where customers can order food by looking at the image of the dish, list of ingredients, and the name of the chef who will prepare it. It has its own logistics facilities that use google maps to locate the position of the customer.
North America Expected to Occupy Significant Share
- North America is expected to witness a significant share for the location-based services market due to the increasing smartphone penetration and the growth of IoT technology in the region. The North American region is the second-largest market for smartphones and tablets and for in-vehicle navigation systems as well, the largest manufacturer of aircraft, and one of the largest manufacturers of aerospace and maritime navigation products.
- The United States commands a prominent share in the North American region in almost all the end-user industries and especially in the consumer electronics market. The country boasts significant smartphone penetration and sales. For instance, smartphone sales in the United States during 2018 stood at USD 79.1 billion according to CTA; the sales are expected to increase even further with the country's plans to move toward 5G services.
- In addition, the country boasts various GPS infrastructures, such as satellites, equipment manufacturers, and supportive research funding, that are combined with government support to boost the technology's penetration, and accuracy is influencing the market growth. For instance, in November 2018, the US Federal Communications Commission (FCC) waived off rules to allow devices in the country to access signals transmitted by Galileo Global Navigation System; this influenced the GNSS chip makers in the country to incorporate the capability, thus increasing the accuracy.
- The companies, such as Google (Waymo), Uber, and Tesla, are increasingly investing in autonomous driving technologies in the United States, and in line with this, the traditional automakers, such as Ford and General Motors, are keen on investing in the technology in the United States. Recently, GM's self driving division named Cruise raised USD 1.15 billion, thus, making its total valuation at USD 19 billion.
- The Canadian automotive industry is observing a steady growth, and in 2018, the retail sales of the new automotive vehicles in the country stood at CAD 82.93 billion, according to StatCan. Furthermore, its industrial automation demand is on the rise as well, according to IFR, Canada's unit shipment of industrial robots in 2018 stood at 3,600 units. Owing to such developments, the country is expected to command a significant demand for LBS, over the forecasted period.
The location-based services market is fragmented. Ongoing research and technological advancements are expected to be the key trends in the market. The companies are adopting various strategies to expand their customer base and mark their presence in the market.
- February 2020 - Cisco Meraki launched Phunware location-based services in the Meraki Marketplace. The Meraki Marketplace now provides Phunware, an important channel to thousands of Cisco Meraki customers, across more than 100 countries worldwide, to suit the potential customers and existing clients need for LBS solutions for their network environments, without the risk of deploying unproven technology.
- October 2019 - Qualcomm Technologies Inc. collaborated with the Indian Space Research Organization (ISRO) to provide support for India’s Regional Navigation Satellite System (IRNSS), Navigation with Indian Constellation (NavIC), in select chipset platforms across the company’s upcoming portfolio. The solution is built on Qualcomm Technologies’ leading foundational inventions in location-based position technology. As part of the updated platforms, the Qualcomm Location Suite supports up to seven satellite constellations concurrently, including the use of all NavIC’s operating satellites for more accurate location performance, faster time-to-first-fix (TTFF) position acquisition, and improved robustness of location-based services.
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