Location Based Services: Are they useful or just a fad?

Location Based Services are in rage now; developers want to get into it and users just want to line up for the release of the next LBS/geolocation app. But the question is, are they any useful? If Foursqaure’s plateaued out usage is any indication, people expect a lot more from their location based services app than just the ability to shout out “Hey, I am here”. Considering, most of the competition in the social networking space will play out on the mobile front, it would do developers well to find out exactly what users expect from such a service.

White Horse’s survey on Geolocation apps “Lost in Geolocation: Mobile Survey Report” tries to answer this and more. The firm surveyed 437 smartphone owners in the survey of which 56% said they knew about these services and 39% said they used them. Facebook Places with 42% usage came first, followed by a distant Google Latitude (27%) and Foursquare (25%).

The huge usage number for Facebook Places can be explained by the fact that it comes bundled with the Facebook mobile app and therefore adoption is just a click away. Probably the same can be said about Google Latitude which is there in the Google Maps mobile app.

So what kind of services matter to users?

As is evident from the survey, making social connected, staying connected with friends and getting referrals of various places from friends are the most important functions expected of a social networking site. “Achieving activity milestones in a game” like Foursquare’s check-ins are only in the minds of 4% of respondents. No wonder than, that Foursqaure usage is dwindling. Similarly, ‘discounts’ are only preferred by 8% of users, a figure Groupon and Gowalla wannabes must take note of.

Barriers to adoption of Location Based Services

Privacy concerns and no perceived value are the top most reasons preventing adoption of Location Based Services.

The third reason ‘Redundant to how I already connect’ ought to be of particular interest to innovators. By learning more about how users connect with each other, and finding ways to seamlessly integrate Location Based Services into these habits, this 19% of users could be brought into the realm of Location Based Services. Network externalities, with growing usage, should ensure that people will start deriving and perceiving benefits out of these apps very soon. Privacy concerns are a more serious matter; considering that people store a lot of personal data on their phones, a compromised app could be a disaster of huge proportions. This is were app makers, mobile OS developers like Apple and Google, as well as mobile app makets need to work together to ensure that apps that go into a user’s mobile are completely secured and well tested. Besides, the fear of inadvertently letting complete strangers know your location is a prevailing fear among many.

Users of dedicated Location Based Services are more influential than those using non dedicated services like Places and Latitude

As is evident from the chart above, users of Foursquare are influential and opinion makers in their circles as far as social networking apps go, which shouldn’t come as a surprise. So any new LBS service, would have to get these early adopters (the ones using Foursquare) rather than the ones using Facebook places, build a compelling value proposition for these early adopters and then think of moving on to regular users and skeptics.

The report provides the following conclusions and recommendations

  • Most brands with promising location-based content are better off building than buying in.
  • Help consumers use geolocation for new social purposes, not just communications.
  • Build a social media presence before moving into geolocation.
  • Address privacy concerns directly and transparently.
  • Develop a brand-appropriate geolocation experience based on the model of dedicated geolocation services like Foursquare. But pay close attention to what Facebook Places is doing.

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