LBSN services like Foursquare and Gowalla, which add extra fun by including gaming elements, are steadily growing in global popularity. When the truly global social networks like Facebook and Twitter add location-based services (LBS), the pulling power of LBSN will become enormous.

ABI Research has estimated that revenues from mobile LBSN will reach US$3.3 billion by 2013. That number could increase significantly if the advertising and sponsorship power of Facebook alone is factored into the equation.

LBSN business models

ABI's view of the future for LBSN suggests that some sharp new changes of direction will be necessary, adding: "Successful business models may differ from what many observers expect."

LBSN will be influenced by technologies coming into play. One is Skyhook Wireless's hybrid location solution that combines GPS, Wi-Fi and Cell-ID for improved indoor coverage. Another is the growth of  open location-based platforms, such as uLocate's Where, being used to power social sites.

All it needs is for Google to launch its own full-blown LBSN to go with its maps and its recently announced free navigation service, and competition for market dominance will reach new and intensified levels.

Meanwhile several factors are hindering mass market adoption and clouding the development of business models. These hurdles include continuing privacy concerns, the cost of data plans, and the fact that many small players are struggling to create sufficient brand awareness in a fragmented market.

It's not just about location

However obvious it may seem that location is crucial for LBSN, it's not the be-all and end-all that some may like to believe. Nate Janewit, a computer scientist at Stanford University, suggests companies need to think differently about location in order to wring more value out of their vast stores of data. He believes location-based services (LBS) should be viewed as a component of a bigger picture.

"Put another way, making a mark in the location services space requires more than the ability to pick up on a user's location," he says. "Location services require the professional and reliable interplay of systems and services enabling search, content delivery and discovery, social networking and communication, and mobile marketing and advertising. What's more, players in this space must connect and collaborate with a complex value chain that includes advertisers, enablers, operators, consumers and companies we have yet to identify."

Janewit expects the winners that will emerge in LBSN are the names that are already big on the Internet - Facebook, mySpace, Google and Yelp. He explains: "It's not about location; it's about the data and the networks that power location services. Internet giants have experience, communities, content and search. Location is just another ingredient they can add to their already successful recipe for success."

Analyst and blogger Ross Dawson agrees in essence with Janewit. He says: "The likelihood is that existing social networks will predominate. People are likely to actively maintain their profiles on just one or two social networks, so it will be difficult for new players to gain traction."

Setting the stage

LBSN started in rough form in Japan before the advent of smartphones with GPS. The Japanese location-based networks were mostly dating sites. One of them was set up to identify a potential dating partner with shared interests if you were within 300 metres of that desirable soul.

The service fell short because it relied entirely on tower triangulation. Some of the targeting was out by a kilometre.

When smartphones arrived, instruments and apps from RIM and BlackBerry did much to pioneer LBSN. This modern social phenomenon took off in a big way after the launch of the iPhone and Apple's vast app store.

Today you can find lists and lists of LBSN services. Some are fairly new, some are looking old and tired but hanging in there, and a few have made a remarkable impact. They are the ones that either appear to have the most growth potential or the greatest vulnerability to competition from the real biggies.

All LBSN services have elements in common. They allow you to let your friends know where you are and they let you find friends in your vicinity. You can use the service to recommended restaurants, stores, movies, bars and other social venues in greater or lesser detail - anything from a terse written review to merely a thumb's-up or thumb's-down.

As these services improve they strive to add more functions, such as geotagging, photo sharing or some integration with Tweets or Facebook status updates. In principle, however, what they all do is say to your contacts: "I am here. You are there. Shall we get together?"

At present there are no LBSN services which are really competitive on a global scale. Among the more successful and better known, we have:

• Foursquare, in many ways the trend-setter for LBSN. It adds a fun contest to the basic service. It's a nice model that does well wherever it is offered, but it's active only in 40 North American cities and 15 in Europe
• Gowalla, which also includes a game-playing feature. It is international but less noise has been made about it than Foursquare
• Loopt, which began as a dating site, became a more widely-based LBSN and has teamed up with Verizon Wireless to enhance its location-based networking capabilities
• Whrrl, similar to the larger Yelp online community, but winning fans by mapping everything onto Google Maps
• BrightKite, which has much of the feel of Twitter, and which entered the realm of augmented reality with the launch of its Layar Reality Browser
• GyPSii, which allows users to upload geolocated photos, videos and other information

Enter the giants

The world middleweight champion, Twitter, and heavyweight champion Facebook are about to join the LBSN fun.

It's been forecast that the total number of Twitter users will reach 26 million during 2010. Facebook meanwhile has already reached the 300 million mark. Both have paved the way to introduce their own LBSN.

Twitter made a direct move in August when it announced the imminent launch of an API to tag any tweet by latitude and longitude. The API will allow third-party programmers to build location-aware services and help users to connect based on their locations.

The location feature will be off by default, which makes it an opt-in service. This should please the privacy advocates.

Facebook hasn't said anything about LBSN directly. However, there is a very strong pointer in the new Facebook privacy policy which has just been published. It indicates that Facebook may be gearing up to release location-related features.

Specifically, the item on Facebook's blog page states: "When you share your location with others or add a location to something you post, we treat that like any other content you post (for example, it is subject to your privacy settings). If we offer a service that supports this type of location sharing we will present you with an opt-in choice of whether you want to participate."

Where to from here

The current and emerging LBSN players don't necessarily face being sidelined by the likes of Facebook. Two factors could have a large bearing on the future of LSBN.

First, increased momentum in data portability initiatives could allow multiple social network profiles to be integrated enough to make it fairly easy to join new social networks. Second, there are signs that people approach different types of social networking in very different ways.

You may use Facebook for casual conversation with friends and you may welcome being able to use it to say, "Hey, you're just there, let's meet for coffee." However, you would be unlikely to use a business network like LinkedIn for the same purpose.

Also, large networks like Facebook are used to stay in touch with people all over the world. If you're based in Paris, say, you may like to use location functions to meet Emile at the corner pub, but you wouldn't need LBSN to say hello to Aunt Marie in Montreal. So maybe you'll stick to Foursquare to socialise in Paris.

Navigation & Location USA in San Jose on December 1-2 will deal extensively with mobile location.