No one can deny that some of the apps available for mobiles are nothing short of brilliant. However, almost all of the apps you can find are monetised so badly that I am wondering if they're being marketed sensibly.
The plethora of iPhone apps is an excellent case in point. Here we have the most popular smartphone ever, with 40 million users worldwide. The number of apps they can pull from the Apple store has passed the 50,000 mark. It's almost certain that the number of iPhone app downloads will pass one billion some time this year.
Yet your average venture capitalist would be hard pressed to find even one truly sound business model anywhere among these apps. The app designers may be able to make your smartphone do just about anything short of cooking your dinner for you, but the marketers still have to find a way for the apps to make real money.
Where does the problem lie? I discussed it with a number of investors and it’s clearly not technology.
Sure, billing for apps through the operator would create a much more direct supplier-to-customer relationship. And of course applications running in the background would open up a lot of subscription model opportunities.
I think we should look elsewhere; end-user education and clear-cut value for money still need to be demonstrated. At the Amsterdam Nav&Loc conference in June, typical questions were: When most content is free, how do you prove the value of your paid-for product? Is traffic alone enough to charge for? Will users pay for turn by turn navigation?
If the mobile world is still discussing issues on this level, I wonder if the model where you give value and get money from the same person will no longer apply if you go for fun products. So either you go for fun and get the money somewhere else – or you offer the user some added value in the form of cost-saving, efficiency and convenience which can be monetised.
Going further, I think making "LBS" a topic by itself is not the right approach. Sometimes people confuse the goal with the result. In my opinion LBS cannot be a goal, only a result.
I don’t think there is an area called LBS and that below it are apps that provide a dating service or tell me where my friends are clubbing tonight. We can't approach LBS from the top down, we have to look at it the other way around. Hence I use the term location enhanced services.
We should accept that the good business models at the app level all run below other, stronger models. That approach could be a means to perfect the current models. So putting Navigation aside, there isn't an LBS industry as such. LBS is just an enabler to make other services work better.
