Advertising Will Subsidise Cost of Location-based Smartphone Services

Friday 13th February 2009 - 11:12


The smartphone market is likely to see big changes in 2009 - not least in how revenue is raised for services and content.

Kris Kolodziej, CTO and vice president of business development with Spime, told smartphone-biz.news that navigation services were currently the top revenue earner in the cell phone market.

These were followed by traffic and buddy finder services.

Location advertising had, however, become a major talking point in the industry.

He said he was sure that in 2009 and 2010, it would begin to subsidise the cost of services to consumers.
Kris Kolodziej, CTO Spime

This would be moving towards the Google business model of offering users content and services without a charge.

“We shall see what happens with that – the consumer expects everything for free,” he said.

Kolodziej said Google was a competitor of Spime in this respect. Google offered its mobile maps download for free, with features such as turn-by-turn and voice search.

“Right now the user pays USD $10 per month for navigation, so that cost would need to be subsidised with advertising.

“We will see what happens when Google comes out with this. Only Google with so many advertisers could pull this off.”

Spime, a Fremont, California based company is a provider of wide range of location-based technologies and applications.

Kolodziej said that 2009 was likely to be a year of consolidation in the industry. He said fewer players usually brought benefits to the consumer, citing the acquisition of Navteq by Nokia and Wayfinder by Vodafone as examples.

Kolodziej suggested that Spime might itself be a worthwhile acquisition target.

“Maybe Google would acquire someone like us because features like turn-by-turn are very complicated,” he said.

“If this goes well we might be acquired by a big company.”

What makes companies like Spime attractive, according to Kolodziej, is the growing realisation that the services provided by navigation companies had the potential to generate a lot of money, making them a juicy acquisition proposition.

“It’s a proven market, it just needs to expand to capture more consumers,” he said.

With smartphones now coming equipped with GPS as standard, there is no doubt that growth will come.
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