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Professor Jonathan Raper LBS Research @ City

Future of Location Technologies Session 4: Business models How location-sensitive applications can be delivered, funded and successful. Professor Jonathan Raper LBS Research @ City. 15.00 – 15.30 Session 4: Business models. Market size and growth Market segmentation

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Professor Jonathan Raper LBS Research @ City

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  1. Future of Location TechnologiesSession 4: Business modelsHow location-sensitive applications can be delivered, funded and successful Professor Jonathan Raper LBS Research @ City

  2. 15.00 – 15.30 Session 4: Business models Market size and growth Market segmentation Channels to market Value chains Business models ROI Geoprivacy Success stories

  3. Selling location? Location cannot be sold in isolation Location, like time, is an infrastructure Location functions as A framework for events Part of the context for decisions Developing location sensitive applications must address these underlying objectives

  4. Market for location hardware Source: Strategy Analytics Global Wireless Practice Jun-09

  5. Adoption of monthly data plans

  6. Segmenting the location market Source: Strategy Analytics Global Wireless Practice Jun-09

  7. Channels to market Traditional software/hardware sale Mobile operator portal Rental of devices with integral service App store eCommerce model Mobile browser eCommerce model

  8. Physical software sale: value chain Developer Developer Supplier Retailer e.g. Memory Map Logic Code Position Content Package Distribution Payment After sales Maps GPS Shop CD Shop Platform Download Win etc Java Monetisation Major cost

  9. Operator portal sale: value chain Aggregator Developer Developer Operator Platform e.g. Mobile Commerce Keep Moving Aggregator Position Package Distribution Payment After sales Logic Java Cell-ID Browser Portal Subs Code Content Aggregator Major cost Monetisation Limited precision of positioning constrains functionality

  10. Device rental: value chain Developer Site owner Developer Site owner e.g. Camineo Guide Logic Code Multi- media Position Package Distribution Payment After sales Visit record Content Info centre Info centre GPS Browser Platform Win Monetisation Major cost

  11. App store sale: value chain Developer Supplier Developer App store e.g. Total Hotspots iPhone app Position Content Package Distribution Payment After sales App store Logic Platform App store App store GPS/ WiFi iPhone Maps Code Monetisation Major cost ‘Black-box’ positioning makes service reliant on commodity

  12. Mobile browser sale: value chain Supplier Developer Developer Browser Web Provider e.g. Placr Travel Demon Position Content Package Distribution Payment After sales Logic Platform GPS/ WiFi Browser Maps Code eCommerce Web Web Monetisation Major cost

  13. Business models for location Software sale Retail model, price allows for channel margins User installs, upgrade path optional, stock issues for shops Operator portal Use of operator platform- cost/ technical issues Difficult to get ‘portal position’ sufficient to get usage Rental Depends on cost/ revenue sharing with partners? App store Simple but entirely subject to portal rules/ revenue split (70/30) Mobile browser Lowest cost and simplest but need to draw users to the site Can use ‘Fremium’ or ad-funded models

  14. Application development Three options for the development of code Mobile platform native e.g. Android Standards-based e.g. Open Location Services Open source web/database technology approach Choice driven by business model requirements Hardware features e.g. compass on iPhone Open licensing requires web/database approach Integration with operator requires Standards

  15. Depends on what ROI required, over what period Marginal costs of the service only: other costs pre-paid Direct costs only: no borrowing costs, low capital needs Full costs: earn back full investment x10 eg VC funding Link with location business model Marginal + App Store: a spinoff from an existing product Direct + Rental: long term partnership on capital costs Full + Browser freemium model: mixed subs and ad-funding Location ROI?

  16. Importance of privacy protection All location technology business models must be delivered with privacy guarantees Legal constraints e.g. Data Protection legislation Consumer preferences Ensure that consumer can accept or reject the transaction based on privacy concerns Offer privacy enhancing technology solutions

  17. Geo-privacy protection You can run You can’t hide • If we look at privacy as a transaction, does it come with sufficient protection or rejection without consequences?

  18. Privacy enhancing technologies

  19. Success stories TrafficTV (Installed software, all mobile platforms) OpenRouting Service (Standards based, browser) TotalHotspots (App Store, iPhone browser) Camineo (Rental model, browser & Java based) Many others using VC startup investments and ad funding are now suffering

  20. Questions? Jonathan Raper raper@soi.city.ac.uk David Mountain dmm@soi.city.ac.uk Placr http://www.placr.co.uk Journal of Location Based Services http://www.informaworld.com/jlbs

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