The Economy: What Happened When We Weren’t Watching and the Implications for LBS

At the deCarta devCON conference, Jeff Rath of Canaccord Adams, an investment bank specializing in emerging markets, succinctly explained the current market bloodbath and what he forsees as the impact on the location-based services market.

Rath sees an unwinding of some of the macroeconomic dynamics for the first time in a long time. Leading up to this situation was a condition where inflation rates were trending lower and debt was cheap. This yielded an explosion of leverage and people bought a lot of things…much that they couldn’t afford, and that is becoming unwound.

"Macro economic dynamics are driving everything; companies are posting good and bad results but all stocks are trading down," said Rath. For much of the early part of the decade, Canaccord Adams’ Location Index, an index of publicly-traded location technology companies, outperformed the major market indices. In the last two years, that index has seen a huge decline where it now underperforms the market.

The hedge fund community is incredibly active in trading and represents 30-50% of the trading on any given day in the stock market. "Everyday you are hearing of hedge funds being liquidated en-mass," said Rath.

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deCarta - Sitting Nicely with New Venture Funding

I spoke briefly with Kim Fennell, CEO and Marc Prioleau, VP Marketing of deCarta about their market growth during the devCON ‘08 event. They feel good that they took the $20 Million is new venture funding as the venture community may be looking a bit more closely at business plans that project revenues too far into the future given today’s economic climate. The market for map servers is certainly shifting as Prioleau sees less of an emphasis in supporting web apps than other opportunities in the mobile space. He notes that Apple’s App Store now counts 300 applications that are "location-enabled."

PND Market To See Early Christmas

From the NAVTEQ Connections conference in San Francisco…NAVTEQ executive VP Jeff Mize revealed some stats about the coming consumer portable navigation device market at Christmas time:
PND Market Growth: The PND is showing strong growth: 20 million units will be sold this year; an 80% growth over last year. 60% of these 20 million units will be priced at less than $200; 90% will be sold from only four manufacturers (Garmin, TomTom have most market share). There is now a very diverse distribution model with PNDs sold in over 35000 retail outlets.

PND market dynamics: Expect aggressive pricing on Black Friday. There will be more emphasis on accessories and add-ons such as map updates, both downloadable and in store, plus text to speech will be a big deal.  Watch for the introduction of private label retailer brands as well as a buzz around connected devices.

GPS Impacts to the Portable Device Market: An Update

I attended a webinar today conducted by Park Associates on how GPS is influencing the portable device market and specifically the personal navigation device (PND) market. As we are constantly being asked how big any particular segment of the geospatial and LBS martkets are, I wanted to share some of their insights with you:

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More Market Sizing on LBS

More predictions on the market size of location-based services is coming from Gartner this time:

"Worldwide subscribers to location-based communications services on mobile devices will increase by nearly 168 per cent in 2008 while revenue will grow by 169 per cent, according to Gartner, Inc. Location-based service technologies have been around for several years but they have not experienced the rate of success that was anticipated at the beginning,” said Annette Zimmermann, a research analyst at Gartner. “The market for location-based services is at a turning point, with indications of mainstream adoption in the next two to five years.”

Now, I don’t know where Gartner has been looking for the last year but the turning point was back in late 2006 when PND’s took off leading to more subscribers for phone-based apps in 2007.

Gartner said the number of subscribers worldwide will rise from 16 million in 2007 to 43.2 million in 2008 and revenue will rise from $485.1 million in 2007 to $1,307.3 million in 2008. The number of subscribers is expected to reach nearly 300 million in 2011 and revenue is forecast to top $8 billion in 2011.