Will Location-Based Services Pay Off?

In theory, location-based mobile commerce services seem like such a winner. Practically every U.S. wireless subscriber will be able to receive highly accurate location information on their mobile phones by 2005, says Ken Hyers, an analyst at In-Stat/MDR in Scottsdale, Ariz. Yet location-based services will generate only millions -- not billions -- of dollars in revenue, according to Hyers' forecast.

The U.S. government mandated location capabilities in its E911 initiative, but it will cost billions for the carriers to comply, he says, so carriers shouldn't expect to break even on that investment before the end of the decade.

The only bright spot is Japan, where there are often no street names or addresses on secondary roads, so there's high demand for location-based services, Hyers says.

One company that still has high hopes is Edmunds.com Inc. in Santa Monica, Calif., which offers Web-based information services to car buyers. In addition, the company already offers its pricing, reviews and dealer-locator service on cellular phones and wireless PDAs (for example, see http://pda.edmunds.com/). That means car buyers could have powerful, unbiased information at their fingertips on the showroom floor and during negotiation sessions.

But Brian Terr, director of advanced products at Edmunds.com, has bigger plans, too. In a third-generation (3G) environment in the future, consumers who have expressed an interest in, say, Honda's Accord, could get alerts about Honda incentives and promotions on their wireless devices, Terr says.

Looking further into the future, he envisions a time when consumers drive past a dealership and get the following message on their wireless phone or device: "We know you're in a 2000 Mercedes and we have a great special on trading that in for new vehicle. The dealership is just ahead on the right." That would require triangulation between the dealership, the wireless phone and the car's electronics.

From an IT manager's point of view, the big challenge with wireless applications is writing the application to work with different device platforms and browsers, Terr says, though he adds that the 3G standards are making that a bit easier.

But will we ever get to the point of writing code once for all devices? "I'd love to say yes," Terr says, "but I think there will still be flavors. You'll write something in XHTML and then tweak it for different browsers, which work in different ways. Some use numbers to navigate, some use up-and-down arrow keys to navigate, some are color, some are monochrome. The user interface drives a lot of it."

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