“2010 will be the year of LBS”. Well it’s about the end of November and we can start changing the song to “2011 will be the year of LBS”. And as if Location wasn’t enough we added Indoor LBS to the mix. Everybody speaks about Indoor Navigation, and most of them refer to a completely different concept

The business opportunities

Most of the Interactive Maps apps are primarily themed for Malls.

From the marketing perspective and looking at the “mall potential users” we see that only 17% of the population has a smartphone, and close to 31% of mobile internet services users are female. That means only 5.27% of the population are females using mobile internet services. From the total of female smartphone users only around 21.5% use some kind of location services. That leaves us with target market of 1.1% of the mobile phone owners. Mall demographics show that females outnumber males 2:1, and in most cases they shop in places that are familiar to them. That means that about 1 out of 100 customers entering a mall is a POTENTIAL user, and if you consider that these apps are only available for certain phones, the target market is even smaller. Can you imagine a customer that visits the same mall every week, turns on the wi-fi to navigate to a store he/she knows?

From a mall application I would expect more. I would like to be able to enter a specific product, and have the app connected to the stores’ actual inventories. Look for prices, show me the places where I can have it now, and even offer alternatives. It’s not about finding a store; it is about helping the users to find their way to the products they want.

At this point of time, Indoor Navigation shouldn’t be the focus. Positioning interactive maps as such is a much better strategy, as the users receive what they have been told, and a small commercial ecosystem can be built around that concept.

Interactive maps can better serve other indoor venues. A clear example is trade shows, where there is a larger concentration of Smartphone users, there is a need to locate places in a venue that is totally unfamiliar, and the opportunities for advertising are larger.

The Boy Who Cried “Navigation”

I was recently putting in order my library and I found a very old book with Aesop fables. It was one of my favorites as a kid. Here is an adapted version of one of them:

“…There once was a developer boy who sat on his Mac, sipping a latte and watching the village customers pass by. To grab their attention he took a great breath and sang out, “Indoor Navigation! Indoor Navigation! We have Indoor Navigation!” The villagers came running and installed the app. But when they arrived to the mall, they found there were interactive maps only. Later, other developer girl sang out again, “Indoor Navigation! Indoor Navigation! We have Indoor Navigation!” To her delight, she watched the villagers installing the app again. When the villagers, familiarized with their TomToms and Garmins, saw they have turn by turn directions but not the same customer experience sternly said, “Save your happy song for when there is really navigation, like in our cars!” Later, a third one released an app that worked exactly like the GPS in our cars. Excited, he leaped to his feet and sang out as loudly as he could, “Indoor Navigation! Indoor Navigation! We have Indoor Navigation!” But the villagers thought they will not receive what they expect, and so they didn’t install the app at all. The End.”

Let me be clear at this point. I have seen amazing apps coming to the market during the last year, with huge investment, lot of work behind, and some of them with a real value proposition. My point is that we need to create a common language that will allows us approach the market without confusing the users and the customers, and in a way “killing the golden goose” (as Aesop would say)

Can we agree on the definitions?

What do I expect to receive from a basic Indoor Navigation app? 1) An app that automatically identifies where I am and shows me an updated layout 2) After determining my destination the device will find the best route 3) While moving towards my destination the map will show my movements without my intervention 4) If I take the wrong route, the device will notify me and create a new path 5) The device will notify me when I arrived to destination.

If your car GPS device would require from you to input where are you, move the map manually, figure out if you are in the right path, guess if you arrive to destination, etc. we would agree that by today’s standards, we will not call that navigation. So why call that user experience “navigation” indoors?

The best way to describe what we have today is “Interactive Maps”. Interactive maps include all the features you can find in apps today. Search and discover, turn by turn directions, locate products and services, identify facilities, ATMs, and other POIs. Look for an exhibitor in a trade show. Find your gate in the airport, and the eateries in your way there. Trigger promotions to consumers when they enter the vicinity of a store, and many more. In a stretch you can call it “Indoor Location Services”, just don’t call it “Navigation”.

Crossing the chasm to real indoor navigation

Are we ready today to provide indoor navigation? Technically maybe. Practically?… I doubt it. For real indoor navigation, as defined above, you must have certain hardware infrastructure. In order to approach a mass market, there will be a need to create a hardware infrastructure for each site, which will most probably be based on Bluetooth.
You need to identify the right venues, analyze if users will have a compelling reason and benefit from the use of indoor navigation, and create a business model that will maximize the profits.
The third component is accuracy. If I’m looking for an exhibitor in a tradeshow, I need at least 10 foot accuracy.
The most viable way to make this happen is having companies like Google, Motorola, Cisco, Nokia, etc. take the lead on developing and providing the required infrastructure. Companies like AT&T, Verizon, etc. may take the installation and maintenance of the infrastructure. There resides the real market opportunity. When this happens, the interactive map applications will get an additional layer of relevancy. Most probably at that point of time the companies that develop, install, and maintain that infrastructure will claim the larger share of the benefits

Last Aesop reference

If Location Based Marketing is in its infancy, Indoor Navigation is in the gestation stage. We don’t know what it will look like, or who the leading players will be. We know not what the standards will be or who will determine them. What I know is that today we have high-quality interactive maps and we can enjoy them in many places. Those apps, while presented and sold correctly, can provide a very good income stream.
At the end of the day, to make Indoor Navigation possible and profitable, we need to create an environment with a compelling reason for users to adopt this technology i.e. users that receive a real benefit; it should 1. Be targeted to a mass market; 2. Provide a product that is comparable to our standards for outdoor navigation, and without a doubt 3. Be based on some kind of external infrastructure. Those that claim you don’t need any of these may fall in the category of “sour grapes” (and that was my last Aesop reference).