Location-based Services and Social Networking Sites – A Match Made in Heaven?

| July 15, 2008 | Wireless Services - U.S | Advisory Report

| Analyst: Deepa Karthikeyan

Deepa Karthikeyan Wireless Data Services Analyst

Issue

Mobile location-based services (LBS) and social networking services instantly struck a chord in the wireless space during their launch in 2006-2007 and continue to gain momentum. An interesting new trend has been the rise in geo-social networking applications that combine the features of both services providing consumers with the ultimate in information and entertainment. The LBS component helps social networking services offer the next level in networking interaction by allowing members to identify user locations, giving them the capability to discern who is in their vicinity and make plans on the fly, which is a definite advantage over the stationary PC model. This combination is dynamic and has the potential to change the face of mobile networking.

Geo-social networking sites like Loopt, Whrll and WHERE initially arrived on the decks of prepaid carriers and MVNOs as the demographics of their core audience were well suited for these services. Predictably, larger carriers like Verizon Wireless and Sprint who were impressed with the traction, adopted them hoping to mimic their success. A prime example is Loopt, a service that shows users where their friends are located and what they are doing via detailed, interactive maps on their mobile phones. Loopt initially surfaced on Boost Mobile and after a successful stint, quickly gained deck space on AT&T, Sprint, T-Mobile and most recently on Verizon Wireless. Interestingly, mainstream social networking sites like Facebook are also incorporating location tracking widgets on their mobile sites.

This report primarily analyzes a few popular geo-social networking sites, their features, carrier-handset partnerships and likely future developments in the upcoming months. As with any location tracking service, this new breed of services will have to deal with the issue of consumer privacy, and should tread carefully on virgin territory as one slip could cost them dearly.

Current Perspective

LBS and social networking services currently occupy enviable positions in the wireless sphere as carriers scramble to strengthen their decks by adding top of the line applications, primarily in an effort to one up the competition. These data-centric services are especially attractive because they complement the “mobile” factor of cell phones and allow consumers to fully exploit the most personal device there is. Mobile social networking sites allow avid networkers to constantly remain connected with their members and receive updates on the spot, weakening their tether to the PC. The messaging-centric nature of these sites also bodes well for carriers as it increases their overall data revenue. LBS that provide consumers with turn-by-turn directions either via downloadable applications like TeleNav or via GPS enabled navigation like VZ Navigator (through A-GPS capabilities of phones) LBS programs that provide directions without the need for GPS and there are those that use GPS/AGPS capabilities that provide audible turn by turn directions, have also been well received. They primarily function as cheap replacements to portable vehicle navigation systems and have more recently diversified into specific regions such as child location and fitness aids like BIM active.

Due to the success and high appeal of these LBS and social networking in the mobile space, it was natural for companies to combine their desirable features and form geo-social networking applications like Loopt and Buddy Beacon to cash in on the existing popularity. These sites initially appeared on the decks of prepaid carriers and MVNOS due to their focus on young and data-centric consumers, but after tasting instant success, they quickly ascended to the decks of Tier 1 carriers, further cementing their presence in the wireless world. The location tracking feature adds value to social networking experience by allowing members to identify the location of their friends and plan events based around that fact and in some instances geo-tag photos and videos and also discover places, movies, and events in a neighborhood by seeing their friends’ ratings of the same and sharing it with other network members.

An interesting trend to note has been the recent attempts by mainstream mobile social networking sites like Facebook and YouTube to keep up with upcoming geo-social networking applications by incorporating location tracking components (Facebook launched Where in association with TeleNav and YouTube allows it consumers to geo-tag their videos) in their mobile sites, which is a testimony to the allure of the latter. In this report we will analyze four main players in this segment – Loopt, Whrll, Buddy Beacon and JuiceCaster, assess their offerings and gauge their position/reach in the mobile landscape by comparing carrier and handset partnerships.

Loopt

The winner of 2008’s Best Community/Social Networking Application BREW Award is quickly becoming the face of geo-social networking in the mobile space. Loopt uses the phones' built-in GPS technology to alert users whenever their friends are within a half-mile to 25 miles. The application allows users to find friends, tag places and pictures and create events based on the location information available. Members who have consented to disclose their location will show up as dots on a map and the user will have the option to text or call the person. Members also have the option to update their status with messages like “Busy” or “In meeting”, similar to instant messaging applications.

Loopt is interoperable, which means a member can add and track a friend who is on the network of another carrier, considerably expanding its reach and appeal. Loopt also provides for easier interaction by integrating the user’s address book as well as profiles at other social communities (like Facebook) with its network, allowing for easier migration of information.

The Loopt application debuted on Boost Mobile in 2006 where it managed to sign up 40,000 customers during the initial two-month trial period, where the service was offered free. Impressed by its success rate, parent Sprint and more recently Verizon Wireless adopted the application to broaden their social networking and LBS base. The service is currently available for $2.99 a month (plus data charges) which is quite steep considering most of its competitors offer their services free. Loopt is however available free to BlackBerry users on the Sprint, Alltel, T-Mobile and AT&T networks, a blatant attempt by the company to break into the enterprise/prosumer space, which is relatively untapped for services of this nature. Loopt also premiered on the new 3G iPhone by partnering with Yelp (a local review site) adding a local flavor to its location services.

Loopt’s network is completely permission based, assuring users that their location information is only made available to consented friends, which addresses the omnipresent privacy and safety questions. To ease parental concerns regarding predators, the site is only open to users who are 14 years or over. The location feature can also be turned off at the user’s discretion, either completely or on a friend by friend basis.

Loopt is also breaking new ground by becoming the first geo-social networking site to officially offer location based advertising by partnering with CBS. CBS in association with Loopt’s location technology will offer localized banner ads on CBS Sports Mobile and CBS Mobile News (expected to go live late this year), to help marketers target their messages with greater accuracy. Users will still have the option to opt out if they find the ads to be intrusive. The success of this initiative will be another feather in Loopt’s cap as it will be setting a precedent for other geo-social networking sites and content providers in the location based advertising domain.

Whrll

Whrll is a free user generated geo-social networking application with an emphasis on reviewing local businesses and events which are constantly updated and extended by members. It is a unique combination of mapping and blogging and challenges the status quo of existing networking sites.

This new kid on the block (launched in 2007) allows users to not only keep track of their friends, but also find local places and events by viewing reviews and experiences (including photos) of other members who share similar interests in real time. The application allows users to see what their friends are up to at a glance and plan around that information. Whrll further provides recommendations such as restaurants and lives music events or movies based on the user’s location and activity history of his/her trusted friends, making the discovery process an interactive and personalized one. The application features integrated data filtering which is conducive to accurate results like the type of cuisine served, hours of operation etc. An integrated social calendar also makes it easier to accommodate spur of the moment events.

Whrll’s recent enhancements include a “what’s on my map?” feature which provides users with a navigation menu for exploring events with the help of recommendations from friends and targeted filter options to create a customized view of the Whrll map, providing users with truly relevant results. Whrll Radar is the other component which provides users with information on people, places and activities taking place beyond the view of a user’s currently mapped location, expanding the range of service.

However the application is not without shortcomings. It is currently limited to the U.S. market with deep content location and event content pre-populated only for 17 metros, although the site indicates that new cities will be added soon. The application is also not completely GPS enabled (users are required to manually enter their location) and its device compatibility is limited to location-enabled BlackBerry devices, Nokia N95, Motorola RAZR models and the Samsung M610. Like Loopt, Whrll takes care of privacy issues by providing its users with an option to turn off the GPS feature at their discretion. The company also indicated that it is working on a newer model that will report user’s location more accurately (like name of the store they are in) and will add more support for non-restaurant events. Since Whrll is a real-time network, targeted coupon-based promotions are likely to appear on the mobile site once advertising kicks into full gear.

Buddy Beacon

Buddy Beacon started off by being a Helio exclusive networking site which allowed members to manage their social lives by disclosing their location on a map to members in their Buddy List via the phone’s built in GPS capability. Buddy Beacon members can add up to 25 buddies to their Buddy List, whose location they can trail provided the user agrees to update/refresh his/her profile. Unlike most geo-social networking sites, Buddy Beacon does not automatically update a user’s location when they move, leaving it up to the user to hit the command which refreshes their particulars, adding an additional layer of security to the application. Buddy Beacon also lets members send out an SMS message called nudges, asking their friends to flip on their Buddy Beacons. Up until now the biggest downside of this straightforward service was that it was only available to Helio subscribers, severely limiting its reach. However, Helio forfeited its trademark early this year, allowing service provider uLocate to expand the application to CDMA carriers Sprint, Boost, Alltel and MetroPCS, making the application interoperable. The upcoming Helio-Virgin Mobile will most likely put the service on the decks of Virgin Mobile as well.

Buddy Beacon is also available as an application on Facebook (as part of WHERE) which introduces cross-platform functionality with online services, enhancing the viral nature of the application. Like its competitors, Buddy Beacon is also available for the iPhone with additional features like the ability to specify custom activity and location information. The recent initiatives should expand the consumer base for this service and the exposure to competition will result in enhancements like improved personalization options.

JuiceCaster

JuiceCaster is the anomaly in this list as it did not start off as a geo-social networking site. JuiceCaster is a free multimedia community that primarily allows users to interact by sharing pictures and videos taken from camera phones. The application also allows users to create profiles as well as update their status and profiles at other social networking sites like Facebook and Twitter. JuiceCaster is offered on-deck on AT&T, Cricket Wireless, Alltel, US Cellular and T-Mobile.

The latest installment of this series, JuiceCaster 6.0, includes geo-tagging capability which enables users to share and send pictures and videos with location information to other social networking sites like MySpace, Twitter and Facebook. This bodes well for both networking sites as it increases the reach of JuiceCaster‘s media and brings a semblance of location detection to mainstream sites like MySpace and Facebook.

The multimedia’s location information doubles up as a friend finding service since the sharing occurs in real time. It also immediately notifies users when someone updates their status in a nearby area. The geo-tagging capability also improves user’s filtered results as they can now search for content based on specific location criteria, making searching for multimedia on JuiceCaster powerful and accurate. The new ‘Who was here?' feature allows individuals to see a list of pictures and videos uploaded by a particular friends or people from a specific location, as well as add their own pictures and videos to its history. The location feature is permission based and can be turned off. The location based enhancements improves the context of the media and enhances the overall user experience. It also improves JuiceCaster stand in the networking domain and improves its competitive ratio.

Other Notables

Applications not included in this analysis, but deserving a mention include the Nokia-owned Plazes, Google-owned YouTube, Jaiku and Dodgeball, Twitter, and Yahoo!’s OneConnect and Flickr - all of which function on the premise of allowing users to alert their friends about what they are doing and where they are.

Geo-social networking phenomenon has moved social networking into a new physical paradigm. As the trend gains momentum, the challenge existing and new players will face beyond the obvious concerns regarding privacy and safety is the effective management and execution of these services. In the long run, geo-social networking will not sustain as a subscription-based application as it is not sticky enough to remain a standalone premium service. Carriers and content providers will have to look for the right content to wrap or package this service with, and more importantly, look into ad-funded models as the applications are prime estates for location-based advertising. Geo-social networking providers should also break away from forming carrier and handset partnerships and try to make their service as open as possible, because limiting interaction to a particular handset or platform defeats the whole purpose of networking. The future and success of mobile networking lies in interoperability between handsets and networks a la Google’s Open Social and Yahoo!’s OneConnect.

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