Half of U.S. Mobile Phone Application Revenue from Location-Based Services

With GPS available on more new mobile devices - some 130 million GPS-capable handsets are in use in the U.S. - consumer demand for location-based services (LBS), such as navigation, is growing, according to a mobile-applications report by Telephia, a service of The Nielsen Company, reports sister site MarketingCharts.

Telephia reported that in the second quarter…

• Approximately 13 million mobile consumers downloaded a mobile application on their phone.
• While location-based services deliver highly personalized offerings such as friend-finding and other location-aware features, navigation represents the lion’s share of revenue.
• LBS accounted for 51 percent of the $118 million generated in revenue by downloadable mobile applications such as LBS, weather applications, chat/community, and personal organization tools.
• Networks In Motion (NIM) - an LBS navigation publisher for products, including Verizon Wireless’s VZ Navigator - secured a 27 percent share of carrier revenue from mobile applications and leads all mobile application publishers.
• Telenav Mobile, another LBS navigation publisher, is second with a 15 percent share of carrier revenue.

Favorable carrier deck placement for LBS applications and the bundling of navigation services with data packages have contributed to record high downloads, Telephia said.

LBS applications command a healthy price premium compared with other downloadable mobile applications. The average price per month for an LBS application is $9.23, compared with a range of $3.82-$5.41 for weather applications, sports, wallpapers/pictures, etc. (see table for average price paid for various mobile applications).

The selling price for LBS applications is roughly 180 percent of industry average. However, overall consumer penetration for mobile applications hovers around 5 percent, compared with penetration rates of 7-13 percent for other downloadable content, like games, ringtones and premium SMS.

“There are hurdles that LBS publishers face, most notably the relatively low incidence of application downloads when compared to other mobile data activity,” said David Gill, Director of Mobile Media, Telephia. “Many consumers may not realize the utility of a navigation application on their mobile phone until they use it.”