Too early to market

January 30, 2011 | By More

Location Based Services, also known as LBS, has been a very hot topic. Most new smartphones have some kind of GPS technology built-in to allow you to know what your current location is. A whole set of services have emerged to take advantage of this capability.

One pioneer start-up company in Silicon Valley USA, we shall denote as STZZ, was very early in this space several years ago when only one or two phone manufacturers had GPS. There had been standalone devices that can be incorporated into dog and cat collars to track them in case they got lost. There were also versions of kid phones for school children.

Did they get to school?

The service that STZZ built had many features. Parents who were concerned that their children who go to school by themselves reach school in time can configure the service so that if the child has not reached school by a certain time, an alarm will be triggered and an SMS sent to their phone.

Another device that is installed in the car can similarly alert the owner if the car is moved, presumably without permission, and so can be considered stolen. The same device when installed can also tell a parent if the teenager who is driving the car is speeding or not arrived at a certain place by a certain time. A personalised webpage can tell the owner where the car had been and what path it took.

Some supported LBS applications

Another opportunity is for commercial applications – trucking and delivery companies. Using the LBS service, the operators will be able to tell where all their drivers and trucks are at any moment, and warn them of traffic jams or redirected. However, STZZ soon found out that in the US, interstate trucking companies (which there are many) are already using their own industrial versions in their trucks. This market seemed difficult to penetrate.

All these devices, including the phone models, uses SMS to tell the service where the device currently is. The LBS platform that they built supported as many devices as they were able to find, from Taiwan, China and some from the USA. The primary target market were parents, positioning the service as providing “Peace of Mind”. Their business model was to sell the device which is available from their website at a small profit, and charge for the monthly service.

Range of supported LBS devices

Signups were very slow. LBS was yet to emerge as a consumer application – these were the days before iPhone. And the market is not yet ready for such apps.

After discussing with the founders, we proposed retargeting their focus, not at the consumer, but at the telephone companies (telcos). Phones were beginning to incorporate GPS and when they are available in volume, it is likely to be in the interest of the telcos to develop location based services as another revenue source.

Telcos in the USA, as those elsewhere around the world (STZZ also set up an office in China), do not typically develop their own capabilities and services. They prefer to work with a service provider, which STZZ can be, since they are early in the market. Several changes will need to be considered.

This required a re-look at their technology platform, to ensure that it is robust enough for ‘carrier class’ applications. The platform will need to be able to support quickly a very large number of handset models, more than currently, when they are available. The platform needs to be able to cope with that.

Their sales and marketing strategy will need to be revamped to address the concerns and needs of the four or five major telcos in the USA and three in China. We helped them do that also.

Of course, market needs can also change over time.  But that’s another story.

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About the Author ()

EngTong, pioneer and innovator. Graduated from Imperial College London with an MBA from Cranfield School of Management. Lived in Scotland, England, California, Beijing and led teams in Italy, France, Japan, Taiwan and Malaysia to do the impossible. Now based in Singapore and believes the future is to blend the sophistication of western management practices with the strength of Asian Values. Trained as a Chartered Engineer. Member of IET, Associate of City and Guilds and a certified SixSigma Champion.

Comments (1)

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  1. Philip Owen says:

    I know all about early to market. In 1990, I needed to explain what a terabyte was to most potential users of optical tape, so the business closed. But generated cash for 5 more years from a final manufacturing run which finally ran out having generated large profits. By 2000, a terabyte was a perfect backup tape and the former users were complaining bitterly. In 2013, 3 TB on a disk drive costs £103.95 in PC World so the window was over. Moving targets all.

    I looked at LBS, also 20 years too early, for the European Space Agency. Some things worked; Tracking stolen lorries, using satellites to drive tractors and harvesters. Sometimes, the problem is the will to keep going. Senior managers naturally, want immediate payback. Xerox didn’t have the will to make microcomputers happen but could have had the same standards setting influence as IBM.