More than 40,000,000 people will be using their mobile phones to look up maps and routes by 2012, creating a search-based advertising market worth £354m, says market researcher Berg Insight.
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It found that the market for map-related applications should grow at a compound annual growth rate (CAGR) of 60% from 4,000,000 users in 2007 to 43,000,000 users in 2012. Revenue from subscriptions and advertisement is expected to reach £345m 2012 from £60m in 2007, a CAGR of 40%.
The adoption rate will be driven mainly by adding GPS-technology in smartphone handsets and bundling navigation and map content with mobile devices or service plans, said Andre Malm, telecom analyst at Berg Insight.
"This year the successful launch of the GPS-enabled Nokia N95 has opened up the market for handset-based navigation in Europe. The US market already has GPS as a standard feature in all CDMA-handsets," he said.
Malm said European operators are following Sprint, Nextel and Verizon Wireless, which have attracted millions of subscribers to navigation services. "Nokia is putting its weight behind a handset-centric map and navigation platform, and Google and Yahoo! are extending their local search and map propositions with Mobile Web 2.0 applications," he said.
Malm said ad-funded services will account for an increasing share of the mobile navigation market. "Navigation fits perfectly with local search applications that offer completely new opportunities for advertisers to target consumers in novel ways," he said.
Malm urged the mobile industry players to embrace the ad-funded service model in order to stay competitive. "Maps are already available free of charge from a host of online sources. Soon navigation will reach that stage too, seriously undercutting premium rate mobile propositions," he said.