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Report: Navigation Gains In Cellphones

10/10/2007 12:21:00 PM Eastern

San Francisco — Location-based cellphone applications, such as navigation, will continue to gain popularity, having already accounted for 51 percent of the $118 million in second-quarter sales of downloadable cellphone applications, Telephia research shows.

The figure excludes downloadable content such as games and ringtones.

Location-based applications include navigation, friend finding and other location-aware applications enabled by a phone’s built-in GPS chips. Other types of downloadable applications include weather, chat/community and personal organization applications.

Record high downloads of location-based service (LBS) applications are driven in part by the growing number of GPS-equipped cellphones, carriers’ placement of the services high on their phones’ deck, or menu, and carriers’ bundling of navigation services with data packages, Telephia explained. Among LBS, navigation represents the lion’s share of revenue, Telephia added.

About 130 million GPS-capable handsets are in use in the United States alone, the Nielsen-owned research company said.

Though LBS accounts for the majority of application downloads in dollars, only about 5 percent of cellphone users have downloaded an application, whereas the penetration rates of downloadable content — such as games and ringtones — range from 7 percent to 13 percent. “Many consumers may not realize the utility of a navigation application on their mobile phone until they use it,” said mobile media analyst David Gill. “However, Nokia’s bid to buy NAVTEQ for $8.1 billion is a very positive sign for the market and validates the strength and potential of LBS.” With consumer awareness increasing, growth will potentially be even greater, Telephia added.

The company’s second-quarter report also found that:

  • About 13 million cellphone users downloaded a mobile application in the second quarter.

  • Networks In Motion (NIM), a publisher of LBS navigation applications such as Verizon’s VZ Navigator, secured a 27 percent share of carrier revenue from mobile applications and leads all mobile application publishers. Telenav Mobile, another navigation service, followed with a 15 percent share of carrier revenue.

  • Monthly service fees for LBS applications command a “healthy” price premium over other types of downloadable applications, Telephia also found. The average monthly price for an LBS application is $9.23 compared with $3.82 to $5.41 for such applications as weather, music, sports and personal organizers. The monthly charge for LBS applications is roughly 180 percent of the industry average for downloadable applications, Telephia added.

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