As we gear up for PYMNTS.com’s Innovation Project 2014 our annual showcase of the best new ideas and brightest minds in the payments space, we’re launching a special Innovations We’re Thankful For Series, a three-part special that aims to highlight the disruptive forces our experts believe are shaping the industry for the better heading into 2014.
In each installment, we’ll focus on a new technology, its use cases and the reasons why we believe it’s something we should be celebrating. Happy holidays!
By Dan Rosen, General Partner, Commerce Ventures (@venturedan)
This week, I’d like to give thanks for my favorite commerce enablement technology, the Global Positioning System (GPS). It’s difficult to imagine but before the iPhone, today’s mobile commerce applications (e.g. Uber, Yelp, OpenTable) and most location-based services were nearly non-existent.
In 2006, Canalys reported U.S. sales of a whopping 2.9 million Personal Navigation Devices (these were the relatively large and clunky consumer navigation devices from vendors like Garmin and TomTom). Today, however, 140 million American consumers are carrying smartphones, and every one of them with an embedded GPS and full range of location-related applications. Not only do we have them, but we also use them. According to Pew Internet, 74 percent of adult smartphone owners (ages 18 and above) report using their phone to get directions or other location-based information. Realizing this, marketers are increasingly location focused and expect to spend most of their mobile advertising budgets with location targeting by 2015.
A Little History
Ironically, GPS technology has been around for several decades, with its earliest roots dating back to Cold War-era missile and warship tracking mandates by the U.S. government.
The formal GPS program began in 1973, but the system wasn’t fully operational for government use until 1995 – Roger Easton is widely credited as the principal inventor of GPS. The next year, President Clinton declared that GPS should also be available for consumer use and the FCC subsequently released rules for Enhanced-911 (E-911), which set a plan for ensuring mobile operators could locate their mobile subscribers in emergency situations.
Despite several deadline postponements, Phase II of E-911 required 95% of mobile phones in the U.S. to be locatable within 300 meters. In preparation for this requirement, Qualcomm developed breakthrough Assisted GPS (A-GPS) receiver technology (enable faster and more precise mobile location acquisition using assistance from the mobile networks), and today almost every U.S. mobile device has a GPS receiver inside of it.
Given that most mobile devices (and all smartphones) have embedded GPS receivers, mobile developers increasingly design location into the functionality of their applications, regardless of whether it is a core feature. For example, 30% of adult social media users already tag social posts with their location.
Location-Based Commerce And Beacons
So what does it mean for mobile commerce? Well, location is a fundamental enabler for location-targeted advertising (e.g. PlaceIQ, xAd), merchant and product discovery (e.g. Yelp, Retailigence, ShopSavvy) and local services marketplaces (e.g. Airbnb, Uber, HotelTonight). The next step, however, is to bring accurate location capabilities indoors, which has especially powerful implications for in-store mobile shopping experiences. Remember, 70 percent of shoppers used their mobile phones while in a retail store last holiday season.
Apple’s recent iBeacon announcement promises to bring granular, indoor location capabilities to retail using a technology called Bluetooth Low Energy (BLE). Already, mobile shopping startups like ShopKick are piloting products based on this new Apple spec with large retailers like Macy’s. Meanwhile, tech giants such as Qualcomm and PayPal are also developing and deploying their own retail BLE-based Beacon products. I suspect we’ll have a lot more to report on BLE (and perhaps be thankful for) this time next year.