LBS for £1.79? Vicinity app on the iPhone. What does it say for the Context – location based services business/ revenue model?

This is interesting .. and makes me think ..

Just because we WANT people to pay – does not mean that they WILL .. If the observation in this blog is true, it means that many a business plan based on paying for Context will also hit rough waters (considering that location is one of the most important elements of the Mobile context)

Consider some of the paid iPhone apps from the telegraph.

Vicinity (has got good reviews etc and also GPS based with wikipedia links and so on) is only £1.79??. Is that 1.79 per month or for all times??.

As far as I can see, it’s a £1.79 price as a one off charge.

Other paid iPhone apps are (from the Telegraph link above)

* Starmap Planetarium (£6.99): Astronomers and space nuts will love this – a stargazing guide that provides information about constellations, planets and even shooting stars, plus oodles of scientific details.

* Etch-a-Sketch (£2.99): Twiddle the virtual dials to start a sketch, or draw directly on screen using your finger. “Tilt technology” will be added soon to enable you to move the iPhone itself to create a drawing.

* Meal Splitter (£4.99): There will be no need to squabble over restaurant bills with this application, which precisely calculates what each diner owes based on the cost of the meal. Okay, so the iPhone’s in-built calculator could do pretty much the same thing, but this takes the pain out of the entire process; it will even work out how much the non-drinkers should pay compared to the drinkers.

* Vicinity (£1.79): Takes advantage of the iPhone 3G’s GPS to provide one-tap access to information about local services and amenities. It will even pull in relevant Wikipedia entries and Flickr photos.

* Band (£5.99): Compose your own music using the collection of virtual instruments.

* Stage Hand (£4.99): Control your Apple Keynote presentations using your iPhone or iPod touch, and read and review slides on its screen.

* Super Monkey Ball (£5.99): The pick of the bunch of new games for the iPhone and iPod touch. Tilt the device itself to control the progress of a monkey inside a transparent bubble. The graphics are first-rate, and the gameplay is highly addictive.

The games(super monkey Ball) seem to be valued higher as does niche apps

However, the business model does not seem to be so good based on this evidence since the useful apps like vicinity seem to be valued only at £1.79

We have all seen many many reports saying that LBS will be the big saviour, people will pay for location etc etc – and then we see a very good LBS application priced at only £1.79. This is in the same series of posts where I talked about taking the principles of better than free for mobile and also said that Google’s initiatives point to a pricepoint of free for mobile applications - for instance, if we contrast Vicinity to Google maps – then Google maps on mobile is free. And although Vicinity gives us some cool features like wikipedia integration which I love – it does point to a very low pricepoint if that becomes a precedent. Further, it points to a one off price point i.e. not a monthly fee ..

Alex Kerr sent me this one the Telegraph link (Thanks Alex)

Dean Bubley of Disruptive wirelesss adds his own insights to the above:

I don’t see what’s wrong with this.

Far too many communications companies think that they can somehow turn an application (or even just a feature or a function) into an ongoing, billable service.

Why pay a service provider to provide “Where is my nearest” capabilities, when you can do it yourself with a one-off payment for a capable piece of sofware? Why repeatedly pay a service provider to tell you where you are, when a cheap GPS chip can do it for you over and over again for a fixed price?

Everyone talks about the move to SaaS (Software as a service) or even Hardware as a service – basically hosted applications, often paid for with a subscription fee. But there’s a counter-trend coming the other way: *Service as software* (and also, Service as Hardware).

But I reckon that consumers can sense those “services” which essentially involve the provider “turning the handle” on a fixed-cost system, which has probably paid for itself already. People innately *know* when their extra service cost “goes straight to the bottom line”, and feel ripped off. They’ll jump at the chance of replacing that service with hardware or software.

Yes, there are certain instances where the SaaS approach makes sense – if there’s lots of maintenance involved in doing it yourself, lots of complexity involved in configuring & setting up software and so on…. then yes, it makes perfect sense to pay a service provider to deal with it for you. But replacing something easy or “plug and play” with a billed ongoing service is (often) a waste of money.

The bottom line here is that many telecom services (LBS, IMS, or whatever) involve buying a standard application server from a vendor, hooking it up, and then turning the handle. The operator is essentially taking someone else’s generic application, and trying to make it look like a service. Spot the problem?

Thoughts?

I have to agree with Dean and also my initial hypothesis – just because we WANT people to pay – does not mean that they will .. This means that many a business plan based on paying for Context will also hit rough waters (considering that location is one of the most important elements of the Mobile context)

Which begs the question: What WILL people pay for? (which was the original intent behind the series of posts)

kind rgds

Ajit