RIM jostles for share of LBS market with Dash purchase, but there is a darker side to the acquisition

Research in Motion’s purchase this month of location-based services (LBS) software maker Dash Navigation Inc. helps to build the BlackBerry’s application relevance beyond the enterprise, say analysts. It could also be good business for RIM to know where its users are. “They need to build on their application capabilities to deal with Apple Corp.’s iPhone, which is making inroads in the enterprise market,” Ron Picket, principal of RDM TeleTech Management Group in Toronto, tells Report on Wireless. Picket says that RIM likely picked up some good technology at a reasonable price from the Sunnyvale CA-based company. The purchase rescues Dash, which was struggling to build software licensing revenue after getting out of the hardware business. Neither RIM nor Dash would comment on the deal. “At this point RIM is bigger than the market, but they need to stay ahead” says Picket. “People are showing up at work and asking to have their iPhones plugged into the network. They don’t want to give up device capabilities.” Dash was the first US vendor to come out with a connected personal navigation device (PND) that included real-time traffic information provided by information from a community of users. The question is: do RIM’s customers need or want this, and will this build data traffic? “There is probably value in knowing who is where and when at a community of users level,” says Peter Wilson, president of Invigeo Solutions, an Ottawa-headquartered geographic information services (GIS) consulting firm. Wilson can see how traffic information could ultimately benefit users. But he wonders, too, if there might be another side to this story that explains why RIM and Dash refuse to talk publicly about the deal. “This same type of location-based information could also be used to answer questions like ‘How many Blackberry owners went to the Springsteen concert?’” he says. “If this is the sort of information the BlackBerry will be gathering, and selling, I'm not surprised they're keeping this quiet.” The technology certainly has this capability, given that the software is built around being connected to other Dash owners to share location-based data. It could be a good business for RIM, and give them a leg up on other device manufacturers that are vertically integrating what is becoming a commoditized GPS market. In a research note responding to the purchase, ABI Research’s director of telematics and navigation, Dominique Bonte, saw the purchase as a way for RIM to stay in the LBS game. "Nokia acquired Gate5 and NAVTEQ in order to develop and position Nokia Maps as the leading LBS platform in Europe,” he said. “Other handset vendors have entered into strategic partnerships allowing them to pre-install navigation software into their handset portfolio.” Bonte then cited the LG and Appello, HTC and ALK Technologies, as well as Samsung and Route 66, noting that “Asus and Garmin have created a joint venture to capitalize on the synergies between smartphone and LBS capabilities." Bonte suggests real-time navigation or traffic content will be a major differentiator. However, offering a GPS package likely isn’t the way to go – it may be better to offer the Dash capabilities as an “on-off” service, with revenue driven from data traffic. Other analysts aren’t sure of the value proposition, despite the fact that there are future possibilities for building upon Dash's widget-based platform. “They are buying this as a loss-leader to say ‘we can do that,’” says Picket. “The key is – how do they get revenue? Is it licensing, or some kind of recurring income?” It’s a reasonable question. RIM should state clearly what its commercial intentions are, because if it gets into the business of selling location-based data, it may make a lot of its enterprise customers very unhappy. If they are simply adding value as a generic application-driven service, however, customers may be more sanguine. As it stands, the application wars are in full swing with the opening of App Store for the iPhone and RIM’s BlackBerry Application Storefront. The jury may be out as to whether or not real-time navigation or traffic content is a differentiator, but one thing seems certain: though the two technologies will co-exist for some time, in the end such enhanced LBS capabilities on smartphones could be the death knell to the in-car navigation market.

RIM jostles for share of LBS market with Dash purchase, but there is a darker side to the acquisition

News | June 12, 2009

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