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Find what you need with location-based services.

This story appears in the June 2005 issue of Entrepreneur. Subscribe »

Location-based services are coming. A report from Scottsdale, Arizona-based technology researcher In-Stat/MDRforecasts that LBS will go well beyond industry hype this year, with more advanced applications arriving in 2006. The push for carriers to provide enhanced 911 capabilities is part of the impetus behind LBS. Once your handset knows where you are, the possibilities for new services are wide open. But don't expect LBS to arrive fully formed. Services like driving directions, tracking and mapping will be first out of the gate.

Some of the hype around LBS includes the idea of businesses pushing advertising to phone users based on location. For example, a coffeehouse could send a latte coupon to a customer walking nearby. But there are obstacles to this. Neil Strother, In-Stat/MDR's senior analyst of mobile devices, says there's a disconnect between what people want to receive and what businesses want to give them. "I think the winners will be companies that allow employees or customers to discover the advantages of being in a certain location without jamming more spam-like ads at them," Strother says. Location-based services that solve problems, like pointing users to the nearest gas station, are more likely to hit it off with consumers.

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