Why The ‘Location Wars’ Are a Dead End

By any measure, this year’s South by Southwest Interactive — the annual festival for the digerati — was extremely crowded. The event saw a drastic increase in numbers, with more than 15,000 attendees making it larger than the parallel music festival for the first time. But it wasn’t just the venues that were stuffed to breaking point. Revellers also discovered that it was impossible to turn around without bumping into geolocation startups like Foursquare, Gowalla, Brightkite, Loopt and more. Indeed, geo startups were so pervasive that some even complained that it was simply too draining to sign into all the services on offer.

That’s where Check.in, a forthcoming system from Brightkite, comes in which attempts to solve the excruciatingly first-world problem of check-in fatigue by allowing you to update your location across a number of services simultaneously. The tagline? “One check-in to rule them all.” Check.in is a cheeky stab in the battle to lead the location market, but I wonder if it’s a productive one. In fact, I wonder whether a location war is the right way for geolocation startups to spend their time at all.

What do I mean? Let’s start by looking at some numbers.

The leading players in this market are growing pretty fast. GigaOM reported last week that Foursquare had added 100,000 users in 10 days (bringing its total user count up to 600,000) and that Gowalla signed up “tens of thousands” of new users. And there are more and more competitors every day. Add in a hiring spree by Boulder’s SimpleGeo, which builds tools that allow anyone to use location features, and you’re likely to see significant increase in the number of geo startups out there.

But as exciting as this growth might seem, those numbers are still pretty small compared to the big fish swimming around the NewNet pond. Twitter counts more than 75 million users. Facebook is rolling through 400 million. Google has billions of dollars to burn on whatever project it sees fit. These are the competitors that Foursquare, Gowalla and the rest should be worried about. It’s not hard to imagine a Facebook or a Google using its weight to secure a position in the location space — in fact, it is already happening: Facebook’s plans for location sharing are well-known; Twitter recently switched on its own form of basic location awareness; and Google is moving in the same direction with products like Buzz and Latitude.

That’s why Check.in (and services like it) is a dead end. It might push Brightkite back up the ladder, but it doesn’t really solve the true problem for geolocation companies: how to make location-based services mainstream. It’s true that a crowded market has to be rationalized. And it’s equally true that only one or two companies from this clutch will be fit enough to survive. But that doesn’t mean they should spend their time trying to kill each other off.

Rather than wasting resources on trying to cannibalize their rivals’ relatively small user base, they should simply spend time trying to make their products better and their offerings unmatchable. That’s why Gowalla’s deal with the Travel Channel, or Foursquare’s partnerships with Bravo and MTV are so important. They are trying to expand their user base via the best mass medium available to them (television) — and by doing so offer something that Facebook or Google or Twitter cannot easily replicate.

Evolution favours the strongest, and it is no different in the startup world. But if today’s geolocation startups waste too much time and money in a head-to-head battle with each other, there will be no energy left to fight when the big predators swoop in to cash in on their hard work.

Related ReportLocation: The Epicenter of Mobile Innovation

Question of the week

How would you encourage the take-up of geolocation services?