Are Location-Based Services Ready to Turn the Corner?

Despite reports that location-based services are far from mainstream, new research by Microsoft (s msft) suggests the technology is gaining adoption and may be poised to follow in the footsteps of the ATM, which took some time to dispel safety concerns on its way to being universally used. In an online survey of 1,500 people around the world last month, 51 percent report having used a location-based service including 50 percent in the U.S.

That’s considerably higher than what the Pew Research Center found when it reported in November that only 7 percent of online U.S. adults use location-based services regularly. The Microsoft study suggests that usage is growing as people learn about the benefits of location, with 94 percent of those who use LBS considering them valuable. The top uses for LBS are GPS navigation (70 percent), weather alerts (46 percent), traffic updates (38 percent), restaurant reviews/info (38 percent) and locating nearby convenience services (36 percent).

Respondents cited concerns about privacy as the main reason preventing LBS adoption. The biggest concerns about LBS revolve around sharing location with unspecified organizations or people, or location sharing without consent. Respondents were also worried about loss of personal information or identity and overall loss of privacy.

As consumer LBS adoption grows, the benefits to businesses are significant, according to the survey. Almost one in five respondents report seeing a location-based retail ad, and of that group, 46 percent said they acted on the ad by visiting a store or making use of a coupon. The U.S. appears to be one of the most welcoming markets for LBS, with the highest frequency of usage (55 percent), the highest likelihood to take action after seeing a location-based ad (55 percent), and the highest percent of people who see LBS as valuable (99 percent of users).

These numbers may seem high compared to previous reports. But if true, this study suggests LBS is making progress, especially as it solves practical concerns for people. Interestingly, only 18 percent of users use LBS for social networking and 10 percent for gaming. Those could be more popular uses down the road, but right now, people seem to see the promise of LBS in helping them get through their day and finding discounts and coupons. That’s why it makes sense for services like Foursquare and other location companies to focus on discounts, recommendations and other practical features.

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