Steve Follmer consulted in Silicon Valley for many years, where he co-founded live365.com. He is currently between startups and analyzing opportunities in the mobile space. Steve holds a BSE degree from Princeton University.

GPSStar presented at Mobile Monday 14, and we were invited to a follow
up interview with their CEO, Mr. Ben Inatsu. GPSStar has licensed the
Navitime technology from Japan for deployment in the greater China
region. Their primary product was launched via ChungHwa Telecom (CHT)
over a year ago: it turns your cell phone into an interactive map,
providing directions, integrated with public transit schedules. $3 a
month (99 NT) gives you unlimited use, including data. This service runs
on 18 AGPS handsets; a lite version costs half that (and for technical
reasons does not include real-time navigation). This pricing is about
half that of Japan, where Navitime has 10mm users each month.

GPSStar has about 2 dozen employees in Taiwan, primarily engineers. They
seems an engineering driven organization, though this comes from an
integrity in which they are very concerned with providing accurate
directions and indeed restaurant phone numbers. The accuracy of all the
data they deliver reflects on both GPSStar and the carrier, and they
take this responsibility seriously. They are currently establishing a
China headquarters located in Beijing, the center for both carriers and
manufacturers.

While easy to understand in terms of their handset navigation products,
we must not overlook the fact that they have in fact built a LBS
services platform. Their software will soon cover 200 handsets, nearly
all the models sold in Taiwan. Beyond that, they are doubtless engaged
in verifying maps to encompass all of greater China.

In Japan’s mobile ecosystem, the carriers dictate specs to the handset
manufacturers. Thus they have demanded and received far greater AGPS
penetration, rapidly approaching 100%. Carriers worldwide face declining
revenue from voice, as it is replaced by IP phones. They therefore look
to value added services, and in Japan their value-add income now exceeds
their voice income.

China’s cellular ecosystem is most analagous to Japan, though it is
fairly unique in that manufacturers are launching services there. Nokia
for example is very inventive and keen to establish some services
revenue, but this is something the carriers have prevented in most
markets e.g. USA. Mr. Enatsu noted that we have not seen the end of
these ecosystem turf wars.

The Taiwan market and ecosystem is of course different still. It is
smaller than Japan and China, and the government does not take as strong
a hand in industry. As such, the carriers cannot dictate features to the
handset manufacturers here. And because it is small, handset
manufacturers have not floated services here, though Taiwan still
remains useful as a testbed for products intended for greater China.

One can certainly imagine a variety of additional LBS products, and
unique marketing approaches for GPSStar. But I cannot fault their
attention to the nuts-and-bolts of covering more handsets and more
countries. Furthermore, I expect they will eventually market the LBS
platform, for themselves or new partners to offer novel LBS products.

The recent controversial study in Germany which monitored peoples daily
movements through their cell phones revealed that people generally
frequent the same locations over and over again. This suggests that LBS
might be more useful to specific classes of users, and indeed GPSStar
may next year offer products targeted to tourists and expats.

GPSStar does not face the market risk or technology risk of most
startups. This is not to diminish their work in covering so many
handsets and such a large geography. Indeed this acts as a sustainable
competitive advantage. Their main risks lie in the transition to
mainland culture, business partners, and government regulation. Indeed
the need for local knowledge further discourages competition.

GPSStar added 3000 Taiwan subscribers during the week of our
interview. Their work is bearing fruit. Their business model and risk
profile are solid. Their platform runs on nearly every cell phone in the
country, delivered through their partnership with CHT. And their goal
is for their LBS platform to become standard on every handset in Greater China.
We wish them every success in their expansion to the mainland.