Why Maps are “Really” Important to Apple

by Patrick Moorhead   |   October 16th, 2012

In my last Apple Maps column I discussed why Apple would have delivered a suboptimal maps experience. This analysis was really a short term view of why they would do this, and the answer was Wall Street. Net-net, Apple would have felt the Wall Street wrath more than they are already feeling post-iPhone 5 launch had they delayed their launch for a quality product. Now, I’d like to look at the long term value of “maps” and why this could be so important to Apple. The answer is simple, it’s to monetize a huge portion of the internet they aren’t getting a piece of today.

Maps are for More than Getting from Point A to B
For most general consumers, “maps”, if they are even aware of the smartphone functionality, means getting help from getting from point A to point B. My son’s pee wee football coach even places a Google maps link to each away game that provides directions on the smartphone. Even if someone isn’t aware that phone maps exist, all they need to do is click on that link and they will get directions to the game.

For more advanced consumers, “maps” help them find brands or categories of products near them to get phone numbers or driving directions. Want to see how late that Jiffy Lube near your house is open on a Sunday? Search for it and it should have that info of it’s in the database. Looking for some coffee and you don’t care about the brand? Search for “coffee” inside of maps and be directed to the closest place.

With an Android device and Google Now, users can easily check in via Google+ once they arrive at a destination. If you’re searching on Yelp or checking in on FourSquare on any phone, you may even me able to find discounts on your visit.

You see, “maps” are more than about just mapping, they are a portal to the future of local advertising, commerce and payments. You need to teleport yourself five years into the future to get the best idea of just how valuable this is. This is about big money, money that dwarfs what Apple lost in market cap over the past few weeks. Let’s peel back the onion a bit.

Local Advertising, Checkin and Deals
Advertising as a business is larger than movies, games and music combined. Most of those ad dollars get spent locally by the billions of small businesses across the globe and the large businesses trying to reach local consumers. Getting a cut of this would be huge and is no surprise that Google, Groupon, Yelp and Facebook are all going after this full force.

Today and even more in the future, every place we go will be tracked and most consumers allow it. In fact, in the future, telcos will provide subsidies to consumers who let them be tracked and be anonymously “checked-in”. In-context deals will be provided to these users that actually provide value, not the horrible deals most users get today from Groupon and Google. The problem with Groupon offers is that they don’t have good enough profiling or enough deals in inventory to tee up enough relevant deals. The same thing for Google and even Facebook.

Knowing where people are and what they are doing is crucial to building these profiles and for delivering the ultimate in ads, the “pick-off”. The “pick-off” is when an advertiser knows you are going somewhere and will provide you an ad to go somewhere else. Let’s say you search for “pizza” and get directed to “Joe’s Pizza” on 5th and Lamar. “Luigi’s Pizza” is on 7th and Lamar, and through their real-time ad network knows this and sends you an immediate $10 off coupon message if you spend $30, and a window seat for the best people watching. You accept, and you, Luigi and the ad network benefits. OK, so this may be a bit exaggerated but you get the idea.

So who could Apple impact with this? Google, Groupon, Yelp and Facebook. That’s big. This isn’t the only opportunity. How about commerce and payments?

Local Commerce and Payments
Now that Apple and their network knows you have arrived at Luigi’s, the coupon will show up in your Passbook and you are ready to roll. You show up at the front door, show the coupon, and you and your friends are seated at the best seat in the house, right in the front window. The party tweets about what good seats they have and check in on Apple’s Maps.

What about when it’s time to pay? Apple, because they are tied into Luigi’s, has a deal that everyone who uses “Passbook Wallet” gets 1% cash back. Apple has a frequent flyer kind of program where they get freebies toward content and devices. So you are motivated to pay with your “Passbook Wallet”. Upon checkout, the waiter scans your phone’s bar code with their smartphone camera, similar to a Starbucks checkout, and you are off to the next big party.

What companies does this disrupt? It effects a ton of people including Isis, Google (Wallet), VISA, Mastercard, and American Express. Can you even imagine how much profit this could be for Apple?

Maps Drive Big, Long Term Apple Opportunities
As I outlined in my previous analysis, Apple delivered a suboptimal mapping experience to limit the punishment they would have received from Wall Street had they delayed iPhone 5 or iOS 6. Long term, though, the stakes are outrageously high and involve Apple monetizing an enormous profit pool, local advertising and payments. Apple need maps, and evolved maps, to make that a reality and they are well on their way to do this.

Patrick Moorhead

Patrick Moorhead was ranked the #1 technology industry analyst by Apollo Research for the U.S. and EMEA in May, 2013.. He is President and Principal Analyst of Moor Insights & Strategy, a high tech analyst firm focused on the ecosystem intersections of the phone, tablet, PC, TV, datacenter and cloud. Moorhead departed AMD in 2011 where he served as Corporate Vice President and Corporate Fellow in the strategy group. There, he developed long-term strategies for mobile computing devices and personal computers. In his 11 years at AMD he also led product management, business planning, product marketing, regional marketing, channel marketing, and corporate marketing. Moorhead worked at Compaq Computer Corp. during their run to the #1 market share leader position in personal computers. Moorhead also served as an executive at AltaVista E-commerce during their peak and pioneered cost per click e-commerce models.
  • http://twitter.com/Dan_Braden Dan_Braden

    Am surprised Apple didn’t acquire a company or two that they later recommended and evolved their products as they have done before versus “developing” their own version.

    • Jussi Hagman

      Very good point, maybe they should have. Perhaps they should get Nokia just for Navteq and patents, but Apple has been conservative about big acquisitions in the past.

      Looks like they thought they could pull it off with the “sweet solution” they had. And frankly, they almost did.

      Mapping is a huge deal for the future, as the article correctly describes. To own their mapping solution, is essential for Apple. Shipping it now and taking a short term impact is nothing compared to the potential wins.

      Waiting for a year or two would likely not have eliminated the transition issues, perhaps it would have made it worse.

      • Mappler

        Well, Garmin is not such a big purchase… It comes with all that Navigon assets and Garmin’s own deals etc. Wait, is Garmin public? What’s their stock ticker…

    • Yacko

      Apple did buy mapping companies, 1. Placebase July 2009, 2. Poly 9 July 2010, 3. C3 Tech Aug 2011

  • mhikl

    “Apple should never have shipped its Map app.” Such was the cry from many reviewers.

    I find this statement lamely thought out and the worst action Apple could have continued to follow. That Apple should continue to allow an inferior experience from Google maps to be perpetrated upon its followers is what Apple should not, could not and finally did not continue to suffer its faithful to endure. To continue to feed the data of the Apple faithful through an inferior app to Google would be a most abominable practice and Apple made the correct choice to use its own map, which by the experience of many is as good as if not superior in many ways to the experience of Google’s map app.

    We all make mistakes, even knowledgeable reviewers, and the reviewers by their negative and poorly thought out first comments on Apple maps stepped into the plop up to their knees. Now they are backtracking.

    What Apple did by presenting a map app that was not perfect was wake people up to the fact that Google has been getting away with a sup par map app from its beginning. Google delivered a sup par experience from day one and no one caught on as Google’s map app, on both Android and Apple devices, was the trail blazer and people were wowed by the fact that the monkey could speak, even if it was often in gibberish. Now we know better and it is thanks to Apple Maps for the wakeup call. Such a bold move is finally being recognised.

    To reiterate, Google maps sucked from the beginning and few, if any, screamed foul. Now we know.

    • FalKirk

      For me, the new map app experience is superior, not inferior. I now have turn-by-turn directions. I now have integration with the OS and with Siri. Personally, I think this is a tempest in a teapot.

  • RedMercury

    Want to see how late that Jiffy Lube near your house is open on a Sunday? Search for it and it should have that info of it’s in the database. Looking for some coffee and you don’t care about the brand? Search for “coffee” inside of maps and be directed to the closest place.

    Great. Except I don’t search inside maps. I search inside Google. Google is synonymous with search: “Let me Google that for you.”

    What you’re saying is that now I have to figure out what kind of searching I’m doing and start the appropriate app. Yeah, right.

    You see, “maps” are more than about just mapping, they are a portal to the future of local advertising [...]

    …and you just blew it.
    Remember back when everybody was building a “portal” to the Internet? Remember how well that worked out? So the whole idea that I’m going to stop using Google and use an application called “Maps” if I want to find out what time the local Jiffy-Lube closes seems kind of counter-intuitive to me.

    • FalKirk

      “… the whole idea that I’m going to stop using Google and use an application called “Maps” if I want to find out what time the local Jiffy-Lube closes seems kind of counter-intuitive to me.” – RedMecury

      I just now read your comment. Then I:

      - picked up my phone and said: “Where is the nearest Jiffy Lube?”
      - Siri responded with: “I found fifteen places named ‘Jiffy Lube’…seven of them are a little ways from you.”
      - I clicked on the nearest Jiffy Lube
      - I went to a map with a balloon showing the location of each Jiffy Lube
      - I clicked on the nearest one. It had tabs for reviews and photos. It gave me a phone number, address, Yelp info and directions.
      - I touched the phone number, called Jiffy Lube and got their hours.
      - I pushed directions
      - I’m on my way to Jiffy Lube

      And Google never entered into it. Not once.

  • http://twitter.com/dmkraig Donald Michael Kraig

    Interestingly, the ONLY people who are complaining about the new iOS map app are reviewers who DON’T USE IT. They quote others. They show images stolen, often without credit, of places they’ve never been to. And they whine and whine and whine as click bait.

    Meanwhile, people who actually use it say it works just fine. I use it daily and find that it’s faster, the images are clearer, and it has turn-by-turn directions, something Google refused to provide for the previous version.

    Is the new map app perfect? Absolutely not! It needs corrections and a lot of them. However, the Google-based map app also had numerous errors and sent me on wild goose chases so often that I basically turned to MapQuest on my computer at home and printed out directions.

    No, the app is far from perfect in it’s millions of locations and photos. But it has features the previous version didn’t have and for people who actually use it the app works just fine.

    • steve_wildstrom

      Well, I’m a reviewer and I use it. Most of the time it’s fine but there are a considerable number of errors in the Washington map (like the Washington Monument notoriously being in the wrong place.) And while turn-by-turn navigation is an important addition and probably the leading reason why Apple replaced the Google Maps app, it still won;t give me a correct, or even feasible, route to Dulles Airport. So there’s a middle ground here. The new Maps app isn;t a fiasco or at catastrophe, but it does have notable problems and isn’t up to Apple’s usual standard.