According to a new report from Berg Insight, mobile location-based service revenues in Europe are forecasted to grow from € 220 million in 2009 at a CAGR of 12 percent to reach € 420 million in 2015.

The research group estimates that one third of all mobile subscribers in Europe will use some kind of location-enhanced application on a regular basis by 2015.

Local search, navigation services and social networking are believed to become the top applications in terms of number of users. The social networking category is forecasted to experience the highest growth in the coming years.

According to André Malm, Senior Analyst at Berg Insight, location-based services are finally on the verge of mainstream acceptance. “Increasing sales of smartphones are driving end-user awareness of mobile Internet services and applications in general. On-device application stores enable access to mobile services for a broader audience at the same time as flat-rate data plans make pricing more transparent. More and more developers are now adding location support in their applications to enhance the user experience”, he said.

He added that integration of GPS in handsets is an important driver. “The installed base of GPS handsets in Europe has recently surpassed 15 percent of total handsets and will increase to 50 percent three years from now.”

The report shows that the revenue model for many mobile applications in the consumer segment is shifting from premium fees to ad-funding. This is especially the case for location-based services where now also navigation services are becoming free for end-users and developers monetise their offerings through ads and various bundles.

“However, revenues may not grow at the same rate as usage because the mobile advertising ecosystem is still nascent. It will take some years before a successful model has been established that allows advertisers to reach out to a critical mass of active users. This is especially the case for emerging location-based advertising,” as the analysts claim.

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