On 3 February 2010, Apple posted a note to its developer community. It asks Apple's developer partners to use location data mainly for the user's benefit. Apple will reject applications that use the device's location primarily to deliver targeted advertising.

Gartner believes this announcement shows the future direction of Apple's context-aware mobile advertising strategy, when put in the context of recent developments, such as Apple's:

• Acquisition of mobile advertising company Quattro Wireless.
• Recent patents for location-aware mobile advertising and for subsidizing a mobile device's cost through enforced advertising.

Apple is clearly interested in how to capture revenue in the location-based advertising market on mobile devices — revenue that other ad networks, such as Google's AdMob, will be positioned to receive. Controlling advertising would also help Apple gain ongoing revenue from the vast number of free applications that it hosts on the App Store.

Apple's note does not mention developers' choice of advertising engine nor govern how they can use location-independent advertising. But we expect Apple may eventually choose to restrict developers to using its proprietary Quattro Wireless advertising engine if they want to make their advertisements location-aware. While this would help maintain standards of consistency for iPhone users, enterprises will need to pay particular attention to how Apple administers its certification and how it monetizes the advertising engine. Context-aware advertising and commerce will be a primary way to get a return from Apple's large, engaged and lucrative user base. But developers and advertisers would either have to develop separate rich, native mobile applications or stick to mobile browser-based applications if they also wanted to reach users on other smartphone platforms.

We expect Apple will face stiff competition from other vendors that have invested in mobile location-based advertising, principally Google and Nokia. Apple's potential control of location-aware advertising on its platforms would give it a leverage point to negotiate revenue share with communications service providers and media companies from the local context-aware advertising market on the iPhone; if other major handset providers do the same this will set the business models on the mobile Internet.

Enterprises and developers:

• Compare Google's and Nokia's business models and offerings for mobile location-based advertising and commerce, alongside Apple's.
• Design your context-aware applications to anticipate future fragmentation of mobile-advertising target platforms. This will enable you to better offer cross-platform mobile advertising and location.
• Consider context attributes beyond location, as we outline in "Important First Steps to Context-Aware E-Commerce."

• "Context Aware Computing: The Importance of Mobile Consumer Application Platforms"— Mobile platforms like Apple's give advertisers reach for context-aware services. By William Clark and Michael King
• "Nokia's 'Free' Navigation Creates Contextual Opportunities"— Nokia's open mapping APIs give developers better access to location data for use in applications. By Nick Jones and others

(You may need to sign in or be a Gartner client to access the documents referenced in this First Take.)

This research is part of a set of related research pieces. See Context-Aware Computing and E-Commerce for an overview.