As carriers offer more location-based services (LBS) and user uptake increases, handset  manufacturers and service providers are looking to capitalize on the LBS trend, ABI Research says in its latest report. According to ABI, more than 550 million GPS-enabled handsets will ship by 2012, meaning chipmakers and GPS technology vendors will need to improve design and usability.

“While most CDMA handsets are already GPS-enabled and GPS is set to become a standard feature in GSM smartphones, GSM feature phones are next on the agenda to be equipped with GPS technology,” ABI Research Principal Analyst Dominique Bonte said in a statement. “GPS chipset vendors increasingly target handsets, looking for new markets and spurred on by the recent dramatic growth of personal navigation devices.”

ABI continues to say, however, that as GPS begins to penetrate lower-end phones, the cost, power consumption and footprint of GPS chipsets will have to be reduced. The research consultancy expects single chipset technology combining GPS, Bluetooth and Wi-Fi all on one die to emerge in 2009, adding that major silicon vendors such as Broadcom, NXP and Atheros are positioned to develop such solutions following the acquisitions of GPS chipset vendors Global Locate, GloNav and u-Nav, respectively.

The report also warns that the danger of spotty indoor GPS coverage has to be addressed because handset-based LBS services are frequently used in challenging environments with reduced GPS signal strength, recommending network-assisted A-GPS and high-sensitivity GPS receivers as requirements to reduce the time necessary to acquire fixes and to improve location accuracy.