Location-Based Services Grow


location based services

Walk half a mile in Manhattan and it can feel as if you have crossed an ocean instead of a street. That’s how jumbled the mix of classes and cultures can be in a big city. It’s also why knowing the preferences of what marketers call “micro-neighborhoods” is invaluable, says Ted Morgan, whose company Skyhook Wireless uses Wi-Fi signals to locate its users. Mr. Morgan is not modest when touting the benefits of so-called location-based services (LBS). If the Democrats had used LBS in the last presidential election, he asserts, John Kerry would be president of the United States.



But Mr. Morgan isn’t interested in politics. He’s using his company’s database of Wi-Fi signals and location software to pinpoint profits. Recently, Skyhook Wireless has been angling to get on the radar of Internet portals like Google and Yahoo, as well as companies that want to target highly specific ads to locals. If Mr. Morgan hits his mark the reward is a piece of an estimated $3.3 billion in local search and classified revenues, according to Kelsey Group.



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Until now, the company has focused on licensing its Wi-Fi location technology to businesses. In a sign that local search is getting hot, Skyhook Wireless will officially launch its consumer product called Loki in early April. Loki adds a location bar as a free plug-in for both Firefox and Internet Explorer browsers. One catch is that the technology is based on the availability of Wi-Fi access points, which can be scarce outside of big cities—Mr. Morgan admits the service is only available to 40 percent of the U.S.



Concern for Customers

And hawking location information is something that can cause concern for customers imagining a “Big Brother” scenario. Cell phone companies have been nervous about tracking customers for years because of privacy issues. Only recently have wireless providers like Sprint and Verizon hesitantly started select LBS services, and Mr. Morgan says telcos will eventually license his service, too.



Mr. Morgan says merchants are already vying to advertise on the tool bar. Imagine if users could “Loki” to find a local Home Depot or Starbucks instead of going to a corporate web site and typing in a zip code, Mr. Morgan explains. Based in Boston, Skyhook Wireless has raised $8.3 million in two rounds of financing, including investments from Bain Capital and IntelCapital Ventures.



However, the real payoff for Skyhook Wireless could come from a Google or Yahoo deal. Currently, Skyhook Wireless has no relationship with either company, but uses Google Maps to display some mapping data. If Google or Yahoo licensed Skyhook Wireless’ technology, or even snapped up the three-year-old company, a Loki-like service could become a permanent fixture on one of the dominant Internet portals.



And Mr. Morgan says Skyhook Wireless will release other consumer apps that will entice the search engines in the coming months. But he also has a backup plan: “If [search engines] don’t get it, we’ll go straight to the advertisers.” It’s a good plan, so long as Google and Yahoo don’t get there first.



Maybe Hillary Clinton should give him a call.