By Peter Purton

A Finnish serial entrepreneur claims to have developed a revolutionary chip that can convert most GSM cell phones into GPS receivers capable of supporting a host of new location-based services.

Risto Savolainen, founder of London-based BlueSky Positioning, told Red Herring his company has managed to cram a complete global positioning system receiver onto a fingernail-sized subscriber identification module, or SIM card, which fits into the GSM or 3GSM mobile phones provided by wireless carriers such as T-Mobile.

Phones that are equipped with the new chip and suitable applications software can then support a host of new location-based services, such as providing directories of nearby restaurants or serving up ads for businesses located in the vicinity of any given phone subscriber.

Some location-based services are already available to mobile subscribers who own special cell phones or have handsets with special positioning GPS add-ons installed.


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The new chip could accelerate the adoption of a host of location-based services because it could quickly convert regular GSM/3GSM handsets―which account for two-thirds of the world’s cell phones―into GPS-enabled devices.

BlueSky, which has received about $3 million from Mr. Savolainen’s friends and family, has already demonstrated a first-generation prototype to network operators such as Orange and Vodafone. It is now working on a second-generation prototype which will actually fit into a phone. He said he hopes to have a commercial product within one year.

Quite a Challenge

But Ken Blakeslee, chairman of U.K. consultancy Webmobility Ventures, cautioned that BlueSky faced significant challenges. Making it work “on such a small scale and behind the battery and the electronics” may turn out to be quite a challenge, he said.

“GPS is hot, but GPS is tricky,” he said.

BlueSky has five patents pending including a patent for a miniature antenna integrated on the SIM card, which will protect its product from direct competitive pressure, said Mr. Savolainen.

A unique aspect of BlueSky’s product is that it can be retrofitted to existing phones and does not require a customer to buy a new phone. This means that if an operator decided to provide GPS to its users it could do so very quickly and at low cost.

The cost to the network operator of the upgrade would be just 8€ ($11.00) as opposed to many hundreds of dollars for a GPS-equipped phone, said Mr. Savolainen. And the introduction of new revenue-generating location-based services could be accomplished within months, rather than years, he said.

BlueSky Positioning was formed by Mr. Savolainen two years ago with his own money from the sale of his previous company, Helsinki-based SST Wireless Information Services, to Reston, Virginia-based Ztango. Mr. Savolainen says his new company may seek further investment in about a year.