Friday, October 10, 2008

Skyhook, Broadcom combine GPS and wi-fi in location-based services

By Efrain Viscarolasaga

Local wi-fi positioning technology developer Skyhook Wireless Inc. announced a partnership last week with communications semiconductor maker Broadcom Corp. that is expected to combine the two companies’ core location technologies — wi-fi and GPS, respectively — for use in the rapidly growing location-based services market.

The deal is a feather in the cap for Boston-based Skyhook, whose wi-fi technology is standard in Apple Inc.’s iPhone, and represents a step forward for the technologies of both companies as location-based services continue to gain penetration in both consumer and enterprise markets. 

“It’s a big validation for us that one of the largest GPS chip makers sees that GPS needs a little help,” said Ted Morgan, founder and CEO of Skyhook, pointing out that he and his team have been saying the same thing since the company was founded in 2003.

What’s more, said Morgan, is the partnership gives the company access to customers that otherwise may have been tough to crack for the 40-person company.

“This allows us to go into a Nokia or a Research in Motion with a big brother that those companies have been working with for years,” he said.

Being satellite-based, GPS
provides a wider footprint than wi-fi positioning, but its signals are unreliable indoors and in deep urban environments. Wi-fi, on the other hand is becoming pervasive in most urban areas and provides a strong signal in such environments, making the two technologies complementary when presented on one platform.

As handset makers and carriers have searched for advanced features for wireless devices, location-based applications have become some of the most sought-after features. Having opened its AppStore last spring, Apple now reports more than 300 LBS applications in the catalog, and the usage numbers from Skyhook-enabled applications have gone up “one hundred or two hundred times” since the opening of the online store, according to Morgan.

In a report last spring, ABI Research projected revenue from location-based services could reach $13.3 billion by 2013, up from approximately $515 million last year.

The Skyhook deal with California-based Broadcom is also evidence of a continued convergence in the positioning technologies market. Location data has become critical to many applications, even outside of the general wireless consumer market, and the search for more and better data has spurred innovation. In Maine, for example, CrossRate Technology LLC has been working to combine GPS, and its predecessor, Loran, to eliminate the failings of GPS, and act as a backup navigation system in mission-critical applications. And two MIT startups are looking at new systems based on various technologies that enhance GPS.

Skyhook is privately held and has raised $17 million in venture funding from a variety of investors, including RRE Ventures of New York, Bain Capital of Boston, Intel Capital of California and CommonAngels of Lexington. Morgan said the company is not searching for new investment.

“The only money we’re looking for is from sales,” he said.