Steve Jobs Sprinkles a Bit of Magic Apple Dust on Boston’s Skyhook

1/17/08Follow @wroush

“It’s probably the biggest publicity event any company can have,” says Ted Morgan.

Is the CEO of Boston-based Skyhook Wireless talking about running a Superbowl ad? Being endorsed by Oprah, perhaps? Or maybe ringing the opening bell on the New York Stock Exchange?

No. He’s talking about getting a mention from Steve Jobs in the Apple CEO’s annual Macworld keynote speech in San Francisco, which, in what’s shaping up as the iCentury, is the most-anticipated, most-watched, most-discussed technology event of the year. And on Tuesday, fortune smiled on Skyhook.

“You can count on one hand how many other company logos Steve Jobs puts up on the screen behind him,” says Morgan. “It’s usually Google and Intel. To have Skyhook up there is just enormous.”

Skyhook, if you somehow missed the news, is the company providing the technology behind the new Wi-Fi-based location-finding feature of the iPhone’s map application. Millions of Apple customers have been trying out the new feature thanks to a major iPhone software upgrade, made available shortly after Jobs’ speech Tuesday. (A similar upgrade for the iPod Touch brought it the mapping application, including the location-finding feature, for the first time—essentially completing its evolution into an iPhone without the phone.)

Morgan was still sounding giddy when I reached him last night in San Francisco. “It’s actually a breakthrough period for the whole business of location-based services,” he says. “We’ve all been talking about it for years, but to have Apple saying that it’s important, well, that’s big.”

Skyhook Wireless LogoDespite its lofty name, Skyhook, founded by Morgan and partner Michael Shean in 2003, has built its business on a firmly terrestrial phenomenon: the spread of Wi-Fi access points (also called routers) across the urban landscape. Stand in any given location in most major metropolitan areas in the United States, says Morgan, and it is possible to detect an average of 8 to 9 access points. In a few techno-saturated urban centers like downtown Boston, San Francisco, and Manhattan, that number is as high as 30 or 40. Since access points tend to stay in one place, and since each one continually broadcasts a unique digital ID that can be picked up by any passing Wi-Fi device, it would theoretically be possible to pinpoint one’s location to within about 30 meters, simply by measuring the strengths of every nearby Wi-Fi hotspot and comparing their IDs against a sufficiently thorough database of access-point locations.

Actually, strike the “theoretically.” This is exactly how Skyhook’s system works. To develop its Wi-Fi Positioning System or WPS (a name that deliberately echoes the satellite-based Global Positioning System, or GPS), Skyhook spent two years sending vehicles equipped with Wi-Fi scanners down every street and byway of 2,500 U.S. cities, logging the locations of 23 million access points. Cell phones or other wireless devices loaded with Skyhook’s mobile client software (which is part of this week’s iPhone upgrade) get their bearings by zapping the local Wi-Fi IDs to a Skyhook location server, which does a quick calculation and sends its best guess at a latitude and longitude back to the device, which can then display it on a map.

On the iPhone, which relies on AT&T’s Edge data network, the whole transaction takes a second or two. Really. I’ve tried it myself at various points around Boston. (It’s pretty accurate, too: at the corner of Charles Street and Revere Street on Beacon Hill, it nailed my location exactly. From my apartment in the South End, it’s about half a block off.)

Skyhook, which has raised $17 million in angel funding and venture capital from RRE Ventures, Bain Capital, Intel Capital, and CommonAngels, has already put its system on devices like the iRiver portable media player from Reigncom. It has also partnered with traditionally GPS-focused companies like Navteq to add Wi-Fi-based positioning to their map databases and navigation software. But the deal with Apple is unquestionably Skyhook’s biggest business breakthrough to date.

“They’ve been fantastic to work with,” says Morgan. “They are the kind of company that can add value and help you make a better product, and they’ve obviously been very supportive.” Morgan hopes the Apple deal will raise Skyhook’s profile with other makers of cell phones, music players, portable gaming platforms, laptops—basically any gadget with a Wi-Fi connection. Once they’re carrying Skyhook’s software, these devices can employ location information in a number of ways, from helping with mapping and driving directions (the only application so far on the iPhone) to enabling local business searches, friend-finding, and location-based games.

While access-point locations are a resource that anyone can exploit, Morgan says he isn’t too worried about competitors coming along behind Skyhook. “It’s taken us years to build out the [location] database, and anyone who wants to replicate that will have to put in the same time and effort,” he says. “The science behind it also fairly hard, and we’ve filed 25 patents around the core positioning algorithms. We expect folks like Google [which is developing its own cell-phone operating system, Android] to try and replicate it over time—but they’re going to have an uphill battle.”

Wade Roush is Chief Correspondent and Editor At Large at Xconomy. You can subscribe to his Google Group or e-mail him at wroush@xconomy.com. Follow @wroush

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