What’s Next for Skyhook Wireless? Location Tech for Games, E-Books, and, Yes, Android Phones

3/16/11Follow @gthuang

Skyhook Wireless may have won the audience favorite vote during the “location smackdown” at Xconomy’s Mobile Madness conference last week, but people in the tech-business community are still wondering: what’s next for the firm?

Boston-based Skyhook, founded in 2003, is a pioneer in location-positioning technology for mobile devices. The company’s software determines the precise location of a device based on data from Wi-Fi networks, cellular towers, and GPS satellites. The technology is deployed in thousands of mobile apps and tens of millions of devices worldwide, made by the likes of Apple, Samsung, Motorola, Dell, Qualcomm, Texas Instruments, Intel, and Sony.

But the company hit a rough patch last year. In July, Skyhook confirmed that Apple dropped its location-finding software from the latest iPhone (and the iPad) in favor of Apple’s own technology. And in September, Skyhook filed a pair of lawsuits against Google, alleging that the search and advertising giant infringed on Skyhook’s patents with its in-house location system, and also interfered with contracts Skyhook had with Motorola and Samsung last spring (to put Skyhook’s software on the manufacturers’ Android phones).

Many observers have interpreted those competitive interactions as a serious threat to Skyhook’s business. The question I’ve been hearing on the street from tech entrepreneurs is, does Skyhook need to reinvent itself, or “pivot” in a big way?

Not so much, says Ted Morgan, Skyhook’s founder and CEO. The company’s current growth plans are “less a pivot” than a question of “how do we do more?” he says. In an interview last week, Morgan laid out his firm’s plans to compete on different types of devices and in a wider range of mobile applications. He also had more to say about the situation with Apple and Google, and its broader significance to startups and the mobile industry.

Reading between the lines, my take is that the company is adjusting its strategy because of these tech giants—it really has to—but it’s not a drastic change. (Then again, if Skyhook were planning to make a big strategic shift, it wouldn’t want Google and Apple to know about it.)

Morgan began by giving a high-level pshaw to naysayers who think Skyhook’s core business is petering out. “The strategy is more sound than ever,” he says. “Google is the only competitor. We own all the intellectual property around it. While the Google [litigation] is a headache, you couldn’t ask for a better market to be in.”

What’s more, he touts Skyhook’s ability to “get around Google” by working directly with Android app developers, such as Priceline and Citysearch (whose apps use Skyhook’s technology). “We will get on every Android phone one way or another,” Morgan says. “It’s a harder approach, but we’ll get there.”

Morgan says Skyhook is “probably in the first or second inning of a [legal] fight with a company that wants to drag it out as long as possible. It’s unfortunate, but it also brings to light [Google’s] behavior which is in contrast to their stated position of being open and not evil.” He adds, “The capital we have is enough to play that out.”

Maybe so, but it’s hard to spend that kind of time and money when you’re a small company. As for the iPhone/iPad situation, Morgan was reassuring. “From a business and customer standpoint, nothing’s changed with Apple. For strategic reasons, they want more control. They’re still our largest customer financially,” he says.

But he notes that Apple and Google are among a small group of tech giants that are “looking to carve up the world” of mobile. “Apple and Google could be a duopoly, like Verizon and AT&T,” he says.

OK, so what is Skyhook doing to stay ahead of these giants? Lots of things. For starters, the firm is positioning itself as the go-to location tech provider for handheld game platforms. Skyhook’s arrangement with Sony Computer Entertainment’s forthcoming “NGP” gaming system could be among the company’s most lucrative deals, Morgan says. Skyhook is also moving into other types of devices—such as laptops, netbooks, e-book readers, and digital cameras. (The latter two should happen later this year; Skyhook is already in camera phones and SD memory cards used in cameras.)

You might wonder why an e-book reader (like the Amazon Kindle) would need to be location-aware. Morgan gives a couple examples: you might want to see the top five books being read around you at any given time, say, or be able to call up reference materials about your immediate surroundings, whether you’re at the beach on Cape Cod or strolling through South Boston. And the same idea could apply to other kinds of mobile apps and content on any device—adding location awareness could make it inherently more engaging, interactive, and social (not to mention attractive to local advertisers).

As long as devices with the location tech sell, Skyhook should be in good shape, since it gets paid per unit once its software is installed. For now, the company’s business is divided roughly equally between the U.S. and international markets, Morgan says. And the number of mobile-phone handsets—about a billion worldwide—is roughly equal to the number of other devices that could be location-enabled. So it sounds like the company’s future isn’t overly tied to any one platform (like Android) or device (like the iPhone).

But as Skyhook goes, so will other mobile software startups. As Morgan puts it, the entrepreneur playbook is to “find a big market, create something valuable, and protect it. We did all those. The model would say we should be able to benefit from all the hard work.”

He sums up the broader significance of Skyhook’s struggle with Google as follows: “The future of entrepreneurship is really at stake. That whole [mobile] platform war is going to get worse. We’ll see if the industry believes in innovation coming from small companies.”

The Skyhook story is, of course, particularly poignant to Morgan and the New England tech community. “A Boston company invented a model of technology that is going to be used on every single computing device in the world,” he says. “Whether we can get people to use our stuff and pay for it is up to us.”

I hate to be overly dramatic, but hearing Morgan talk in this way reminded me a little of what Leonidas, the Spartan king in “300,” said when he stood up to Persian king Xerxes and his immense advancing army: “The world will know that free men stood against a tyrant. That few stood against many. And, before this battle was over, that even a god-king can bleed.”

Let’s see if things turn out better for Skyhook than they did for the Spartans.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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