An Unlikely Macworld Winner: Boston Startup Skyhook Wireless

One of the product tweaks Steve Jobs announced during yesterday’s Macworld keynote: The iPhone’s Google Maps app will now be able to triangulate your location using AT&T’s mobile phone towers — a faux GPS feature. Apple also rolled out a similar feature for the new iPod touch maps app, but because that device doesn’t connect to a mobile phone network, they needed a different way to pinpoint your location.

The solution: A “wi-fi positioning system” (WPS) from Boston startup Skyhook wireless, which Apple is building into both devices.

Since 2003, Skyhook has been building a massive database of some 23 million wi-fi hotspots and their geographic location, covering 70% of the U.S. population. (See sample map of midtown Manhattan.) The company’s software figures out where you are by measuring nearby wi-fi hotspots’ signal strength, calculates how far away you’re standing from the hotspots in its database, and uses that information to map your location.

Skyhook has launched a Web portal, Loki, that adds location-based features to some Web sites, powers a “buddy finder” feature on some versions of AOL’s AIM software, and has been trying to get its software on GPS units as a backup system. But its real success could come from getting its software on wi-fi-only gadgets like the iPod touch and smartphones like the iPhone that don’t have built-in GPS.

Skyhook didn’t disclose details of its deal with Apple, and a rep declined to comment, but presumably it gets a licence fee for each device Apple sells. Piper Jaffray analyst Gene Munster expects Apple to sell 9.4 million iPod touches and 12.9 million iPhones in 2008, which would quickly make an impressive install base for Skyhook’s software.

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