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Summary:

Skyhook took a beating in the press recently after it lost Apple as a customer going forward, but the startup isn’t afraid to use the courts to assert its position as Apple and Google fight to own the same location data Skyhook built its business on.

Skyhook Wireless took a beating recently as news surfaced that one of its flagship customers is now using its own location data rather than the database provided by the Boston-based startup. Skyhook, which maintains a collection of location data gathered from its triangulation of Wi-Fi networks, no longer provides location on newer Apple devices. The iPhone maker said in a letter to two members of Congress that it was now using its own data rather than the longitude and latitude coordinates provided by Skyhook.

Skyhook was already facing some fierce competition from Google, which has been creating its own database of places using Wi-Fi networks (see the video interview below). The Apple news, which came out in a July 12 letter but was publicized last week, put Skyhook in the middle of the two giants trying to dominate the mobile location market. Plenty of people wondered if Skyhook was toast.

On Monday, when Skyhook put out a news release saying the company was just granted four patents related to the way it determines location using Wi-Fi networks, I called Ted Morgan, CEO of Skyhook, to see if the release emphasizing its new intellectual property was a coincidence.

“We think that the Wi-Fi location piece was what makes location work in general … we have invested in it, and we have been doing it longer than anyone else as proven by the 50 patents we’ve filed and the 15 awarded so far,” Morgan says. “They show we did start this and provide us some protection for what we’ve done so far.”

Morgan declined to comment when I asked if he’d sue to keep Apple, Google or anyone else off his startup’s turf, but it’s a good bet he has lawyers lined up and ready to file some infringement suits. (Because of a series of Supreme Court rulings back in 2007 most firms now sue before opening licensing agreements, making infringement lawsuits more common). Judging from the patents named in the release, Skyhook isn’t kidding around:

11/774,399: System and method of improving sample of WLAN packet information to improve Doppler frequency of a WLAN positioning device.
11/950,178: Location-based services that choose location algorithms based on number of detected access points within range of a user device.
11/950,242: Location-based services that choose location algorithms based on number of detected access points within range of a user device.
11/430,079: Estimation of speed and direction of travel in a WLAN positioning system.

It’s a good bet that Apple and Google aren’t kidding around either. As the web goes mobile, and the phone becomes the platform for the next generation of technology innovation, owning the underlying positioning data isn’t just a source of revenue from application companies seeking to find out where users are to offer them services; it’s a source of demographic information that could be valuable to many.”Location is a cornerstone of mobile and we’re sitting in the middle of it,” said Morgan.

While application providers can offer advertisers information about specific users, Morgan maintains that the information Skyhook can provide (or Google or Apple) is much broader, allowing demographers, advertisers or researchers to understand where people are. As opposed to deep information on a person that a service like Fourquare can provide, Skyhook can offer a breadth of information about an entire city’s movements. Morgan claims he has information on 100 million users and can get it regardless of the app they might use.

Since I caught him after a board meeting, I asked Morgan what the mood was when he met with his investors. He responded, “The mood was positive. Not every fund is managing a startup that gets in the middle of a major technology battle. If we’re smart about this, we’ll end up a major technology company, and if not, we’ll end up squashed. It’s worse if no one cares about you.”

That’s what I love about entrepreneurs. Put them between a rock and hard place, (or Apple and Google) and they’ll find the bright side. For more on Skyhook’s dilemma, check out the interview I did with Morgan from the end of April when we discussed its looming fight with Google.

Related GigaOm Pro Research (sub req’d): Location, the Epicenter of Mobile Innovation

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  1. It was reported elsewhere today – sorry, no link – That even though Apple isn’t using the Skyhook data/etc now, they had a long-term contract and are continuing to pay on that. So, it would appear Apple is safe for as long as they license from Skyhook which could be indefinite.

    1. Stacey Higginbotham PXLated Tuesday, August 3, 2010

      Yes, Apple still uses Skyhook for its older products, so Apple is still a customer, and will likely remain one for a while.

  2. Dr. Phil Hendrix Wednesday, August 4, 2010

    Stacey, these are important developments and reflect the on-going jockeying for competitive advantage in location-based services by Apple, Google, Twitter, Facebook and many others.

    In my report (Location – the Epicenter of Mobile Innovation, published by GigaOm Pro in Feb.), I devote a chapter to discussing methods for Location Determination (LD), e.g., determining mobile users’ locations. Three predominant methods – GPS, Wi-fi Positioning (WFP), and Cell-ID – are described and compared on twelve key criteria (p. 27), including coverage, accuracy, time to locate and others. While each method has its merits, due to interference from surrounding buildings the accuracy of GPS suffers in urban canyons and indoors, where many users (attempt to) access location-based services.

    As the “inventor” of WFP, Skyhook forged a big lead over competitors in mapping locations of Wi-fi access points, which should translate into more accurate LD in more places on devices using Skyhook. Given the importance of WFP-based LD, both Skyhook and Google have invested significantly to map and continuously update databases of Wi-fi access points and locations, deploying fleets of vehicles that continuously roam the streets and (at least in the case of Google) even off-road areas, such as parks, campuses, etc. More complete and up-to-date mapping of Wi-fi access points translates into more accurate LD using WFP.

    Apple’s decision not to use Skyhook for WFP in the iPhone 4 raises the question of which method(s) Apple is using to determine users’ locations – to my knowledge, Apple has not yet developed its own database of Wi-fi access points, so my guess is they’re relying on GPS for location determination. If so, I would expect location determination on the iPhone 4 to suffer in urban locations and indoors, compared to mobile devices that use WFP. I’m curious if anyone can confirm (i) which method(s) the iPhone 4 does use to determine users’ location, and (ii) if WFP is one of the methods and Apple is not using Skyhook or Google, what is Apple’s source of data on (locations of) Wi-fi access points; and (iii) how the accuracy of LD on the iPhone 4 compares to that of other smartphones that employ GPS and WFP using Skyhook or Google data.

    Dr. Phil Hendrix, immr and GigaOm Pro analyst

    1. FWIW, I’ve had iPhone 4 locate me with the GSM radio turned off… so it must’ve been using WiFi, so either WFP or IP geolocation… given that it located me right down to the house I was sitting in, I’m guessing WFP.

  3. 10 Things You Need To Know This Morning (AOL, SIRI, GOOG, VG, AAPL) « Apple News Daily Wednesday, August 4, 2010

    [...] Apple stopped using its location software in its new mobile gadgets, has a bunch of patents, and may use the patent court system to extract license fees from the likes of Apple and Google, which run competing [...]

  4. “Morgan declined to comment when I asked if he’d sue to keep Apple, Google or anyone else off his startup’s turf, but it’s a good bet he has lawyers lined up and ready to file some infringement suits. ”

    Shouldn’t the article’s title be, “Speculator speculates that Skyhook will take the battle to court, but no one knows just yet.” ?

    Otherwise, interesting essay.

  5. SearchCap: The Day In Search, August 4, 2010 Wednesday, August 4, 2010

    [...] Skyhook Will Take the Location Battle to Court, gigaom.com [...]

  6. another navteq, garmin, tomtom issue? providing me too location services without an LBS social destination site they brand and own. without it they’re all “out the loop”.

  7. Devicescape Joins WiFi-Based Location Sweepstakes Wednesday, August 11, 2010

    [...] Samsung, Dell and Motorola. (I wonder how Devicescape is going to deal with the patents that were awarded to Skyhook recently.) And if Skyhook wasn’t enough, Devicescape will have to deal with Google which is building [...]

  8. What about WiFi geolocation patents by others like Navizon?

  9. Skyhook Sues Google in a Location Battle Royale « Wednesday, September 15, 2010

    [...] and requests an injunction on Google’s Wi-Fi location software as well as damages. In Augus,t I had written that Skyhook was likey to sue to protect its IP, although I had figured it might go after Apple, the other mobile giant, as well. When asked if [...]

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