Summary:

Skyhook Wireless, which provides enhanced location technology for mobile devices and services, has hit a few bumpy patches in its road to gr…

Ted Morgan Skyhook

Skyhook Wireless, which provides enhanced location technology for mobile devices and services, has hit a few bumpy patches in its road to growth: it is currently locked in a legal battle with Google (NSDQ: GOOG) over its technology, with no less than two lawsuits against the company; and it had, but lost, a key deal with Apple (NSDQ: AAPL) to embed its technology in its iPhone handsets. That’s two formidable Goliaths, but this David (it has less than 40 employees), has a few other ideas to pull ahead of the pack in the crowded field of location services hopefuls. Ted Morgan, the company’s CEO, sat down with mocoNews in London to talk about Skyhook’s stance on user privacy, a focus on key partnerships at the service layer, and a move into other kinds of devices beyond smartphones — and those Google and Apple setbacks.

Those Google and Apple issues : In a suit (original filing here), filed in September last year, Skyhook claims that deals it had with Motorola (NYSE: MMI) and others (the biggest thought to be Samsung) to embed its technology on their Android devices, but those deals collapsed after Google barred the OEMs from using Skyhook on the Android platform.

In May, Google formally rejected Skyhook’s claims: “To the extent Google took any action that affected Skyhook, those actions were the lawful exercise of legitimate rights of Google and therefore are not actionable. If Skyhook suffered any damages, which is denied, then any such damages resulted solely from its own acts or omissions,” it said in a legal filing (via Bloomberg). A setback, but not an unexpected one.

While it is still fighting that case, Skyhook has also filed a separate one in Federal court against Google claiming patent infringement over location technology, an area where Skyhook owns several patents and was an early mover in the area of triangulating a user’s location with WiFi, cell and GPS data. (Google denies those claims, too.)

There have been other setbacks for the company — namely, Apple licensed Skyhook’s technology and integrated it into earlier models of the iPhone, but then opted for its own, in-house technology starting in April 2010. But while Skyhook has taken legal action against Google, it appears Apple still remains on amicable terms, with Ted Morgan describing a deal between Apple and Skyhook (the terms of which are not public) as “financially enriching” to Skyhook. The company continues to manage location for those older iPhones still in use.

Did Morgan think this relationship with Apple contributed to the “dust-up” (his word) with Google? “We thought that at first, but actually it was the opposite,” he said, pointing out that Google’s measures against Skyhook took place in the summer of 2010, after Apple opted to use its own technology in favor of Skyhook’s.

The Skyhook/Google battle highlights another important aspect of the “open source” nature of Android. Although theoretically Samsung and Motorola could have continued to use Android and embedded Skyhook on their devices, it would have meant losing the Android branding, along with several Android features, such as the Market app storefront — which are proprietary. “And Moto and Samsung really need those apps and that branding,” said Morgan.

Skyhook’s Plan Bs: It may have missed the boat (so far) on smartphone OEMs, but Skyhook has been getting on to devices, anyway — in the form of deals with some of the bigger brands that have made apps for the Android platform.

“It’s better to be in the device, but this is useful, too,” said Morgan. In this year alone, deals signed have included Android apps for Mapquest, Priceline.com, Citysearch and UberMedia’s Twidroyd Twitter app.

It’s also extending to categories beyond smartphones: It has a deal with Sony to be the embedded location service in its newest PSP device, the Vita. It has also signed an integration and distribution agreement with Intel to make it the default location technology for developers creating apps for its AppUp store.

And it is looking at in-car navigation services, too: Morgan came to meet me straight after a meeting with Tom Tom.

Privacy: The other big area for Skyhook is potentially its most contentious: using location data for services like targeted marketing and advertising, which the company sells in a service called SpotRank. Morgan called privacy the “third rail of location services,” and when the inevitable subject of user privacy comes up, he is quick in his defense: “We’ve always been very worried about privacy issues,” he said. “But we track locations, not users. No one can ever use our data to figure out a person’s name or identity.”

He notes that Skyhook employs a “privacy czar”, an in-house ombudsman who “constantly suggests changes to the system and how we roll out services.”

“Your location history is a signature of your life, and if you see that you can figure out a lot more,” he said. “But we don’t maintain that history. We do want to figure out how to better target, but not by revealing the ID of the user.” He points out that this what several other leading players do.

Is there an opportunity with Windows Phone 7? Unsurprisingly, Morgan thinks there could be an opening for Skyhook with Nokia (NYSE: NOK) and Microsoft (NSDQ: MSFT).

“[Nokia's] Navteq is the mapping part, but we’re the underlying location technology,” he said. “We think Windows Phone 7 could be better if Microsoft and Nokia didn’t use something they’ve cobbled together over the years.”

But will these two opt, like Google and Apple, for homegrown technology simply to have better control over the flow and eventual use of the information that gets collected? It’s certainly an area that many others are zeroing in on for lucrative returns in the long run: Strategy Analytics forecasts that location services will haul in $10 billion in revenues in 2016, with half of that coming from location-based advertising.

The report, it should be noted, is fairly dismissive about the privacy issues in location services, calling the “kerfuffle” over location tracking on the iPhone, and other privacy concerns, a mere “speed bump” in the progress of location services.

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