Users Of The iPhone Can find Their Location By The Help Of Skyhook

The big idea came on a trip: Ted Morgan and Michael Shean used Wi-Fi signals in their travels so often to pick up e-mail; they saw a business opportunity in their future. What if they could figure out locations and directions via Wi-Fi signals instead of the more commonly used Global Positioning System (GPS)?

After discovering that it could work, they left their jobs at e-billing company eDocs and formed Skyhook Wireless in 2003. The Boston-based firm raised $16.8 million and signed up several partners to showcase the technology, including AOL (TWX) and mapping firm Navteq (NVT).

Last week, Skyhook was thrust to center stage courtesy of Apple (AAPL) CEO Steve Jobs. He not only demonstrated Skyhook at the Macworld conference here, but also gave a detailed and spirited explanation of how the technology works. "Isn't that cool?" Jobs said. "It's really cool."

Now, users of the iPhone and the iPod Touch (an iPod that can pick up Wi-Fi signals) can find their location and, in conjunction with mapping information from Google (GOOG), get instant directions. The feature is part of a software update that is free for the iPhone and $20 for current Touch owners.

The alliance and plug from Apple are "enormous for us," Skyhook CEO Morgan says. "It's a huge endorsement of the technology."

Morgan won't discuss terms but says Skyhook generally gets a royalty on each device sold, similar to how GPS tech companies work with device manufacturers.

USA TODAY caught up with Morgan and Shean during their Macworld visit. During their time together, they drove around the city to see if the iPhone really could tell if they were near the Golden Gate Bridge, at Fisherman's Wharf or cruising down zig-zaggy Lombard Street.

No wrong turns: Skyhook worked as advertised.

Morgan explained how the technology works: "Every Wi-Fi access point, whether public or private, sends out a signal every second or so, like a lighthouse. We pick up those signals and use our technology to calculate your exact location."

To get the system up and running, Skyhook sent teams of drivers around the USA and Canada to map out hot spots; it now has 70% of North America covered. Skyhook vehicles now are cruising Europe and Asia to add to the database.

Skyhook isn't the only company touting GPS alternatives.

Google introduced its free "My Location" technology in late November, picking up its information from cell phone towers. Google's offering works on a handful of Motorola (MOT) and Sony Ericsson (SNE) phones, smart phones from BlackBerry (RIMM) and "most" Windows (MSFT) Mobile devices, Google says. Apple uses both Skyhook and Google technology on the iPhone. It looks for Wi-Fi signals first, and if there are none, it switches to Google's cell-tower information.