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Skyhook says: Who needs GPS?

Many companies are trying to position themselves as leaders in the geolocation field this week, which makes sense since the sure-to-be-fascinating Where 2.0 conference kicks off next week. My favorite pitch from these companies so far is from Skyhook Wireless, which makes a geolocation system that uses WiFi, not GPS satellites.

Here's how it works: Every WiFi access point (every Internet device, in fact) has a unique fixed-in-hardware machine identifier, which is transmitted whenever it is on. If you have a database of these AP identifiers and their physical locations, you can use the WiFi radio in your laptop or PDA to triangulate against that data. It's solely a metropolitan solution, since lonely Interstates tend not to be populated by access points. But there are big advantages to WiFi over GPS. For one thing, more people have WiFi radios than GPS receivers. Also, WiFi works indoors, where GPS often fails.

Keeping the database of what's where updated is the trick. Skyhook employs a fleet of 200 full-time people who have the job of "wardriving" up and down city streets in cars equipped with GPS receivers and WiFi scanners, mapping the location of hotspots and access points. CEO Ted Morgan told me Skyhook has mapped eight million access points in the top 100 metro areas.

What's this mean to you? Skyhook has a consumer application, Loki. It's a toolbar add-on for Firefox or Internet Explorer that will pinpoint your physical location on a Google map, and, if you want, also connect you to other "geotagged" databases of restaurants, photos, people, and so on. This data will also enable location-focused online advertisements, which might be more relevant that current ads. It might also creep you out to get an advertisement that knows where you are.

Here in San Francisco, Loki nailed my location both at my home and the CNET office. In contrast, Microsoft's Location Finder (part of Windows Live Local) got my house right, but missed the CNET office location entirely, placing me in a residential neighborhood.

At Where 2.0, the company will release its APIs so even more developers can tap in to the geolocation data the system can gather. Many of the services I've covered recently would benefit from having location data. Etsy could automatically display artisans close to you; SwapTree could coordinate trades with people nearby; and TurnHere could select videos shot close to where you are. Community sites and social networks are also going to eat this up.