The three-year-old wireless company, backed by Bain Capital, Intel Capital, and Nokia Innovent, aims to woo developers of location-based services with free access to its metro-area position system, which relies on Wi-Fi signals rather than GPS signals to compute a user's location.
Skyhook Wireless' Wi-Fi Position System (WPS) takes advantage of the ubiquity of Wi-Fi access points in urban areas and is able to compute the location of a Wi-Fi-enabled mobile device in less than a second. According to the company, "WPS has no line of sight requirements, is accurate to within twenty meters and can be used indoors or outdoors to determine location in seconds."
WPS is currently active in the top 100 U.S. metropolitan areas and Skyhook expects its coverage to reach 70% of the U.S. population by the end the year.
Ted Morgan, CEO of Skyhook Wireless, says that developing location-based applications for mobile network operators can be costly. First, he says, Skyhook doesn't require specialized GPS hardware, which costs money. "When you've got a device maker that's putting out a new phone or new PDA, they have to justify every penny that goes into that device," he says. "Having to put a $5 to $10 GPS chip in there is fairly expensive."
Adding Wi-Fi to mobile devices costs money too, but Morgan suggests equipment makers are more likely to include Wi-Fi because it's a technology that has uses beyond pinpointing one's location. Moreover, it's a cost consumers may willingly bear because of the utility of Wi-Fi connectivity. Skyhook's network would most likely be useful to users of laptops, PDAs, Smartphones, and tablet PCs, which tend to have Wi-Fi connectivity.
Morgan contends that developing for mobile network operators like Cingular and Verizon can be an expensive proposition. "You generally have to pay a five-figure amount to be a member [of one of their developer programs]," he says.
Jeffrey Nelson, a spokesperson for Verizon Wireless, says that Verizon does not charge developers a membership fee.
That doesn't mean developing for Verizon is without cost, however. Developers working on Qualcomm's BREW development platform, the source of software in many Verizon phones, face fees that go up to $15,000 for Elite level membership in the BREW Developer Alliance Program.
It's worth noting that such fees buy benefits like technical and marketing support.
Morgan also characterizes the process of getting a software application approved by mobile network operators as something of an ordeal. "You submit your application and they go through multiple tests, kind of Star Chambers, to decide whether it's the kind of app they want to have on their network," he says. "That can take six to nine months. Then when it gets out, you have to pay the operating system license, and the provider gets something like 30% to 40% of whatever you make."
"That's just on any mobile app," he continues. "And they charge you per lookup for every single time you request a location. So across all that, there's very little left for the developer to make any money. What we're saying is take our developer kit for free, build your app, build your user base, and as you're successful we'll sit down and talk about what's a fair split on the revenue."
The mobile network operators, however, don't want to deal with hobbyists; they want committed business partners. "Qualcomm has real costs in having BREW developers and providing the tools for BREW developers," says Verizon's Nelson. "That does have the positive consequence of screening out people who aren't serious about developing. As a developer, you need to make a business case too. We're not a free-for-all. We've in this to provide great services to our customers that they want to pay for."
These two divergent points of view reflect the fundamental difference between the open Internet and closed mobile phone networks. May the best business model win.
Building A Mobile Business MindsetAmong 688 respondents, 46% have deployed mobile apps, with an additional 24% planning to in the next year. Soon all apps will look like mobile apps – and it's past time for those with no plans to get cracking.