Jed Rice, Skyhook: “we develop a high performance Wi-Fi positioning system”

GPS BN: And what about the company itself in terms of size and business?
JR: I will give you a couple of metrics: We have raised US$16.8 million with the latest round happening last July with $8.5 million. The total staff is around 220 people. Obviously we are now decreasing our number of collection engineers in the US and ramping up in Europe and Asia; we expect to have about 150 people for this task in Europe this fall. We have a core staff of about 25 people and we are actively hiring with the goal of doubling the size of the team in the next three months.

GPS BN: and what are your key customers and key market targets?
JR: The core focus of the company is developing a high performance and reliable positioning system. And we have been consistently able to deliver it positioning as measured on three key metrics. First, is our time to fix which is under one second. Second, is the accuracy I mentioned already: 40 meters, 95% of the time; the third metrics is availability: we return a location fix over 99% of the time in our coverage area. And when we talk about availability this is universal availability, both indoors and outdoors, unlike GPS where availability is generally only calculated on an outdoor basis.

Because of that performance it allows us to approach the market in two ways: one is as a stand-alone system where we can location-enable any WiFi device. Our second approach is to complement GPS by filling in the gaps where it has limitations – limitations that are very apparent on complex, multi-radio devices like mobile handsets. Talking about Wi-Fi devices, we are the core location technology on some very interesting devices and services. One is the W10 from iRiver, a PMP that offers local mobile search and pedestrian navigation.

GPS BN: But this product has not been released yet, right?
JR: Yes, this is correct; it is going to be released soon in the US and in Western Europe within the next couple of weeks. Another example which is already available is a location plug-in for AOL Internet Messenger (IM). AOL IM is now able to offer to its 54 million users a friend finder service very similar to what you see on mobile phones.

GPS BN: can you give us some color about the penetration of this buddy finder among AOL IM users?
JR: It is a very healthy six figures number and we have calculated several million location transactions since going live earlier this year. Back to our second way to the market, the other thing we do is complementary location augmentation to other location technologies, primarily GPS. Mobile handsets particularly have performance limitation: in terms of time to fix, availability indoors and accuracy in urban areas. To do this we have a solution called XPS which is hybrid positioning and it is different than assisted GPS.

Assisted GPS normally performs a cell ID positioning reading and feeds it to a GPS in order to speed up the GPS' ability to acquire a fix. But with XPS we do 2 readings simultaneously: one with WPS and one with the GPS. Then according to the accuracy, speed of response and expected error calculation returned by both technologies at a particular point in time, the device uses one, or the other, or both, to determine the location of the device. For example, if we are indoors or in a downtown area with tall buildings we will take the flag, but if we are on a highway or in the mountains GPS will be the primary source of location.

GPS BN: For this application, what are the companies you are targeting?
JR: Ultimately, it will be the devices manufacturers. Today we have a public relationship with SiRF that will OEM our technology to create a hybrid positioning system they will sell to device manufacturers. At the same time we also have a US carrier customer - we are not allowed to name it - that is delivering a hybrid solution independently of the handsets manufacturers, but through their devices. In this case the hybrid positioning sits on the top of the Qualcomm GPS solution. Expect more announcements from us in the coming weeks.

GPS BN: How does it work in terms of business model?
JR: We license the technology in a software model. We do it in a couple of different ways. For example with devices manufacturers, we have a per unit royalty fee, like with iRiver. This model allows them a very predictable cost per unit. This licensing scheme is good for them when there are a lot of location transactions like navigation applications. For other folks such as service providers, carriers, sometimes they like a transaction model. They are buying from us a transaction capacity, because they have a wide range of applications that require single location look-ups, such as taking geo-tagging photos, mobile search, geo-tagged blog entries, rather than turn-by-turn navigation.

GPS BN: When do you expect the company to become profitable?
JR: Right now it would be difficult to tell you, we are still in the process of building the business; it will come when we have a critical mass in terms of coverage as well as usage, meaning the number of handsets deployed.

GPS BN: What will be the mainstream platform for your technology in the future: Laptop, PND or mobile phone?
JR: From a device perspective we look at the market according to 4 devices categories, Portable Navigation Devices (PND), Portable Mobile Players (PMP), laptop and UMPC, and mobile phones. The mobile phone market will be a clear leader. There are a lot of metrics that prove that out. If you talk to a carrier like Orange for example, they are very clear about the fact that they have much more Wi-Fi enabled handsets than GPS enabled handsets. Nokia currently has 20 models of phones with Wi-Fi and only three that have GPS. If you look at the iPhone, there is WiFi but no GPS. But obviously there is and there will be a convergence, a lot of GPS-enabled devices that will also have Wi-Fi capabilities.

UMPC and laptops are also clearly a big market for us; primarily we look at that for web-based applications. There are very interesting developments in this area, especially the fact that now with JavaScript API a web content provider can simply build a website that would become location-aware, so that when visitors come to that site they can automatically get localized content based on their location.