Yandex's Acquisition Of KitLocate Foreshadows An Era Of Pervasive Location Services

Mar.31.14 | About: Yandex N.V. (YNDX)


Yandex's acquisition KitLocate is ushering in an era in which mobile location-based services aren't turn-on-turn-off, but rather are always on.

This has huge implications for mobile technology and for upcoming M&A.

Technology vendors and venture funds should keep their eyes on other companies with pervasive location technology.

The acquisition of an early stage Israeli start-up company, KitLocate, by Russian Internet giant Yandex (NASDAQ:YNDX), was treated as yet another small M&A in the press. Many articles reported the acquisition, summarized KitLocate's technology for reducing the power consumption of GPS-based mobile applications, mentioned that Yandex is maintaining the KitLocate office as an Israeli R&D center, and then moved to the next topic. Yet another acquisition.

But the implications of this acquisition are in fact much greater. Yandex's adoption and promotion of KitLocate's technology is ushering in an era in which mobile location-based services are pervasive, meaning that instead of being turn-on-turn-off, they are always on. This has huge implications for mobile technology and related M&A.

Anyone who has left a mobile mapping application running throughout a several-hour stroll around the city has learned first-hand how quickly location-based applications drain smartphone batteries. Apps like pedestrian navigation by Google Maps for Mobile are great for people walking around a new city, as are the ever-widening range of applications for friend-finding, location-based reminders, check-ins, and the like, but they're currently virtually impossible to run as intended for long periods of time.

The biggest culprit is GPS - it simply takes a lot of power to receive GPS signals and calculate the device's location as it moves around. Many other technologies for location positioning, such as motion sensing using sensors built into phones, also take significant power.

But a new class of technologies is poised to enable location-based applications to operate with much less battery usage. This will create a flood of new applications and services that use location pervasively.

A recent report listed over 130 companies working on non-GPS location positioning technologies, mostly for the purpose of working indoors. Some of these companies are poised to enable pervasive location positioning outdoors as well.

One technical approach is exemplified by KitLocate, the company just acquired by Yandex. KitLocate uses a variety of methods to reduce battery use, such as turning off GPS when a phone is stationary and only turning it back on when the phone's movement indicates that its location may have changed. As long as the phone's motion sensors indicate that its owner is staying inside a single building, the GPS will be left off. A phone whose motion sensors indicate that its owner is driving will have GPS left on for longer than a phone whose motion sensors indicate that its owner is walking. The company's future plans include using motion sensors and other indoor location technologies (including Wi-Fi and Bluetooth based) to track location without GPS, and use GPS every now and then to compensate for errors that accumulate. And bottom line, when a phone is moving outdoors, it will still need to activate GPS to track position accurately.

Yandex is planning to continue distributing KitLocate's technology to the market, but more significantly is incorporating this technology into its mobile search products and services, primarily serving the Russian and European markets.

Another approach moves GPS-free location positioning into the chips that handle a smartphone's Wi-Fi connectivity or sensor processing. Broadcom (BRCM) has released a Wi-Fi chip that incorporates location tracking, as have Qualcomm (NASDAQ:QCOM), Cambridge Silicon Radio (NYSE:CSR), STMicroelectronics (NYSE:STM) and others. Moving signal analysis and sensor fusion into chips will enable them to run on a lot less power.

Another approach is exemplified by start-up company Glopos, whose low-energy technology uniquely uses self-learning algorithms to determine location based on the cellular signals and parameters that are already handled by mobile phones (including non-smartphones) in the process of handling calls. Somewhat similarly, W-Locate's XIMLOCK delivers location positioning with a unique applet that runs inside a phone's SIM card, but with less accuracy due to the limited computational resources on the SIM card.

Another approach is called SLAM, standing for "simultaneous localization and mapping," by which a smartphone is able to enter a new area and learn over time about the Wi-Fi or Bluetooth access points nearby and how they can be used for mapping and location positioning. This may enable Wi-Fi or Bluetooth based location positioning methods, which now can only be used in areas for which the system has knowledge in advance about access points, to be used anywhere. Start-ups working on SLAM technology (also called "blind crowdsourcing") include PoleStar, Navin and But even with SLAM technology operating universally, such systems can only determine their locations if there are Wi-Fi or Bluetooth signals nearby.

Finally, many of the major mobile companies are working on a multi-tiered approach to location services, whereby a phone can monitor its location in a coarse manner, such as knowing which cellular antenna it is near, until it gets near an area of interest. At that point it switches to a more precise, but power-hungry, method, until it gets even closer to the point of interest. At that point it turns on GPS. This approach does not work for mapping, but can work for location-based reminders, navigation over long distances, and other services. This approach is used or researched by Apple (NASDAQ:AAPL) in their GeoFencing (patent here), Google (NASDAQ:GOOG) (patent here), and others.

All of this is only some of the ongoing R&D in indoor location positioning, much of which can be used to deliver location services outdoors as well with less power consumption than GPS.

Whichever methods succeed in the market, pervasive location positioning is poised to reach the market by the beginning of 2015, enabling locations to be tracked constantly without draining smartphone batteries or other resources. Once one or more smartphone OS supports pervasive location positioning, we can expect a wave of new applications that exploit it in new and novel ways.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.