Many next-generation LBS are designed for use in urban and indoor environments where GPS underperforms or even fails. As a result, alternative positioning technologies like Wi-Fi, Cell-ID, and A-GPS will become increasingly important. Used in combination, Wi-Fi, Cell-ID, and A-GPS will represent 25% of all positioning solutions by 2014, according to ABI Research. A study by the company, “Alternative Positioning Technologies,” examines the main trends in this market and offers an in-depth discussion of the ecosystem and its value chain.

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Barriers like handset penetration levels and the lack of open platforms still hinder the adoption of alternative positioning methods. Yet the licensing of Skyhook Wireless’s Wi-Fi positioning to GPS-chipset vendors Broadcom, Qualcomm, SiRF, and CSR will contribute to widespread availability. Similarly, Sprint’s recent decision to give third-party developers access to its network-based location platform via location aggregators such as Wavemarket, Loc-Aid, and uLocate will stimulate the use of hybrid positioning.

At the same time, alternative positioning technologies are shaking up the entire location ecosystem. Major vendors such as Google are building their own reference databases of cell-tower and/or Wi-Fi hotspot locations via user-generated content and/or self-learning mechanisms. This allows Google to offer LBS services independently of carriers. More importantly, Google will likely make its location assets available to smaller vendors, further endangering the position of the carriers.

“Users expect a seamless and transparent location experience regardless of application or environment,” said ABI Research director Dominique Bonte. “Since no single positioning technology can provide this, the future will be about hybrid positioning systems, combining A-GPS, Cell-ID, Wi-Fi, cellular, motion sensors, and even TV broadcast and proximity technologies such as Bluetooth, NFC, and RFID. A-GPS, Wi-Fi, and Cell-ID will be the winning combination, offering accuracy, availability, interoperability and short fix times at low cost.”