Mapping a New, Mobile Internet

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They're willing to supply data on their whereabouts in exchange for safety and convenience. With a phone, far more possibilities open up. An Amazon.com (AMZN) application lets users take photos with their iPhones of things they'd like to buy. Amazon's computer promptly searches for each item. When it finds a match, it lets the user know the lowest price and nearest location. In the process, Amazon gains data on the movements and habits of its most zealous customers.

CLOAKING OPTIONS

In this dawn of geo-tracking, many people are more likely to start out swapping data with friends and families. Already 25 million people have installed Facebook on their handsets. And Google is pushing in the same direction. On Feb. 4 the search engine released Latitude, an app that lets people with high-end mobile phones share location data with friends. Users can check on their buddies stuck in traffic, sneaking out of work early, or catching a ball game. Latitude even provides directions on how to meet up with friends and contacts. (Instructions for finding Skibiski one recent afternoon involved taking the E train from midtown Manhattan to West Fourth Street and walking east on Bleecker Street.)

The privacy implications are considerable. Is it O.K. for a boss to hand an employee a Latitude-loaded BlackBerry and then monitor her whereabouts? Companies that operate fleets of trucks have tracked employees for years. But similar technology in cell phones would potentially let all sorts of companies monitor and measure employee movements. Latitude does offer cloaking options. A user can hide from certain people or ask to be located by city, not by street.

Resistance to mobile ads is showing signs of breaking down, at least in some quarters. When surveys ask users if they're interested in receiving the ads, nearly everyone says no, says Greg Sterling, a senior analyst at Opus Research. But when asked recently whether they would welcome messages only from local businesses they select, 43% say they'd be "very or somewhat interested." That number, says Sterling, is higher among the data hounds who use the iPhone, BlackBerry, and other high-end phones.

Sense's hedge fund investors—the company does not name them—want to study the mobile data to get a leg up on macroeconomic trends. How is traffic at key malls? Is that struggling retailer attracting customers with its new marketing campaign? "Usually you get store sales data with a couple weeks' lag," says one of the investors. "If you get real-time data on traffic to stores, this could be epic—especially if you have it and nobody else does. Pair that with MasterCard (MA) data, and you've got some pretty meaty stuff."

Some companies are rewriting their business plans based on the possibilities for location-based services. Nokia, the leading cell-phone maker, faces a slumping global market, with phone shipments expected to fall 5% to 10% this year. But perhaps no outfit has access to more location data on hundreds of millions of people. By working with Sense to study people's movements, their tribes, the photos they take, and the applications they use, Nokia is betting it will come up with customized suggestions on everything from walking routes to boutiques. All of them would be linked to a map on the phone. Money would come from subscriptions or advertising.

Back at Sense, analysts are busy crunching data for Nokia. At this early stage, says Jebara, you can't always tell whether a person is in a coffee shop or the bar across the street. The geographic read isn't precise enough. So the machines make a guess based on the person's tribe and the time of day. No doubt they sometimes get it wrong. But here's the crucial point: The more we use the mobile Net, the more data we provide. And with more data, the Next Net develops more fully—and becomes increasingly vital for business.

For a video of Sense Networks and a look at top mobile applications, go to businessweek.com/go/09/futuretech

Baker is a senior writer for BusinessWeek in New York.