The news this week that Apple has acquired indoor positioning company WifiSLAM is a sign that the war over indoor mobile location services is hotting up.

Apple paid around $20 million (£13m) for the Silicon Valley-based company, according to the Wall Street Journal. Typically, Apple played down the purchase, stating that it invests in smaller technology companies “from time to time”, and that it generally does not discuss its plans.

However, mapping is something of a sensitive subject for Apple. The company's CEO Tim Cook was forced to apologise to customers in September 2012 after the company replaced Google Maps in iOS 6 with its own mapping application, which was found to be riddled with inaccuracies.

“One thing Apple needs to have learned from the Apple Maps fiasco is that you can't come straight to market with a solution that is going to be able to compete with the market leaders,” said Jamie Moss, senior analyst at Informa Telecoms & Media. Apple needs to take the time to test new mapping services thoroughly before bringing them to market, he added.

Indoor mapping is a very different beast from outdoor mapping, however. Nobody has really cracked indoor mapping yet, so Apple has an opportunity to catch up with Google or Nokia in this space. By bringing on board an indoor-mapping specialist like WifiSLAM, Apple is bolstering its chances considerably.

WiFi triangulation for indoor positioning

WiFiSLAM allows smartphones to pinpoint their location to an accuracy of 2.5 metres using only ambient WiFi signals that are already present in buildings, according to the company's AngelList profile.

While developers are still experimenting with a number of technologies for indoor navigation – including Bluetooth, radio-frequency identification (RFID), near-field communications (NFC), light, sound and magnetic anomolies – WiFi remains the leader, due to its ubiquity on smartphones and extensive coverage in public venues such as offices, cafes, restaurants, airports and, increasingly, retail stores.

Fixing a position indoors is similar to triangulating a position outdoors with a global navigation satellite system such as GPS, only with geocoded WiFi base stations replacing orbiting satellites. Using this technique, indoor positioning systems can theoretically achieve an accuracy of one metre or better, but in practice an accuracy of a few metres is more typical.

Indoor navigation also relies on a number of sensors in the phone itself, which help to make sense of the location data. These might include a compass and gyroscope (to establish the direction of travel) an accelerometer (to determine speed), and even a pressure sensor (to determine altitude – enabling the device to detect the exact floor a user is on within a high-rise building).

Analyst firm Forrester predicts that indoor positioning will have an enormous impact for product strategists in retail, hospitality, transportation, healthcare, manufacturing, and other industries that have a strong emphasis on physical infrastructure, such as stores, offices, hotels, plants or other facilities.

“By integrating indoor location data into inventory management and space-planning databases, indoor positioning will make it possible to search for products and objects in the physical world as easily as we can on the internet,” said Forrester analyst Tony Costa.

“In the short term, this will make finding people and objects in venues easier. Longer term, should venues open this data to Internet search engines such as Bing, Google or Siri, users would be able to search across multiple venues or geographic areas for products or objects.”

Competition mounting

As well as Apple, Broadcom, Google, Microsoft, Nokia and Qualcomm are all in the process of extending the capabilities of their products and services to enable indoor positioning.

While Google and Nokia are taking a platform approach – expanding their web and mobile mapping solutions to include indoor maps for publicly accessible venues such as airports, train stations, libraries, museums, universities, department stores, casinos and sporting venues – Broadcom and Qualcomm are integrating indoor positioning at the chip level.

For example, the inclusion of Qualcomm's IZat location platform in its Snapdragon S4, GNSS and Atheros WiFi chips means that the company can provide an end-to-end indoor positioning solution that is up to 10 times more accurate than existing platforms, with virtually no impact on battery life or design cost.

At the Cisco Tech Editors Conference in San Jose earlier this month, Cisco showed off how it is using Qualcomm Atheros to improve the indoor positioning capabilities of its Mobility Services Engine (MSE), which enables location-based app development on Cisco wireless networks installed in public venues.

Sarah Vanier, marketeer at Cisco, demonstrated an iPad application developed by Meridian which allows shoppers to navigate around a shopping mall. Retailers within the mall can integrate with the application via an app editor or software development kit (SDK).

“The user, John, is walking directly by a store called RJN. When the WiFi network senses the application, the application wakes up and prompts John to open it,” said Vanier.

“Once it's open, the retail organisation can show all the different offers. A lot of retail organisations have a problem with price shopping, so people use their mobile devices to compare and contrast prices. This is a way to captivate those shoppers so that you are able to communicate to them and show them your offers.”

Vanier also demonstrated how 'John' could search for the men's clothing department, navigate to the right clothing rail for a sweater and receive alerts about discounted items along the way. When he had chosen the items he wanted to purchase, John could alert his favourite sales person, who would then walk directly to him to complete the transaction.

Cisco's MSE also integrates with the ThinkSmart analytics platform. This uses the WiFi signals from end users' devices to monitor dwell time, traffic patterns and crowding within the shopping mall. By monitoring these things over a period of time, retailers can get an idea of how successful their marketing strategies are, and deploy staff in such a way that customer experience is optimised.

“The mall can look at this as a monetisation opportunity for them. They can provide WiFi as a service and then the retail shops can license it essentially, so they can be acting as the service provider in that case,” said Vanier. “This enables companies to engage directly with the end users, but really it's looking at turning WiFi into a revenue enabler.”

Putting the consumer first

Product strategists in retail and advertising have been among the first to embrace indoor positioning, and already major retailers such as Tesco in the UK and Best Buy and Walgreen in the US are piloting indoor positioning-based applications.

Forrester predicts that indoor positioning will accelerate its growth in these areas throughout 2013 – as well as in social, education, entertainment and hospitality – enabling a more personalised service, action-based rewards, augmented experiences and targeted offers.

The development of the Internet of Things will also drive the need for indoor positioning, opening up buildings, environments and venues, as well as their contents to digitisation, resulting in more seamless integration between digital and physical services.

“Whether it's a virtual shopping assistant that helps you select or find products, augmented content and new social interactions to make in-venue experiences more compelling, or convenience services that let you skip lines or complete tasks more efficiently, indoor positioning will help bring bricks-and-mortar experiences into the digital age,” said Costa.

Crucially, however, companies that want to benefit from this technology need to win over consumers. This means making indoor mapping applications as easy to use as possible, offering real customer benefits in exchange for data, and reassuring them that their privacy is protected.

Only when the user feels comfortable sharing their physical location and sees tangible benefits in subscribing to these location-based services will they start engaging with indoor positioning, and only then will companies like Apple start to see the rewards.