By JESSICA E. LESSIN
Apple Inc. has acquired the indoor-GPS company WifiSLAM, a sign that a war over indoor mobile-location services is heating up.
Apple paid around $20 million for the Silicon Valley-based startup, according to a person familiar with the matter who said the deal closed recently.
The acquisition could help Apple catch up with rival Google Inc. in mapping after it cut its ties with the Internet giant over maps last year. Google offers indoor mobile maps of locations like shopping malls and airports for Android users but not for iPhone users. The service is based in part on floor plans.
WifiSLAM, which is roughly two years old, is among a slew of technology companies trying to crack the problem of how to detect a mobile-phone user's location when the user is indoors and traditional GPS technology doesn't work.
Its approach involves detecting a phone user's location in a building using Wi-Fi signals that already exist inside the building. WifiSLAM has been offering the technology to application developers for indoor mapping and new types of retail and social-networking apps.
Indoor mapping and tracking has long been seen as an important, potentially lucrative frontier for technology companies. Analysts and proponents of the technology say it could be used to build apps that direct users to their gate at the airport, provide audio tours in museums or push offers to consumers based on where they are standing inside a store.
But indoor mapping hasn't taken off because of technology limitations, including poor Wi-Fi penetration inside buildings. And the business models around indoor location services remain nascent.
An Apple spokesman confirmed the deal, saying the company "buys smaller technology companies from time to time" and generally doesn't discuss its plans. He declined to comment further. WifiSLAM representatives didn't respond to a request for comment.
Opus Research analyst Greg Sterling said that consumer apps in the space have struggled to build audiences that are big enough to interest advertisers.
But he believes that data about consumers' indoor whereaboutsâ€"with names omitted to address privacy concernsâ€"could be extraordinarily valuable for retailers studying foot traffic and making merchandising decisions. "There is a lot of money lurking in in-store merchandising," he says.
He and others predict that new advertising models could emerge, such as charging a marketer only when an ad drives an in-store purchase, something retailers have been experimenting with and lusting after for a long time.
For Apple, one likely lure of the technology is to help it keep up with other mapping products as the company and its rivals strive to one-up each other on features.
Apple released its own iPhone mapping service last year after using Google mapping data since the phone's inception. But Apple's offering got poor reviews amid user complaints about inaccurate data. Apple Chief Executive Tim Cook apologized for the product's quality, and Apple has been working to improve it.
Others are also interested in the market. Microsoft Corp., for example, offers some indoor maps.
Last year, an alliance of technology companies including Samsung Electronics Co., Nokia Corp. and Qualcomm Inc. announced plans to invest in indoor location services using Bluetooth and Wi-Fi signals. The alliance said the companies would introduce new indoor location services this year.
WifiSLAM has a handful of employees, and its co-founders include former Google software engineering intern Joseph Huang.
The company has raised money from a handful of angel investors, including Google employee Don Dodge, according to the investor site AngelList.
Write to Jessica E. Lessin at jessica.lessin@wsj.com
A version of this article appeared March 25, 2013, on page B1 in the U.S. edition of The Wall Street Journal, with the headline: Apple Buys Indoor GPS Specialist In Map War.
