Skyhook’s positioning system, based on mapped network access points, may soon be supplementing satellite GPS in a handheld near you.

Skyhook Wireless in Boston announced today that SiRF Technology Holdings of San Jose is licensing Skyhook’s Wi-Fi Positioning System (WPS) client to combine the GPS location abilities of satellite with the WPS’s vast database of mapped access points on SiRF’s chips.

For those not familiar with SiRF, Ted Morgan, the CEO of Skyhook, describes the chipmaker as the leader in providing silicon for navigation systems everyone has heard of. “Look at the personal navigation devices from TomTom and Garmin — they have about 90% of the market — they all use SiRF chips,” he says. Morgan says handhelds with GPS functions also are largely SiRF-based.

“SiRF’s founder [Kanwar Chadha] has talked for years about the need to look beyond satellite GPS,” says Morgan.

The software licensing deal means the original equipment manufacturers (OEMs) that make handsets using the SiRFstarIII GPS chip will have WPS as an option (carriers will need to run the SiRFLoc Server application). If they build in Wi-Fi, they can use the Skyhook WPS as an extra. “It’s all a matter of the decisions the device maker makes about Wi-Fi,” says Morgan. With more and more handsets building in Wi-Fi to support fixed/mobile convergence with mobile carriers, he thinks the desire to use WPS in those same phones won’t be much of a stretch. “Carriers can make money if they adopt this for navigation, buddy finding, local advertising and more,” he says.

Use of the WPS has been somewhat limited to users of Skyhook’s Loki utility, a Windows browser toolbar that lets laptop users integrate their location into their online use. Another service now putting WPS to use is AOL’s Instant Messanger. A couple of weeks ago, they quietly launched a plug-in for the AIM 6.0 client software for Windows 2000/XP so you can see the locations of your buddies (and they can see yours) if all have the WPS plug-in installed. Morgan says AIM is planning to aggressively push this and some other new plug-ins soon. At CES, Skyhook announced that the WPS is now integrated into an iRiver-branded media player, model W10, coming soon to the U.S.

Morgan says the WPS database of mapped APs in the U.S. now covers 70% of the population. He calls the mapping a “massive exercise… we’ve had 200 full-time trucks driving. We’ve got 15 million access points in our database.”

Why would anyone want to rely on the Wi-Fi-based positioning if satellite support is on the same unit? “The vast majority of complaints from GPS users are usually about the first two minutes of a trip,” says Morgan. The handheld GPS systems just take too long to triangulate a position, that might not even be possible when indoors. (Car-based GPS usually cheats, he says, because the car can assume it’s in the same position it was when the GPS was turned off.) “Adding Skyhook to SiRF means you have your locations in less time, and it’s accurate, whether in Manhattan or Montana,” he says.

The two companies will be showing off the GPS/WPS hybrid at the 3GSM World Congress 2007 in Spain later this month.

Morgan says the future for the WPS could go beyond just Wi-Fi access points in the database, to taking advantage of any wireless, which he calls “signals of opportunity. Users don’t care, they just want the best fix [on their location]. This SiRF announcement is just the first step. We’re doing some testing now with cell towers and WiMax signals as well.”