Apple opted to combine two kinds of triangulation to get the best results: It looks at both cell tower locations and Wi-Fi networks nearby. Google is providing the technology for cell triangulation, but a firm named Skyhook Wireless is handling the Wi-Fi work.

I've written on my own Wi-Fi blog for years about Skyhook, which has assembled the world's largest and most up-to-date database of Wi-Fi signals in all major cities in the U.S., and an increasing number of cities in Europe, Australia, and Asia.

Skyhook takes advantage of a few elements of Wi-Fi networking. All Wi-Fi access points constantly state their name, rank, and serial number, emitting a signal even on networks that are secured with encryption. The signal includes the access point's unique hardware identifier, the network's name, and a few other minor characteristics. (Wi-Fi networks that are "closed," a setting available on most home access points, provide some information when users are active on the network.)

These details can be sniffed without connecting to a network, and thus avoiding running afoul of an increasingly large number of state laws in the U.S. and national laws elsewhere that restrict unauthorized network access for any purpose. (A new law in Germany is so broad that researchers are highly concerned they could go to jail and face fines for innocuous behavior.)

Skyhook has hundreds of trucks equipped with good GPS receivers and Wi-Fi antennas that drive around cities collecting this broadcast information and pairing signal strength at a given spot on the globe. With
billions of these kinds of data points, it can take advantage of the fact that most Wi-Fi networks don't move, and that millions upon millions of networks in the U.S. in private homes and in businesses are broadcasting their location.

Skyhook released a proof of concept of their approach in 2006 with the Loki toolbar, which is an add-on for several Windows browsers that let you map your location or find nearby businesses in many categories, or even prefill store locators at many sites.

For Mac and Windows users, Loki can provide Web page designers with a hook that lets them find a user's
location -- with the user's permission -- and deliver information on the Web site tailored to that spot.

The information Skyhook gathers is updated all the time, but it also receives details back from users. Its software sends a snapshot of the Wi-Fi signals that its laptop "sees," and Skyhook can integrate that with information it already has about the area, making it easier to spot Wi-Fi networks that have moved, changed names, or disappeared.

The iPhone taps into Skyhook through AT&T's Edge netowrk. When the user taps the "find my location" button (a little crosshairs on the lower left of the Maps application screen), the iPhone scans the
vicinity for Wi-Fi networks and sends that information to Skyhook. From what I can tell the Google cell tower and Skyhook Wi-Fi details are combined to provide the closest possible location match.

In testing around San Francisco, I was generally pinpointed pretty well, even in some of the concrete-and-glass canyons that make up the area near the convention center. The crosshairs superimposed on the map show not just your likely location, but also the degree of error -- the bigger the circle, the bigger the
guess on the part of the device.

I've heard a lot of talk at the Macworld conference that this new feature, free to existing and future iPhone users, might spur sales among people who were thinking of an iPhone, but waiting to pull the trigger on a purchase. Verizon Wireless, Sprint, and others are offering location and direction-based services, including turn-by-turn mapping and instructions like that found on a GPS receiver -- but they charge about $10 a month for the feature.