The recent news that New Zealand's Rakon has developed the world's smallest GPS chip coupled with other new developments (Google Local on mobile phones) has me thinking we are moving towards a Brave New World. In particular we are moving towards a world where everyone will be trackable and services will increasingly be based on our current locations. More after the jump.

When the FCC enacted the E-911 location requirement for cell phones in 1998 few people probably realized that it would have such a profound impact on how ads and other services would be delivered. While the goal of the FCC regulation was to provide the same instant location routing of landline 911 calls for cell phone users, its unintended consequences could be a new kind of disruptive economic force. With the recent development of ever smaller GPS chips with ever improving reception coupled with an increasing cadre of location-specific services, we are poised to begin living in a world where services of all kinds will be based on our current location. While some of these services are still in the development stages, many others are already here:

• Tracking of cell phone users: Several companies have talked about tracking phones in order for companies/parents/stalkers to know where people are at all times.
• Killer Smart phones: If we are going to put GPS chips in cellphones and track people we might as well let people use them for navigation and search as well. Google and others are already developing beta versions of Google local that will allow for search based on a users location as identified by the GPS chip. Thus rather than type in your location, which you may not know, your phone will already know it and use it for a search.
• Tracking of children with GPS enabled bracelets/watches. Several companies already do this and with Dateline and others shows still going strong, the market will probably only increase. Moreover, as more and more baby boomers turn geriatric, these services will move to tracking grandma and grandpa.
• Tracking of Probationers: Already done in most states, bracelets could get smaller and reception could get better.
• Recording where you've run: Garmin, Timex, and Suunto already do this. Smaller GPS chips can make the watches smaller and more attractive without reducing reception. As watches get better looking and more powerful, the market for these will increase dramatically.
• Location based ads: Garmin is offering a service like this with their Nuvi that will provide notification of discounts on restaurants and hotels based on where you are. As the chips get smaller this could move from dash mounted systems to cellphones and watches.
• Unobtrusive GPS Devices: Think of this as Microsoft SPOT watches done different and better. In particular, you could receive real time notification, based on your location, of traffic jams, location important news, arrow guided directions, etc..As watch screen resolution gets better and big watches become more socially acceptable (see Suunto watches), these services could become more likely.
• Pet tracking: Already some companies offer this service in case your mutt gets past your electronic fence, but these smaller chips will get people thinking about chipping their dog. Currently RFID chips are standard for higher cost dogs, while reception will be lower with the GPS, in addition to battery issues, I am sure smarter people than I are thinking it over as we speak.
• GPS and RFID: Two great tastes that go great together. This combination could provide some amazing tracking and ID in a small package. While the Rakon chip is still much larger than standard RFID chips, the combined package would be much smaller than any developed so far. As with pet tracking battery issues are still a problem, but these smaller chips are step in the right direction.
• Social networking: Several companies are trying this with phones already, but with integrated GPS chips the accuracy will improve. In a nutshell you will be able to see where your friends are and if they are close you can hook up, or avoid them as you choose.
• Social research: This is admittedly an offshoot of tracking people, but with a different goal in mind. In particular, strapping unobtrusive GPS watches to subjects and following their travel patterns could provide us with information that could be useful to urban planning, traffic research, store placement, and behavioral geography in general.

Of course there are a few issues that could forestall the development and integration of these fine products and services. In particular, there are three issues that are common to most all CE products:

• Cost: The cost of these chips must fall to a level that their integration into existing products does not increase the cost point. Lets face it people are cheap and only the most committed early adopter will run out and buy these products if they cost too much. Once the price drops they will be everywhere and we will see the service side ramp up nicely.
• Battery Life: As with all things electronic power is an issue, especially when you are trying to keep the products small. This actually may be a bigger obstacle than price to increased use and adoption. There will always be people willing to pay for services and goods that are expensive, but if battery life sucks then even if you give them away people won't use them.
• Compelling uses: While this post is simply an outline of potential uses and services that can arise from the integration of small GPS chips into anything and everything until a cool killer app is found adoption will be slow. If I knew the cool killer app I surely would not be posting it here.

Overall we are standing on the edge of a new paradigm of GPS uses. While location based services have been increasing as GPS use becomes more pervasive, there is still a long road ahead in terms of making these services economically viable. However with the development of ever smaller GPS chips in conjunction with improved mapping services, the ball is moving in the right direction.