Imagine that your business had a complete log of your customers' wanderings"”every trip to the grocery store, every work commute, every walk with the dog. What could you learn about them‾ Armed with that knowledge, what sorts of goods and services might you try to sell them‾ Just as important, if you made your best pitch"”relevant and timely, of course"”would customers concerned about privacy tell you to get lost‾ This isn't science fiction. A nascent industry extending from the laboratories of Google (GOOG) and Nokia (NOK) to a host of data-fueled startups is wrestling with these very questions.
On a snowy winter evening in New York's SoHo neighborhood, a small team of analysts at a startup called Sense Networks is poring over the movements of nearly 4 million cell-phone users over the course of a year. They have been tracked by global positioning systems, by cell towers that catch their signals, or by local Wi-Fi networks that detect their presence. As far as the Sense analysts can see, these people have no names: They are simply dots moving across the maps on Sense's computers. (The data trove comes from a company New York-based Sense will not name.)
Much can be learned, it turns out, from the patterns of those dots moving across the maps. It's possible to see clusters grow around a popular restaurant or retail store. It's also easy to learn about each dot. Business travelers tend to congregate in certain spots in each city. The newly unemployed often shift from the clocklike routine of work to far more random movements. And Sense can flesh out these digital stick figures with additional data. By noting where dots appear to sleep, the company can assign an average neighborhood income to each one. It then becomes easier to predict whether those spending time near car lots are in the market for luxury brands or economy models.
Laboratory of humanity
After a few weeks of monitoring one dot, the Sense computer usually has enough data to place it into a tribe"”a group of people with common behaviors. One tribe comprises night owls who explore bars and restaurants into the wee hours. Sense founder Greg Skibiski and his chief scientist, Tony Jebara, who is also a Columbia University computer science professor, call them 'Young & Edgy.' Another group seems at first to overlap with the Young & Edgy. These people, though, stay true to a single establishment and return home at more regular hours. 'Barflies,' says Jebara.
With every step they take, the members of Sense's tribes are helping to create a new laboratory of humanity on the go. This emerging phenomenon, powered by Web phones and an explosion of new mobile-software applications, is the long-awaited Next Net. 'The phone in your hand is the bridge between the virtual and real worlds,' says Michael Halbherr, vice-president of Nokia's gate5 mobile Web unit.
Sense, led by the 35-year-old Skibiski, is a mere gnat in this market. It's a services shop powered by five PhDs and a slew of algorithms. Phone companies and advertisers provide Sense with raw data on people's movements and behavior. Sense's mission is to transform mountains of data into intelligence: what individuals will be most likely to buy, or where they'll be when a craving hits. The company is looking for venture money and may struggle in the current rough market. But whatever Sense's fate, the method of its research"”predicting people's preferences by their movements"”could soon work its way into industries from marketing and finance to media.