Facebook Buys NextStop for a Boost in Location-Based Services

A tech segment that's seeing red-hot growth is location-based services (LBS). Essentially, this allows people to use their smartphones to indicate when they're in a certain location, such as a bar or store (the process is known as a "check in").

The LBS player that has the early lead is Foursquare, which recently nabbed $20 million in venture capital from investors including Andreessen Horowitz. This scrappy startup -- which was founded in March, 2009 -- is gaining 15,000 new users every day.

There are a slew of rivals in the segment, including Loopt, Gowalla and BrightKite. But some Web incumbents are also trying to get a piece of the action.

Perhaps the most important is Facebook. The company was rumored to have tried to purchase Foursquare. Well, Facebook has bought another operator: Travel-recommendation site NextStop.

Location, Location, Location

Two years ago, former Google (GOOG) employees Carl Sjogreen and Adrian Graham started NextStop. Before this, they had helped build Google Calendar, Google Groups and Picasa, a photo service.

With NextStop, Sjogreen and Graham saw an opportunity to make a better online travel site. Essentially, it would be based on social recommendations, ratings and comments, helping travelers find interesting things to do while on their trips.

While a good idea, it was still tough to get traction. After all, the travel category is fairly crowded and has a variety of dominant brands.

However, while building the site, NextStop developed a variety of useful LBS features. After all, the database has more than 100,000 recommendations about places around the globe. Plus, NextStop has built a sophisticated system that provides user-participation incentives, such as with badges. This has been critical for LBS plays.

So it's possible that Facebook will use some of the underlying NextStop technology for its upcoming LBS offering (there's no date for the launch yet) -- although it's clear that Facebook also wants the company's top-notch engineering talent.

LBS is a strategic area for Facebook. After all, a popular Foursquare feature is to post location information on the Facebook news feed.

So why can't Facebook do this too? In light of the NextStop deal and recent comments about the importance of location, it looks like Facebook will boast this functionality soon.