Harman Buys Aha Mobile, Sees a Location-Based Bonanza

As smartphones become the mobile communications norm, GPS capability is becoming pervasive. And that's a big threat to traditional operators like Garmin (GRMN) and TomTom. But it's also a big opportunity for Internet-based services like Foursquare and Facebook. These platforms allow users to "check in" to bars and restaurants and send location-specific messages with their phones. It's the next frontier for social networking.

And it could be a big money maker. A few months ago, Andreessen Horowitz led the $20 million funding of Foursquare. The valuation was estimated at $115 million -- pretty impressive for a company that started in March 2009.

No doubt, there is likely to be lots of dealmaking in the sector. This week, the premium audio equipment company Harman International (HAR) agreed to purchase Aha Mobile. The company essentially turns a smartphone into an in-vehicle infotainment system.

A Look At Aha Mobile

Back in 2008, Robert Acker founded Aha Mobile. Before this, he was a senior vice president at Dash Navigation, the developer of the first Internet-connected GPS device.

Acker's vision for Aha was that all cars will inevitably connected. But why not accelerate this by leveraging people's smartphones?

But there was a challenge: It can be dangerous to use a smartphone while driving. So using Internet technologies, Acker focused on the most common actions for drivers, like getting lunch, finding directions to a destination, locating a nearby gas station, and so on. In the meantime, the driver can hear streamed music and even Facebook status updates, using speech-to-text capability to direct the system.

Harman Cranks Up the Volume

Location-based services (LBS) like Foursquare, Gowalla and Booyah have untested business models. Will people get tired of using these services? Will there be enough advertising revenues? A the same time, there are privacy issues. There are already cases of cyberstalking.

But with Aha, the value proposition is straightforward. The in-vehicle infotainment business is already substantial. And it looks like smartphones will be a disruptive force in the industry.

All in all, Harman is certainly smart to jump in now and leverage its global footprint. More importantly, it looks like Aha is a good choice to make its strategy work.