Skyhook is an incredible little start-up that had a great idea – to pinpoint location without the use of satellites (like in GPS). How do they do it? Skyhook utilizes the world's WiFi networks and cell towers as a basis to look up location. The company hired 500 drivers to literally drive up and down every single street, with a device mapping every single active WiFi connection and cell tower. They did this worldwide.
Luckily for Ted Morgan and Michael Shean, Steve Jobs caught on to their creative idea, and gave them a deal. Skyhook's services are implanted into every single iPhone. When your iPhone uses "GPS", it does not always connect to a satellite. Some of the time, it learns it's location via Skyhook. Skyhook Wireless now gets a little piece of every single iPhone Apple sells.
Read the New York Times article "Cellphone Locator System Needs No Satellite".