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With a global positioning system (GPS) chip now in the iPhone 3G, location services are becoming important to many mobile application developers. Each day, we’re seeing new iPhone apps launch which, if they’re not centered around location, rely heavily on it for core functions. But because Apple will not allow any applications to run in the background, it is hampering much of what location-based services (LBS) can do, as Brady Forrest rightly argued on O’Reilly Radar a couple days ago. Manual location updates are fine, but real-time updates regardless of if you’re using your phone or not, are the future.

This sentiment is shared by Pelago chief executive and co-founder Jeff Holden. His company makes the location-based app, Whrrl. An app which venture capital firm Kleiner Perkins saw enough promise in to make Pelago the first recipient of money from the iFund, the firm’s $100 million fund to spur iPhone application development.

Whrrl is a nice application, but it could be much more, and Holden knows it. The key idea behind the app is to “drive down the friction with which you can share experiences,” Holden told me when I met with him at last week’s CTIA conference in San Francisco, Calif. The key to that is getting people to use the app.

Certainly, promotions such as the one Whrrl is currently doing with the hit HBO television show Entourage, in which fictional characters from the show send location and status updates, help. But usage may skyrocket if a user could just have a device in their pocket that signals to friends where they are or who they’re with.

To many people this sounds scary, and naturally it would have to be something that is opt-in and could easily be turned off for private moments. But many, including Forrest in his piece, realize the power of being able to know when a friend is nearby. Or passively updating your location which can likewise tell your friends where you are.

Obviously, other location-based applications such as Loopt and Where would benefit from continual location updates as well. Unfortunately, that’s simply going to be hard to do unless Apple changes its plans for the iPhone. While the upcoming Push Notification System will be somewhat useful for these location-centric apps, it will not allow the apps to run in the background. Instead, it sort of mimics background messaging functionality through its own servers. Because of that, it doesn’t seem like it will be possible to continually update something like your location throughout the day.

Instead, as Holden explained, another Whrrl user could ping you to let you know they’ve checked in somewhere even if you don’t have the Whrrl app open. That ping would direct you to open the app to update your own status. That’s basically a Facebook “poke” or a Twitter “nudge” — cute, but not really all that powerful.

Holden sounded much more optimistic about the other platforms that Whrrl is running on or will soon run on. Phones such as RIM’s BlackBerry running on networks such as Verizon’s should allow for LBS background features eventually. Likewise, Google’s upcoming Android platform will have background location features. Applications like Life360 depend on it.

When these are released and if they become as popular as Holden thinks they will, expect the pressure to be on Apple to follow suit.

That may end up being the catalyst that makes Apple open its iPhone platform a bit more to allow apps to run in the background. Remember, initially Apple wasn’t going to allow third-party developers to make native apps — all development was to be done through the Safari browser. Apple relented on that. And it might as well for background-running apps.

The future of location services may depend on it.

[photo: flickr/CJ Sorg]

As more location-based services come out, one definite problem I’ve been experiencing is a lack of membership. That is to say, most of them work great, but no one I know really uses them, making them fairly useless. Whrrl, the location-based social network has a new feature today that may up its adoption.

The service had teamed up with Deep Focus which handles the marketing for the cable television channel HBO to promote the hit show Entourage. Entourage follows the exploits of an up and coming actor in Hollywood who has brought his friends along for the ride (his “entourage”).

This promotion isn’t a straightforward advertising campaign however. Instead, all of Entourage’s primary characters now have Whrrl accounts. This means that you can follow what bar Turtle, Drama, E and Vinny Chase (characters from the show) are in. Or find out where super agent Ari Gold is screaming at his assistant Lloyd.

Of course all of this information is fake — as these characters are fake, but it’s still kind of fun. It adds a fictional element to the service and allows for deeper interaction with Entourage if you love that show. This reminds me of how another hit show, AMC’s Mad Men, has its characters on Twitter (though they weren’t actually created by AMC, and the channel tried to remove them before realizing that was stupid). Many users of the micro-messaging service are following the tweets of characters like Don Draper and Roger Sterling while they talk, in character, to other Twitter users.

Whrrl will allow users to add individual Entourage characters as friends, or follow the group as a whole. In addition to location updates, there will be character commentary much like I described above for the Mad Men characters on Twitter.

It will be interesting to see if certain locations in the series (with is primarily based in Los Angeles) become more popular when users start getting updates from the Entourage guys. That could add a whole other marketing layer to this.

Whrrl’s parent company Pelago raised a $15 million second round back in May. Pelago was also the first company in venture capital firm Kleiner, Perkins, Caufield & Byers‘ portfolio to join Kleiner Perkins’ iFund, the $100 million fund which the firm set up to spur iPhone application development. Its iPhone app launched in July with Apple’s App Store. The service is also available on a wide variety of other mobile devices.

Entourage’s new season starts on Sunday. Find out more about the promotion here.

[photos: HBO]

Loopt, the location-based social network, uses GPS technology in cellphones to figure out where you are. Because of this it can tell you things such as which of your friends are around you, or what restaurants you are near. Unfortunately, the cost of accessing this GPS data, doing a “dip” as it’s called, has been very prohibitive. Consumers may not realize it as much, but it’s a problem in selling an application like Loopt to carriers. As Loopt founder Sam Altman told me, “the economic model had to change.”

Today, it is.

Loopt has reached deals with both Qualcomm and SiRF to give it unlimited dips of GPS data for one flat fee, Altman announced at MobileBeat 2008 today. What does this mean? Nearly every phone with a GPS chip right now will be able to use the Loopt application for a much better deal.

The carriers and handset makers still have to buy into this new plan, but you can be sure that is going to happen now that Loopt has this deal.

Loopt has been garnering a lot of buzz recently as devices such as the iPhone 3G are bringing GPS-based apps more into the public consciousness. Loopt is attempting to be the main player in this the location-based networking arena. It faces competition from the likes of Pelago’s Whrrl.

A source close to the company tells us that this announcement will be huge because Loopt is working on a location-based ad network of some kind. Obviously something like will work better the more times the app is able to pull in GPS data. Now, there is no cost restriction in doing that.

Update: Whrrl has not been snubbed by Apple. As of Friday morning, it’s now the 10th application from the top of the list on “featured” apps, if you go the AppStore from your iPhone. On the iTunes home page, Apple has put Whrrl in the first set of companies featured under “new”. (Whrrl is in the first tab, and in the fourth). So Apple so far appears to be trying to treat these companies fairly. Whrrl says it wasn’t snubbed by not being on stage during Apple CEO Steve Jobs’ keynote last month, rather, it says it hadn’t completed its app fully to be ready for demo.

Mobile social network Whrrl will be available today on the just-launched App Store for the iPhone.

The attractive thing about the application, created by Seattle-based Pelago, is the way Whrrl combines a number of different services into a single package — microblogging, location-based updates and reviews. The service is already available on other mobile devices, but the iPhone launch is worth noting because Pelago was the first company to join the $100 million iFund created by Kleiner, Perkins, Caulfield and Byers to spur the development of iPhone apps. (Pelago was already Kleiner-backed prior to the iFund.)

However, the launch is overshadowed a bit by a similar announcement from competitor Loopt, which is backed by Kleiner competitor Sequoia Capital. After all, Loopt actually got a chance to take the stage during Apple’s WWDC this year, and there are rumors that Whrrl was consciously snubbed. While the iPhone version of Whrrl appears to the same service that’s already available on other devices, Loopt gave its announcement extra juice by revealing that it will partner with other companies, most notably local review site Yelp.

Pelago has raised $22.4 million in venture funding.

Check out MobileBeat2008, VentureBeat’s conference on July 24.

Social networks built around location are a hot item, and getting hotter.

It’s one thing to have a group of contacts which you can update with words from a mobile device (think the micro-messaging service Twitter). It’s another to be able to quickly update your exact location on a map and have others see it. Add to that the ability to review places (think: Yelp) as well as tag places you would like to go, and you have a general idea of Whrrl, a location-based social network.

Several other services including BrightKite and Yahoo’s FireEagle, are exploring similar usage of location for networks, but with this new round of funding, Whrrl gets an important ally: T-Mobile. Deutsche Telekom’s venture capital arm, T-Mobile Venture Fund led this latest Series B round.

T-Mobile’s support validates the service, said Jeff Holden, chief executive and co-founder of Pelago, Whrrl’s parent. T-Mobile and Indian venture fund Reliance Technology Ventures (RTVL), which also participated in the round, will be important in helping the service expand globally, Holden said.

This location-based network arena will only get hotter as newer technologies and newer phones come into the market. While Google’s Android is still a little ways off, Apple’s 3G iPhone is expected to be just around the corner, and is expected to add GPS technology. Whrrl has already spoken on its blog about its excitement about building a native application for the device with the software development kit (SDK).

Pelago was the first company in venture capital firm Kleiner, Perkins, Caufield & Byers‘ portfolio to join Kleiner Perkins’ iFund, the $100 million fund which the firm set up to spur iPhone application development. Kleiner Perkins participated in both Pelago’s Series A round as well as this latest round. Other return investors include Trilogy Equity Partners and Bezos Expeditions. DAG Ventures is a new investor.

Loopt is yet another company doing something similar to whrrl, using GPS to update your friends’ location on a map. Loopt is backed by Kleiner rival, Sequoia.

As more and more phones add GPS capabilities, the ability to update Whrrl will get easier and easier. In fact, a user could use the service to send out updates of their location to friends without having to touch the device.

The Seattle, WA-based Pelago previously raised $7.4 million in 2006. We wrote about Whrrl in November.