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It looks as if Loopt may be looking for an out — or more likely, an insane new round of funding. The location-based social network for mobile devices has supposedly hired the investment band Allen & Co. to find a potential sale or investment partner, TechCrunch is reporting.

But what’s crazy is the apparent valuation Allen & Co. is putting Loopt at: Over $500 million. Now, I like Loopt as much as the next guy, and am bullish on the eventual success of location-based services, but a half billion dollars, in this market, for a network that is far from established? Come on.

So with those kind of numbers being thrown around, you can throw a sale out the window. But with over $13 million is funding already raised from the likes of Sequoia Capital and New Enterprise Associates, does Loopt really need the massive amount of new money that such a valuation would bring in?

Maybe. After all, we all know Facebook and MySpace are going to get into the location-based networking arena eventually with their networks that are much more vast and deeply rooted. If they’re able to conquer location quick enough, it could mean trouble for services like Loopt and Pelago’s Whrrl.

In a separate article, TechCrunch’s Mike Arrington seems very bullish about Loopt’s prospects seeing as it has risen back into the top 20 apps in the App Store. But this surge can be attributed to one thing: Loopt being featured in an Apple commercial. It cannot be overstated how huge that is.

We’ve previously written about the power of apps being featured in Apple retail stores, but commercial time is probably even better. After all, only a few were selected for the latest commercials including Shazam and UrbanSpoon — both of which are now, you guessed it, top applications once again in the App Store. (Both, like Loopt, were previously popular apps before falling a bit as new ones rose to power.)

Don’t get me wrong, Loopt definitely has many elements of what it takes to make it a successful network, but that doesn’t ensure that it will be. It all comes down to users using it, and despite new features like Loopt Mix, most of the people I know simply aren’t. Instead they’re still using networks like Facebook and Twitter, neither of which have location (and Twitter needs some mobile work in general), but for now that doesn’t seem to matter.

Loopt founder Sam Altman didn’t have a comment when we asked him about the rumored Allen & Co. help. We’ve previously covered Allen & Co.’s secretive dealings here. They were also the firm brought on to help Digg in a sale that never happened. That company instead opted to take a new round of funding recently.

Location-based services (LBS) are becoming a dime-a-dozen in Apple’s App Store. Some, such as UrbanSpoon, Yelp and AroundMe are quite useful and popular. But those simply focus on finding places and activities (and mainly food) nearby your current location. More complex LBS social networks, which focus on tracking you and your friends, haven’t yet caught fire. Brightkite, which just launched its iPhone app, has the potential to change that.

The LBS social networks like Loopt, Where and Whrrl are all somewhat popular and useful to varying degrees. The problem, as I see it, is that while people are fine with downloading the apps to test out, after a few weeks (or in some cases a few days) people stop using them. That makes them useless.

Why do they stop using them? Because their friends aren’t using them.

Brightkite has a chance to buck that trend because it has managed to maintain a fair amount of usage despite being a web-only (and text-based) app the past several months. And that was before web browsers like the new Firefox had location services built-in. Basically, users were manually inputting their locations all of these months to the service. With the iPhone 3G app, that gets a lot easier.

You start up the Brightkite app and it automatically finds you. Big deal, you might think, the other LBS apps do that too. But Brightkite’s strength lies in its easy-to-use interface and its ability to allow you to check in to actual places. The latter feature is nothing new. Google-owned Dodgeball has been doing the same thing for years, by letting you manually type your location into a text message (which you can also do with Brightkite). But now, the Brightkite iPhone app lets you more easily check in somewhere using GPS.

And that’s really the thing. The Brightkite app is really nothing groundbreaking, it just combines a lot of key LBS social network features together and does them right. Aside from checking into places, you can post notes that are tagged with your location, post photos tagged with your location, see your friends’ activity, send direct messages, post comments on messages, search people, places and posts and you can repost all of your activity automatically to the more popular micro-messaging service Twitter.

Curiously however, if you post a picture to Brightkite and have it set to repost to Twitter, it won’t show the picture, just your location on a map. It should show the picture and the map.

The service also has a feature to show you what other Brightkite users are nearby you. Loopt recently launched a feature like this which it called Loopt Mix. One key difference is that Loopt makes it so you must opt-in to Loopt Mix, and makes it so it’s very obvious as to how you can turn off that feature. Brightkite seems to send your updates to the “Nearby” area automatically, and it does not appear that you can opt-out of this (at least not from the app itself). Some users may be very wary of that, but if enough keep using Brightkite, it should spur some usage and new connections.

Brightkite’s iPhone app is solid. And it has enough users that it may push LBS social networks another notch towards mainstream usage. But for that to truly happen, I’m still waiting for the big social networks, Facebook and MySpace, to get into the LBS game.

It would also greatly help if Apple allowed these LBS apps to run in the background.

Brightkite’s app is available for free in the App Store. One downside: You have to have a Brightkite account, and the service is still in private beta testing. (Though plenty of users out there should have invites.)

Find me on Brightkite here.

As promised, Facebook has rolled out a new, more robust iPhone application. Version 2.0 brings many of the features that are found on the regular Internet-based version of the social network, but had been lacking in the first few iPhone iterations.

Included in the update are: Notifications, the full News Feed, people search, friend requests, photo tagging, photo captioning, full Mini-Feeds, inbox search and message attachments. The update also promises to be more stable and run faster even with a large number of friends.

The application description states: “This is now the best way to use Facebook on your iPhone.” That’s important because the native app really hasn’t been the best way to use Facebook on the iPhone thus far. What worked better was the brilliant web-based version Facebook made and optimized for the iPhone before the device could accept third party applications. The fact that you couldn’t use the newer app to do something like accept friend requests was ridiculous. Now you finally can.

I’m using version 2.0 of the app right now; it’s really quite beautiful. The first thing you’ll notice is that it has gained a lot of color. Aside from the traditional Facebook blue and white, the button to comment on feed items is now a green dialog box with a plus sign in it. New messages and notifications are clearly noted with red circles with the number of requests inside.

But it’s the little things that may make this app great. Tapping areas in which you would type something, such as the green comment boxes, zoom out a large comment box. It’s a small thing that most people may not care about, but that attention to detail make this app look and feel almost like Apple itself designed it. The same is true with the secondary bar on the New Feed tab. You can scroll it from side to side with your finger — and if you flick it, it keeps scrolling, showing your the various options.

The area from which you update your status are now higher up and are always displayed along the top of the main home area, as is the button to take or upload a picture. It has seemed pretty clear since the first version of the app that Facebook wants more people to use the service to update their status, and at least among my friends, it looks like they certainly are.

The first version of the iPhone application was more like a communication tool than a mobile Facebook. This new version is regular Facebook, but is arguably even better with its sexy user interface and the fact that it’s mobile. Certainly some users who are upset with Facebook recent Internet-version redesign may like this more — it’s less confusing.

So what’s next for the iPhone Facebook app? My guess would be some sort of location functionality. Services like Loopt, Whrrl and Where are getting better at figuring out how to make location-based networks be compelling within an iPhone app, but the giant elephant in the room that no one wants to talk about is the likelihood that the much larger social networks like MySpace and Facebook will soon get into the location game themselves.

As I’ve talked about before, the key to location-based services taking off is having friends (as in people you actually know) use them. Loopt’s most recent update with Loopt Mix which allows you to find other users near you who wish to share their information was an important first step — but most people still aren’t going to reach out to strangers around them. They will reach out to friends around them however. And Facebook is all about friends.

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]

While even the popular social networks nowadays aren’t making that much money (Facebook expects to make $350 million in revenues this year), the burgeoning field of mobile social networks could be big business shortly, a new report by ABI Research indicates. Specifically, location-based mobile social networks could earn revenues of $3.3 billion within five years.

This is great news for many of the location-based mobile networks out there now such as Whrrl, Loopt, Where and Plazes. Each of these networks have garnered various amounts of buzz recently; Whrrl, Loopt and Where thanks mainly to the iPhone 3G launch and Plazes thanks to its sale to Nokia. But there is still some question as to how this money will be brought in.

The most direct means of making money will likely be licensing and revenue-sharing models with the wireless carriers and handset manufacturers, ABI concludes. Loopt, for example, has deals with all of the major carriers in the U.S.

But more interesting (and potentially lucrative) could be an area that the report notes “holds a lot of promise” — location-based mobile advertising.

A source close to Loopt told us last month that a driving force behind its deal to make the use of GPS data more cost effective was that it is working on an elaborate location-based advertising system. The company is apparently putting a lot of stock is such a system taking off.

These location-based social networks should soon face serious competition from the current social networking leaders such as Facebook and MySpace. While the mobile upstarts may have a lead out of the gate with location technology, the more traditional social networks have huge advantages in terms of overall users. Adding a layer such as location on a mobile version of these sites is less challenging than building an entirely new user base, as Silicon Alley Insider notes.

[photo: flickr/pinkbelt]

updated

Loopt, the cellphone service that lets you track your friends on a map and communicate with them, said it is now also available on RIM’s BlackBerry Curve, Pearl and World devices.

This makes Loopt the third location-based service (LBS) to be available on the majority of U.S. smartphones, but arguably lets it open a lead over competitors Whrrl and Brightkite in this segment. I’ve illustrated the competitive field with one of my napkin drawings below. You’ll see that Loopt has an extra green box at the top because of its coup at Apple’s WWDC last week, when it was featured as part of Steve Jobs’ keynote. Loopt beat out Whrrl, we reported last week.

I’d appreciate feedback from the LBS companies, in case I’ve misunderstood the availability of their apps.

The illustration omits the added advantage Loopt enjoys by having struck deals with the major U.S carriers. It has signed with Sprint and Verizon, and while it hasn’t announced AT&T yet, we’re expecting it to — due to the fact it was featured so prominently during the 3G iPhone announcement last week (the iPhone’s US carrier is AT&T).

With the Blackberry, Loopt announces a number of other carriers:

Loopt.. announced today that the location-based service is now available for free to BlackBerry users on the Sprint, Alltel, T-Mobile and AT&T networks. BlackBerry users can now share their location information with friends across multiple devices and carrier networks.

Some perspective: The U.S. smartphone market saw sales of 7.3 million units in the first quarter, a global record of 106 percent annual growth, according to research company Gartner. Another research company, IDC, estimates RIM’s market share at 44.5 percent, Apple’s at 19.2 percent. The Pearl, Curve and World are believed to be the most popular Blackberry phones.

Note that Loopt was already available on Motorola, Samsung, LG and Sanyo feature phones prior to this announcement, which we group together under “Others” in the diagram. Whrrl offers a simplified SMS version of its service for other phones. Brightkite offers a “generic” mobile application, which we’ve heard mixed feedback about from experts.

The pending release of the 3G iPhone has spurred speculation about pending wild growth of smartphone sales and application development. Based on the Apple keynote announcement that the iPhone would have GPS technology, many foresee a bright future for location-based services. That’s because LBS applications make up the largest share of mobile applications total sales.

However, there seems some controversy in this, based on the experience with LBS so far.

Venturebeat guest author Jason Devitt published a piece Saturday describing his nine years in the LBS industry. In the piece he describes in depth the challenges LBS has been facing over that time, including Loopt’s challenges, but he also nods to the opportunity the 3G iPhone now represents.

His view can be seen as moderate, mind you. One of the world’s top mobile consultants, Tomi Ahonen, questions the viability of LBS, calling it “singularly the biggest failure of our industry” and much more. His considerable experience makes an impressive anti-LBS case.

Still, as Devitt points out in this comments to Tomi Ahonen’s article, there’s counter-evidence suggesting LBS’s success too (for example mobile application sales).

Ahonen uses thinly veiled references to criticize Devitt’s piece, or at least so it seems (coming a day after Devitt’s piece was published), referring refers to “semi-credible experts on LBS,” and “current statements coming from the West Coast of America.” However, like Devitt, I believe LBS is about to succeed on current generation smartphones.

VentureBeat’s Matt Marshall contributed to this article.

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Here’s the latest action:

Another long time Yahoo employee departs — Jeremy Zawodny, a programmer who had been with the company since 1999, is moving on to a unnamed smaller company. Zawodny helped launch the Yahoo Developer Network and worked on several internal projects for the company. In his blog post on the topic, Zawodny points out that his departure is completely unrelated to the failed Microsoft takeover and now the Carl Icahn takeover bid. He follows other old-school Yahoo employees such as Bradley Horowitz out the door (Horowitz went to Google).

Did Loopt beat out Whrrl for Apple WWDC keynote placement? — A May BusinessWeek article insinuated that Whrrl might be one of the 3rd party iPhone apps showcased at the WWDC keynote. Instead, a competing location-based service (LBS) app, Loopt, was. Whrrl, created by Pelago, was the first app to be accepted into Kleiner Perkins’ iFund program, which is giving out $100 million to 3rd party iPhone app developers. Snub or oversight?

Google Street View turns one, adds a ton of cities — The controversial and borderline voyeuristic site has rolled out the service in 37 new areas. Find the full list on their blog post, and also note that a number of national parks are now included in the project.

Virgin Galactic rolls out the mothership, no really — The new aircraft, called WhiteKnightTwo, is designed to haul the passenger-filled SpaceShipTwo to its orbital altitude of 50,000 feet, according to USA Today. Billionaire Richard Branson is the “Spaceliner chief” of Virgin Galactic. In other billionaires in space news, Google co-founder Sergey Brin made a $5 million investment in Space Adventures, a company that will take two passengers up to the International Space Station in 2011 — expect Brin to be one of them.

Microsoft can’t buy Facebook, so it has built its own Facebook — Okay, that’s a slight exaggeration, but it is interesting that the software giant, which owns a small percentage of the social network, has now built and is testing a network that is described as “Facebook-like,” according to InfoWorld. The project is called TownSquare, and is already in use by around 8,000 Microsoft employees.

Sirius-XM merger faces hold up in Washington — A new letter being requested by the Senate indicates that the two satellite radio companies have not complied with the FCC requirements that their receivers be interoperable, according to the Wall Street Journal. Such an omission could stall, or kill, the deal.

Symantec buys SwapDrive — The deal, signed last week, is said to be for $123 million, according to TechCrunch. SwapDrive competes in the online storage space with AOL’s Xdrive and Microsoft’s Windows Live SkyDrive, and there is always rumor that Google will enter the space as well.

Cella Irvine is named chief executive of the About Group — The About Group runs the popular website About.com, which is owned by The New York Times Co.

Semiconductor Industry Association (SIA) cuts forcast for growth — The chip giant says sales will slow in 2008 due to price pressure from the memory sector.

A Korean blog fuels a massive protest — You have to go to this site to see the picture, it’s crazy.

Daughter of well-known valley VC Tim Draper, has a new valley show coming — The show, called Valley Girl, will be about innovation in Silicon Valley. It will debut next month with interviews with Google chief executive Eric Schmidt. Jesse Draper is one of the stars of the hit Nickelodeon show, Naked Brothers Band.

Wall Tetris at MindTribe — The Palo Alto-based company has a really cool interactive game on one of its walls that passers by can play with their cell phones.

There’s smoke, there’s fire, and then there’s a volcano the size of Olympus Mons on Mars erupting and turning the ground into an ocean of burning lava. Such is current state of speculation surrounding the 3G iPhone.

There’s really no point in beating around the bush at this point. The new iPhone is coming on Monday. You know it. I know it. We all know it. If Apple were not to announce it at this point, it would be perhaps the largest letdown in the history of the company. That simply won’t happen.

If you still have any doubts, look no further than some of the rumored 3rd party announcements that are beginning to trickle out as we approach the WWDC. What do a lot of them share in common? They are location-centric. While the current iPhone has location recognition capabilities for its Google Maps application, it is GPS technology that will be needed to be the lifeblood for these apps. The current iPhone does not have GPS. The new one almost certainly will.

We’ve already written about Whrrl, a location-based social network that was the first application to be accepted by Kleiner Perkins’ for the $100 million iFund. Is there really any question that this was built to use GPS?

Yelp is also apparently working on a native iPhone application that will be location-driven, according to CNET. This could be a game-changing app because it will utilize Yelp’s already expansive list of local establishment ratings and reviews and serve them to you automatically based on where you are. The application will be able to do this thanks to GPS.

There will be others as well. Brightkite, Loopt, Plazes, FireEagle — all of these are likely to be important, if not major, players as location technologies become more mainstream. Given the iPhone’s elegant user interface and great usability, it is likely to be the device that will lead the way. It just needs that GPS chip. And it will get it.

Twitter is the current leader in the micro-blogging/micro-messaging sphere, but if it doesn’t act soon to offer some sort of location capabilities, it will get left in the dust. Is anyone going to want to type out their location, when your phone can send it automatically for you? This could be something to watch for in the coming months as Twitter will likely be bogged down trying to fix its architectural problems.

The GPS-enabled iPhone is coming — is your application ready?

For more on location technologies, check out the post by Eric Karr, the vice president of location technologies at Loopt, on TechCrunch.

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.