In a relatively short time, location-based services technology has come a long way. Until recently, the primary technique was called Cell-ID, which could track the whereabouts of a user to between 200 metres and one kilometre of a specific location. Perfect if you happened to be a jumbo jet coming in for a landing. If you were walking through the West End searching for movie screening times, however, you might as well have put the phone in your pocket and popped into a newsagent for a newspaper.

With the roll-out of 3G technology, of course, many of the early complications have been resolved. The use of more powerful mobile signals meant your mobile phone became a beacon that could be tracked using GPS (the global positioning system). Under this technology, satellites, usually using triangulation techniques, pinpoint your whereabouts down to a street corner. But even this development isn't foolproof. The signal can take as long as a minute or more to get an accurate fix on your location.

Now, mobile operators and handset manufacturers are introducing phones that rely on a tracking technology called Assisted GPS (or A-GPS). Here, the mobile device transmits data about the users' whereabouts to the operator's nearest base station, dramatically cutting down the response time to a few seconds. Initially, A-GPS chips have been used by businesses to track the whereabouts of valuable assets in near real-time. Now, those chips are being embedded into mobile handsets and PDAs to keep consumers from straying too far and too fast from their always-ready "guide", the mobile network.

The idea is to make LBS applications more responsive, whether it be for restaurant look-ups, movie reviews, driving directions, or multi-player mobile gaming. And this is only possible if the satellites knows where you are before you become aware you need their help to solve a problem.

This little lesson in the geeky evolution of our handsets is an important factor to consider as a new generation of LBS applications hit the market. Early location based services were hobbled by a user's movement and thus could only retrieve general location-specific information – a nearby, but not necessarily the nearest, ATM machine or cinema – for a given area. With A-GPS, street-level turn-by-turn directions is now possible. Most handsets today can also pull up coloured street maps bearing relevant details of nearby landmarks or area businesses offering special deals. Think of a buy-one-get-one-free offer at Costa Coffee or details of a summer sale at the Gap, sent via an SMS alert.

New location-based services fall into a host of general classifications from asset-tracking or people-tracking to proximity-based notifications (the Gap sale alert) to proximity-based payment services. In the Nordic countries, people have been using the latter, paying for petrol with mobile phones for years. In South Korea, tens of thousands of taxi cabs are equipped with a mobile- or PDA-swipe payment system.

The asset-tracking LBS feature is big with business. Using radio frequency ID tags, companies can cheaply track the whereabouts of everything from the delivery of machine parts to cartons of milk anywhere on the planet. Orange has rolled out a service called RingTrack which functions in this way. This application is expected to take off in the coming years. The technology consultancy Berg Insight forecasts that by 2011 there will be 52 million machines that connect to European mobile operators' networks announcing their whereabouts.

For the everyday consumer, tracking services have been used to keep friends and family close. In 2006, Disney Mobile, a division of the Walt Disney Co., introduced "Family Locator" in the United States enabling parents to get a reading on their children's handsets at any time with one press of a button. Video game developers are incorporating the people-tagging feature for the purpose of introducing gamers to one another so they can square off in not quite head-to-head combat.

And, tech start-ups such as Loopt, whrrl and Meetro rely on LBS to allow users to share tips among fellow members on restaurants, hotels and other travel hot spots. It's also used to arrange meet-ups, among friends or other users of the service.

Not all these new services are about finding the best bar or restaurant. The big evolution in LBS is with locating nearby services. Need a dentist or doctor in a pinch? A host of LBS services now allow users to pull up detailed local business directories to find not only the nearest doctor, but one who comes highly rated.

Early kinks in LBS technology have more or less been worked out so that query responses today are both comprehensive and timely. But the richness of these services depends on users. As more users weigh in with travel tips or restaurant ratings or take up your offer for a mobile gaming duel, the more dynamic the services become.