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It works best for me in densely populated urban areas or on freeways that go through urban areas. The smallest the circle gets is about 15 meters in diameter, which is actually pretty useful when driving.

Cell site 'triangulation' makes me feel kind of sad. It's as if the iPhone wants to be a GPS, but- much like the retarded child trying to attend MIT- fails. And you feel kind of bad for the iPhone, too, because you know it's trying super hard, and that makes it all worse.
 
People don't seem to understand how this works. PLEASE watch the description movie, and especially note the part where they say it's known to be inaccurate at times and that the more the tool is used the better it'll get. Also, it's not a real GPS and and is an ESTIMATE and due to the way it works, that's the best it can be.

It also has some advantages over GPS - it works indoors and doesn't take a while to get a lock since it isn't trying to find satellite signals.

Oh, we understand how it works. Nobody is claiming it's GPS but the fact is the stated estimates of accuracy are off by a factor of 2 to 3 times what they claim on Google's site. If you're using it in Skyhook plotted areas they are claiming near GPS accuracy and that is a complete fallacy as well. I have now used it extensively in the area which I live, Cleveland, Pittsburgh, Baltimore and Providence, RI. The accuracy has been absolute crap. As I noted in the post above yours, I've been identified as being as far away as 18 miles from my actual location. That's not in the ballpark. That's not even in the same city. Google is claiming an average accuracy of 3/4 mile. In practical use in many different cities I've never been closer than 3 miles the vast majority of the time. That's completely unusable.

It works best for me in densely populated urban areas or on freeways that go through urban areas. The smallest the circle gets is about 15 meters in diameter, which is actually pretty useful when driving.

Again, I'd have to disagree. I've been in Skyhook plotted areas (as identified by their website) in plenty of densely populated areas. I'm pretty sure Cleveland, Pittsburgh, Baltimore and Providence, RI count as densely populated. I can count on both hands the total number of times the iPhone actually placed me in the correct location. On average I was two to five miles away from its guess. I've learned very quickly not to use the locate me button when I'm using a predetermined route. I'd be utilizing it for directions and suddenly it places me miles away from the route and I'd have to go back and reset the route step again to get me anywhere near where I was located.
 
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