Evan Schuman's StorefrontBacktalk

Think this is all hypothetical? When Apple launched its new iPhone 4 this week, Steve Jobs’ demonstration of video chat and browsing the Internet crashed repeatedly. The problem: Hundreds of WiFi devices in the audience were competing for bandwidth with the demo. And last month, Google hit a similar problem when it unveiled Google TV. If the biggest names in technology run out of bandwidth for their wireless application demos, why should any retailer believe that the seemingly bottomless barrel of bandwidth won’t run dry for them, too?

Our cynical IT exec reader was especially frustrated at in-store mobile efforts. “Do vendors understand that they need to build partnerships with mobile carriers for microcell deployments in-store to assure the coverage they need to do their server-based offer management? The last time I walked into a Best Buy, by the time I reached the digital cameras I was ‘searching’ on two devices on two different carriers. So I fire up the Shopkick client, take my barcode picture, feel the rush of anticipation and—nothing. Nothing, that is, until I leave the store, disgusted, when suddenly I regain coverage and 16 coupons and offers stream in. This is, of course, after I have bolted the kids into the car seats. Now that is a positive differentiator. Not trying to be negative, but a failing for years has been a general lack of awareness that this stuff is based on radio—and radio follows the laws of physics.”

That’s exactly what too many retailers face when they plan applications that require the use of smartphones, WiFi, GPS and other radio-based technologies. Fascination with a smartphone’s capacity to instantly deliver coupons won’t change the limits of the mobile phone network. And WiFi’s popularity is its own worst enemy, if you’re depending on wireless networks to support your apps.

Consider a typical shopping-mall retailer. A customer walks in with a smartphone that includes WiFi and GPS. It’s the perfect opportunity for an application using GPS to detect that the customer is standing in Men’s Apparel and instantly deliver coupons to her phone, right?

Nope. First, GPS is a great way to locate things that are outside: cars, boats, planes and people. But it depends on signals from a network of satellites 12,550 miles up in the sky.

Those signals can’t punch through the metal roof of a typical big-box store, never mind the layers of concrete and steel that stand between a shopping-mall customer and the sky. That means that, while GPS can identify a location to within an accuracy of 65 feet outdoors, it’s useless inside most retailers.

It’s a pity, because GPS is a nearly perfect technology from the point of view of retailers. It’s military grade. It can be used by an unlimited number of people at once. It’s already paid for and is maintained by the U.S. government. It costs retailers nothing extra and it’s already in many of the phones customers have paid for and are carrying with them in stores. Its only drawback: It won’t work inside those stores.

Then there’s the smartphone. Unlike GPS, mobile phone signal repeaters are often installed in major shopping malls. In the U.S., there are 180 different mobile carriers, according to the wireless association CTIA. But most of them use the bandwidth of Verizon, AT&T, Sprint and T-Mobile.

That means if the mall is big enough and there are mobile repeaters and those repeaters kick out a strong enough signal to reach inside a retailer’s store and there aren’t too many people in the shopping mall using their smartphones for their own purposes, a smartphone-based coupon application might work.