04 SXSW Interactive Lockup 300x187 Think Foursquare or Gowalla has the Location Market Cornered? Go to SXSW and Think Again.It’s March, and we all know what that means – South by Southwest (SXSW) in Austin, Texas.

At last year’s conference, two seemingly silly apps called Foursquare and Gowalla debuted. They both let you “check-in” to a bar or restaurant or the conference center. When you checked in on Foursquare, you got what looked liked merit badges with funny names like “Player, Please!” – check in first and/or often and you became “the mayor” of the the place, and who doesn’t want to be the mayor, right?

Foursquare took the Texas bull by the horns and came out of the SXSW with a solid lead over Austin’s new favorite son, Gowalla. Those that caught the fever at SXSW couldn’t wait to get back to their home city to start laying claim on mayorships (assuming they were in the handful of cities that constituted the initial launch, everyone else was out of luck.) There were social location services before, but the new gaming element was very attractive to a lot of people. Of course, the leaders in this space leading up to SXSW 2009, Brightkite and Loopt, we’re left wondering – why didn’t we think of that?

Fast forward nearly one year to today. Foursquare still has a solid lead on Gowalla, including some strong media partners, but the Austin startup has more funding and a slicker interface than it’s competitor. Other services, most notably Yelp, have added check-in functionality (although not the gaming aspect), and the world keeps waiting for Facebook to make a move into this space (although Twitter is better positioned to be the social location platform). Both Foursquare and Gowalla have a lot of special promotions and games and VIP passes and parties and, well, you get the idea, for this year’s SXSW. We’ll be there reporting on it all, but the real question on our minds isn’t what will these guys do, but who else will enter the fray two weeks from now?

There is so much room right now for innovation in social location that we will be positively shocked if we don’t see a few new players (please?) emerge in Austin this year. A well thought out app could be very disruptive as well, as we’ve noticed increasing frustration among Foursquare and Gowalla users that the apps just don’t add enough value to constitute continued use. Also, both of these startups are still far behind both Brightkite and Loopt in users (Brightkite just passed the 2 million mark), and if either introduce appealing innovations they could regain mindshare momentum.

There is an outside chance that we could see social location feature announcements from Facebook, Twitter and/or Google at SXSW, but as each of those companies has its own developer conference coming up, we feel that it’s unlikely we’ll see much news on this front from any of them. So as all of these companies vie for the attention of the ultra-bleeding-edge SXSW folks, we anticipate that new startups will try to slip in under the radar as Foursquare did last year, with hopefully new takes on this rapidly developing market. As hot as location is right now, there has never been a better time.