People have used magnetic compasses to find their way outdoors for centuries. In a twist, a startup has found a way to use the magnetic sensors in smartphones to locate people themselves—this time, indoors, where GPS signals don't normally reach. Tracking people in this way could lead to mobile maps that work indoors, and let stores target offers to customers standing in front of a particular product.

The Finland-based startup, Indoor Atlas, launched last week as spin-off from the University of Oulu. The company's technology, intended for mobile software developers to use in other apps, is a new approach in the growing market for systems that track people inside.

The company says its method pinpoints people more accurately than many current methods, which typically employ the Wi-Fi or radio signals detected by a smartphone and are precise to within several meters. Indoor Atlas says its approach is accurate to between 10 centimeters and two meters, depending on the building. That's the difference between, say, knowing a shopper is in the freezer section versus knowing he is standing in front of the ice cream. It also does not require a building to have any special equipment.