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Real-time GPS

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Check would www.sparkfun.com, they have some GPS modules that might meet your needs. They also sell cellular modules. Take a look at their modules and their sizes, there are others I'm sure more Googling might help.

Hope this doesn't come across as offensive but one other thing to consider investing the money you would otherwise spend on this is conversations with a psychiatrist, there's nothing unusual about what your wife is going through but supporting the paranoia by relying on a device in a fail-able world is often times an excuse for lack of paying attention, it's the core issues of these types of fears that a psychiatrist can help with.

Parents have been raising children for thousands of years, this technology will NOT take any significant risk out of being a child and it is coming to terms with that risk that is important, personally with young one's in a public place, the best thing you can do is use a leash, other than that there is no better guard than a watchful adult.
 
An Android phone can be used to do this and would be half the price of that watch. Just google Andriod Tracking Software.

Edit, Plus they are getting cheaper by the hour. I also agree that removing the anxiety would be a better solution.

Mike.
 
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Sparkfun sells low frequency (433 and 900mhz) RF transceiver modules but their power output is only in the 500mw range, good for maybe a few hundred to a thousand feet I'd guess roughly. GMRS might be an option but I'm not sure if there are any GMRS modules that are small enough to meet your needs, a typical handheld GMRS radio is about the same size as the Android option, I'm sure modules could be made but small formfactor radio options like that are a niche market, so most of of the modules you'll see will be cell phone network based.

Although I'm sure if you researched it enough and didn't mind spending the money you could develop something small enough for your needs, but for very small children the easiest option would be X harness with the device attached like a backpack, but that introduces some saftey issues of it's own, as you already know, half the problem is getting the kid to not lose the device in the first place =) Virtually impossible for younger kids, older kids it's a little easier because belt packs are more practical. But the little ones can strip themselves naked even if you shackle their clothes on it seems =)
 
I make vehicle trackers. The scheme is similar to the blog post at **broken link removed**

The big difference in hardware between that and the smaller solutions like the lok8u watch is the number of levels of packaging around the components.

The GSM module from Sparkfun consists of an adaptor board to connect an SM5100B GSM module to an Arduino. The SM5100 module itself is a GSM chipset on a board that has all the connections brought out to a connector. It will also include voice circuits as the module can be used as the basis for a mobile phone.

The Arduino has its own USB interface and power supply, and a socketed processor.

The GPS module contains a SiRF-III chipset, which is packaged with an aerial, and it also contains voltage regulators and level converters.

An integrated solution like the Lok8u watch will probably use the GSM chipset, the GPS chipset and a processor all on the same circuit board. They are saving money by omitting many of the boards, level converters and voltage regulators that are simply not needed when the devices are used like that. You should not forget the economies of scale. Sparkfun are a retailer who has to make their profit while providing lots of information to customers who only buy a few items. Large scale manufacturers pay a lot less for their chipsets.

On the overall project, there is a lot of programming needed. There can also be quite a lot of difficulty in providing power for anything that is small enough to be carried by a child and yet is in regular communication with the GPS satellites and the GSM network. The Loc8u runs for just a day if you charge it each night. You also have a reliability issue. When you need tracking devices to work, that is when you don't know where they are to tweak them. Unless you would value your time quite cheaply, a couple of Loc8u watches and their subscriptions would be a lot easier than several hundred hours of your time.

On all sorts of projects, it is easy to underestimate the difference between a single device that works and a production item. The development cost of a single item is probably 1 - 10% of the cost if a production item.
 
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