53397-beacon_teaser

With Apple’s iBeacon technology starting to see some real-world applications, we thought this would be a good time to take a brief look at what it is and what we might expect from it in future … 

The one-sentence summary is that you can think of iBeacon as like GPS for indoor locations, your phone able to pick up the iBeacon transmissions and work out where it is with a high degree of accuracy. You could, for example, drive into an iBeacon-equipped underground parking garage, park your car there and then have an iPhone app direct you back to your exact parking space when you’re done shopping.

But the positioning side of things is really only half the story. The other half is that what gets triggered in your phone can be much more than a simple ‘You are here’ signal: it can be pretty much anything at all.

Image: mzstatic.com

Image: mzstatic.com

So, you could be walking past a store and receive a discount coupon on your phone valid for that day.  Of course, it would be pretty annoying to get spammed by random offers as you’re walking down the street, but you’ll need to be running a corresponding app to trigger the offer. My best guess is that Apple will offer a Passbook-like app which you load up with cards for the companies you want to hear from, and only those companies can send you offers.

Photo: meijer.com

Photo: meijer.com

Things get a step more interesting with personalised offers. If you’re a member of that store’s loyalty program, it could know what you usually buy there and offer a discount tailored specifically to your tastes. Or a department store might know you’re a gadget addict and alert you to the arrival of the latest new toy, the app offering to direct you through the store to the exact location of the gizmo. When you get there, it may offer to show you a video on your phone of the device in use.

Image: frogdesign.com

Image: frogdesign.com

Let’s get a little more sophisticated. You may be standing in a clothes store looking at suits. The system notes that you’ve been stood in front of one particular display for a couple of minutes, so it might offer to show you what the suit would look like on you. It directs you to what appears to be a mirror, which photographs you and then overlays an image of the suit on your photo. It offers to show you other colors and styles.

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You like the suit and decide to buy it. There was much speculation about whether the new iPhones would include NFC (near field communications) for contactless payment, and some surprise when they didn’t. The reason is that Apple had a better payment technology in mind: Bluetooth LE. Yep, the same system on which iBeacon is based.

Essentially, the same system which beams you your offers and directs you around the store can also be used for wireless payment – and with far greater convenience than NFC because of the greater range. Get a request on your phone for payment, use your fingerprint and/or a PIN to authorise payment on one of your preloaded cards and receive your receipt electronically.

The challenge for Apple is that NFC is the established standard for contactless payment. The roll-out of the infrastructure is already well-advanced in many countries (such as much of Europe), and plans are in hand elsewhere. It will be a tough job for Apple to persuade companies to invest in a second, competing technology.

But it may not have to. As I suggested in an earlier piece on Touch ID, Apple has the financial resources to simply buy up payment processing companies and roll out the infrastructure itself. It doesn’t have to do all of this: all it has to do is create a roll-out big enough to popularize the combination of iBeacon with Bluetooth LE payment. Once consumers are calling for it, retailers and banks will have no choice but to follow suit.

It’s still a big task, even for Apple. It’s by no means certain it will succeed, despite being a clearly superior technology: some of us are old enough to remember Betamax get beaten by the inferior VHS standard. But Apple could have gone the easy route of adopting NFC, and it chose not to. That’s not a decision it would have taken without a plan …

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37 Responses to “iBeacon briefing: What is it, and what can we expect from it?”

  1. Talk about jumping the gun. I cant imagine this any time soon, were talking years away! This will be a gradual roll out as with iOS.
    Apple still need to make significant improvments to their maps app before this makes any headway

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  2. Location specific shopping promotions? Oh you mean like there already is through O2’s Priority Moments (UK based cellular operator), which uses your current GPS/Wifi based location, to push nearby promotions….

    iBeacon will just able to offer more granularity

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    • Ben Lovejoy says:

      Yes, iBeacon mostly does a better job of what is already possible, but taken as a package it’s a pretty powerful offering.

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    • ifunography says:

      Using Bluetooth LE vs cellular/GPS also significantly reduces battery consumption, for which the benefits need no explanation.

      Behind the scenes, it also takes very few lines of code to set up an iOS device as an iBeacon and to monitor for iBeacon regions – in the order of roughly 5-10 lines of code. That makes iBeacons really easy to configure and deploy.

      There are some other use-case scenarios not highlighted here that Apple demoed in the WWDC sessions. iBeacons can be, and I think will be, a massive hit.

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  3. iBeacons has a feature where you can stipulate distance and what triggers happen. Simply walking by a store and having a coupon pop up is going to anger potential consumers so it’s better to have the Beacons set for a proximity that guarantees the patron is in the store before offering coupons.

    Apple is not alone in promoting Beacons because it’s a part of the Bluetooth spec. I just don’t see NFC taking off without Apple support. NFC support is spotty on Android phones as well while Bluetooth LE support is essential for new smartphones.

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  4. Xac says:

    Nailed it Ben… This is the kind of long-term thinking that keeps me coming back to 9to5! Keep it up.

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  5. It looks really cool but I am living in Europe and it is full of NFC terminals which are very convenient actually – you tap your Visa card with NFC chip to the little box on terminal and you are done – up to €20 no PIN is required. Wish Apple made iWatch Europe NFC edition with Touch ID and I would be happy with no PIN until say €200 which would cover almost all normal purchases I make. Then there can be a separate 5 year fight just like they killed Flash but the iWatch could be here this Xmas, the beacons in Europe won’t replace NFC for 3-5 years even if successful – there is no single retailer I know of who would botehr with Passbook for example. Dont take me wrong I am a big apple fan and actually created couple of my own passes with GPS latitude av longitude that pull up my health card number at my doctors place or my favourite restaurant loyalty card at their location around town and it is very cool albeit no one has scanners that can read the codes so they have to type it in. Enjoy the weekend veryone;)

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    • Ben Lovejoy says:

      That’s a cool idea :-) Yes, I’m in the UK and most of my payments are made with an NFC card, but the technology has barely made it out of the starting-gates in the U.S., so there is definitely scope for Apple to make this happens if it doesn’t hang around.

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  6. pkadam says:

    Betama was beaten by cheap VHS players.

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  7. Me gustó bastante la idea, se nos vienen nuevas apps con nuevas implementaciones jijiji

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  8. Andrew Davis says:

    Can someone explain to me how this would work in Walmart, Tesco, etc? So the PayPass, PayWave NFC compliant terminals that equate to about 1m in the US and are already compatible with ISIS (NFC based payment rollout between telco consortium) are all going to have to upgrade, alter existing POS infrastructure to cater to 20-30% of smartphone users who use Apple devices because Apple don’t support NFC?

    I don’t see how grocery chains like Tesco, Walmart getting enthused about having the ability to pay for stuff at long range, are people going to just start walking out of the store without scanning products and saying they paid already using Beacon thus not scanning anything into their retail systems, etc….

    Seems like a stretch…..

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    • Ben Lovejoy says:

      There are a few retailers today who let you pay on your phone and walk straight out of the store (Apple being one of them, of course), but the main benefit of the increased range is it just being less fiddly. With NFC, you do pretty much have to touch the card to the reader. Being able to stand back comfortably at the cash register is a worthwhile benefit.

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      • But I think that could be the crux of the issue. Only a few retailers support “at distance” purchase. What about smaller shops and independent who probably don’t have that open minded approach to checking out. Unless you can implement a universal standard that everyone is happy with and can adhere to (something that NFC with contactless payments is so far ahead on) then you will struggle to change behaviour in a marketplace that is at best a laggard when it comes to technology.

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      • Ben Lovejoy says:

        Most iBeacon payments would be done at a cash register as now, just without the need for such close contact between card/phone and reader

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  9. Nick Germon says:

    When you say it is well established in Europe,(NFC) what do you mean by that? Is the infrastructure well established, do a lot of regular people use it and not us tech heads?
    Just curious because it is almost non existent here in the states so I have never used the technology

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  10. The comments here focus mainly on payments but what makes iBeacon way more interesting is that it could do that, make clients pay, yes, but combined with getting a wealth of information on shopping behavior prior to purchase is what is the big deal here. You can exactly plot consumer behavior in your stores. Think of walking paths, time spent at displays, what articles were scanned during this time, did they enter other stores of the same chain, which displays did they check there, did they go online at home to check out the same or different items, did they come to the store again afterwards or not? You can do realtime A/B testing with your displays in different stores. You can provide specific offers if someone has checked items in one store of your chain, did not purchase them and then offer them a discount as soon as they pass that storefront again or another one of the same chain. Retailers with complimentary product assortments could combine their instore data to drive traffic to each others stores. Identifying the same devices at the same time on multiple occasions might indicate friends or family shopping together, allowing the offering of instant group discounts. Et cetera et cetera. All of this stuff is not possible with NFC due to it’s short range (< 10cm). So sooner or later in Europe they will want a technology that can do that and iBeacon is on it's way. Better yet, in the US by then a lot of successful cases will be available already. So regardless of NFC already being the standard for payment in Europe, it lacks this significant purpose and will be accompanied, if not replaced by (something like) iBeacon.
    Exiting times for retailers! (which I'm not one of :-)

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    • Ben Lovejoy says:

      It’s certainly a strong argument, especially given the investment retailers have made in loyalty cards to get access to a fraction of the same data. Here’s hoping.

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      • There’s on other interesting fact as well about this technology, and that is that each iPhone as of the 4S can function itself as a Beacon as well. This means that devices communicate through each other, forming an dynamic network of instantly communicating devices. Devices within a proximity of 50 meters can form a chain and hence a network or grid for low data transmission e.g. covering many square miles in the case of indoor or outdoor events where people are close enough to each other.

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  11. It will always need to be used in concert with NFC. NFC allows end points to be passive, like a credit card with an affordable passive chip, appealing to significantly low income users who may not be able to afford a smart phone or multi-media type device. iBeacon and Bluetooth LE require an actively powered device with relatively significant computing capacity. You can’t make an iBeacon credit card, price tag, or label to stick on consumer products.

    Having passive technology also allows you to maintain context when outside the range of the iBeacon station. Like, still being able to scan the passive sticker on the baked good my friend just bought me to get its allergy information, expiration date, etc…

    These technologies complement each other well. There is an appropriate use case for both and should be supported as payment options as well as consumer information technologies. The sub-meter location capabilities alone are worth its weight in gold.

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  12. Rajan SV says:

    Gecko the versatile BLE device now on indiegogo has today unveiled the ibeacon – micro-location based solution with gecko

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  13. Mark Wright says:

    The point everyone misses is
    regardless of how good the tech is… if it is not broadly available to ALL consumers
    and just used a differentiator. then it is just divisive.
    so this wonder tech is available to 13% of retailers customers at best?(worldwide)

    I wish apple were more holistic they do make nice stuff but
    far to much of a communist regime.

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    • Hi Mark (Wright),

      That is not completely correct. The standard iBeacons from Apple will only work with iOS devices as of iOS7. But the generic Beacon technology from many vendors that you see out there now, based on Bluetooth LE (From companies like Radius Networks, Estimote and Kontakt.io) is compatible with iOS and Android as well and can already be used with devices like the Samsung Galaxy S3 and other models. So this technology will be accepted widely, but the question is if the Apple iBeacons are the best choice if you want to service a broad public.

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  14. Noah Body says:

    Retailers have already invested tons in WiFi 802.11abgn infrastructure that have capabilities to provide pretty much everything iBeacon supposedly is going to provide. On top of that — WiFi is essentially device independent; standards are out there for a reason, after all.

    Tons of bluetooth walking around on the retailers floor will also potentially cause problems to existing WiFi infrastructures as it raises the noise floor on 2.4 GHz.

    Seems to me the easiest path for retailers is to evolve the existing infrastructure rather than adding a whole new technology to purchase, configure, deploy, manage….etc…..

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  15. Ben – I think there’s a missing link – Facebook – for the really powerful use of iBeacons. Would be interested to hear your thoughts – https://www.linkedin.com/today/post/article/20140709142800-40834194-how-facebook-ads-could-follow-you-to-the-shops-in-2015?trk=object-title

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  16. Much more than a cool idea, most forward thinking companies in North America are either leveraging or in the planning stage for iBeacon based initiatives @trubeacon

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