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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 …