Using Apple's iBeacon transmitters for microlocation will drive the next phase of innovation in retail. Here are 10 things to know about this growing technology.
Momentum continues to build around Apple's iBeacon, an advanced location transmitter that has the potential to revolutionize the retail experience by incorporating alerts for deals and mobile payments for customers, and providing big data analytics for businesses.
Here are 10 things you should know about iBeacons and the ecosystem that this low-cost, low-energy Internet of Things technology will create for retailers and shoppers.
1. iBeacons use Bluetooth Low Energy
For communicating with iBeacons utilize Bluetooth Low Energy, a new variant of Bluetooth technology that allows two-way communication between devices using a triangular pattern over shorter distances. This way, businesses can set up the iBeacon transmitters that have signals up to 500 feet away without Wi-Fi, GPS, or 3G/4G, and use much less energy to do it. The closer your smartphone is to the transmitter, the more it knows about your exact location and what you're looking at. The small, wireless sensors are cheap, between $5 and $20 each, and they could soon become even cheaper.
2. Apple is integrating iBeacons into its retail stores
Apple introduced iBeacon at last year's WWDC with iOS 7. Since then, they have integrated it into 254 Apple retail stores to help with store events, Genius Bar appointments, and online orders. The service works with an app, which is available for download and detects users when they enter the store. For example, if you were standing next to the iPhone table, the app may ask you if you would like an upgrade because you don't have the latest model and it noticed you kept going back to the display. Slightly creepy but potentially useful (see #10).
3. Companies want iBeacons for the big data
Businesses and retailers now have a direct way to find out what customers are doing, and can pinpoint exactly where in the store they are doing it. Think of the opportunity for big data here — a company can find out your microlocation, what you're looking at, how long you're looking at it, and maybe what you decided to buy at the last second instead. That way, they can send you personalized messages and deals when you enter the store so you will have a better idea of what to buy and/or can utilize coupons or other deals more effectively.
4. iBeacons are being integrated into LED lights
General Electric is introducing LED lights that have Bluetooth LE for iBeacon functionality. Now, retailers can cut costs with these lower-energy lights and won't have to buy standalone beacons like the one from Estimote. Philips is also jumping on the bandwagon, piloting iBeacons in a their lights in a grocery store in Germany, so the lights can relay information to smartphones.
5. Retailers are already planning for and implementing iBeacons
Walmart announced in April that it planned to use the GE lights as part of their transition to LED bulbs, which use 40% less energy, and they are also using beacons in some of the stores as well. In Macy's department stores in New York and San Francisco, iBeacon transmitters, called shopBeacons, will be installed to track shoppers' movements throughout the stores and offer them special deals, as well as connect their home shopping experiences to their in-store experiences. Major League Baseball also announced plans to use iBeacons at 20 parks across the country to enhance fan experiences, starting with the New York Mets' Citi Field. The Barclays Center in Brooklyn, New York, has done something similar.
6. Android can access iBeacons, but without interactive capabilities
If an Android app has been created by an individual retailer, Android users can access the iBeacon platform, although it's only for Android 4.3 or higher. A special SDK must be downloaded by Android users to access the notifications and interactivity with iBeacon. To try to compete with Apple, Datzing was developed earlier this year specifically for Android devices, allowing any Android phone to do the same kinds of things that iBeacon can do.
7. iBeacons offer shoppers a more streamlined experience
For the consumer experience, iBeacon is more about proximity, more than location. Using iBeacon, customers can find and watch videos, receive coupons and other discounts in real time, depending on where they are in a store. Essentially, if you open a store app that utilizes iBeacon, you can receive directions to an aisle you need to get to in the grocery, see where other sales for a similar product are, or find better deals or coupons as you walk through the store. Another example is the Barclays Center in Brooklyn, where iBeacons notify you to possible seat upgrades at a discounted rate as soon as you walk in the door.
8. iBeacons could also disrupt other industries
It's not only about retail. The iBeacon ecosystem also has the potential to change other industries. Special events — concerts, sports games, and festivals, can use it to more seamlessly involve fans in those experiences. For instance, at SXSW this year, iBeacon was used to deliver badges and help fans communicate about the individual concerts. It could enable the smart home as well. Since it's already in industrial LED lights, you can bet it will be built into our home lighting, appliances, and electronics at some point, allowing people to more affordably achieve smart home functionality. In the classroom, iBeacon allows teachers to take attendance, monitor who is in the classroom, and communicate with students and parents.
9. iBeacons have some competition, but it's fragmented
There have been other types of beacons around for a while, but the iBeacon platform is growing quickly based on promotion on support from Apple. There are several brands of beacons such as Estimote and Radius Networks. In London's Heathrow Airport, Virgin Atlantic installed beacons to display a customer's boarding pass when they approach the gate. Kenneth Cole Productions Inc. uses beacons to send coupons to consumers. To see how these beacons work, check out this Estimote video below:
Near Field Communication (NFC) is a set of short-range wireless technologies that Google bet on, but only Android devices with NFC chips can use it. Blackberry, Samsung, and Motorola went for NFC, but Apple was reluctant to put the chips in phones — so they created their own solution to this issue that is more affordable, uses less power, and has more range and proximity coverage. Bluetooth can handle much more bandwidth than an NFC interaction, and if Apple creates a broad ecosystem that works with many devices and operating systems, retailers will be able to seamlessly integrate it into their stores. Of course, how broadly Apple will connect iBeacons across platforms remains an open question.
10. There are natural privacy concerns with iBeacons
Although Apple said the iBeacon is simply a location tool and doesn't gather excessive data or track users (it sends out a signal but doesn't receive information) privacy it remains a concern that consumers and businesses will have to confront. The apps on your phone that sync with an iBeacon respond to those signals so retailers get that information. Of course, you can turn the location settings off on your phone, but you can consider that location data as personal data that the store has access to. And that's the concern.