Apple’s Latest iBeacon Offering Explores the Great Indoors

Apple’s Latest Offering Explores the Great Indoors

Tech Giant Will Provide iBeacon Plans at San Francisco Developers Conference


June 1, 2014 4:44 p.m. ET

Apple Inc. AAPL -0.37% ‘s latest product to carry the “i” prefix—following theiPhone and iPad—promises to do for indoor spaces what GPS did for the outdoors.

Apple’s iBeacon allows apps to locate a user within a few inches, so that a phone can direct a driver to the nearest open spot in a parking garage or the shortest hot-dog line in a crowded stadium. It allows restaurant diners to pay the check and leave without a waiter’s assistance or museum-goers to learn about exhibits by walking past. Soon, it might make shopping-mall maps unnecessary.

EBay Inc. EBAY +1.18% ‘s PayPal and others are experimenting with similar technology. But Apple’s support could propel the concept into the mainstream. Hundreds of millions of iPhones can detect iBeacon signals, and Apple is encouraging developers of more than one million apps in its App Store to use the technology.

Yet the technology is still in its infancy and might not take hold broadly for many years, or it could be supplanted by other innovations. Further, privacy concerns might give retailers pause about adopting beacons.

Apple has moved cautiously with iBeacon, in part because it might raise concerns about being tracked. Apple says iBeacon transmitters don’t track users, because they only send out a signal, and don’t receive information. The technology is in relatively limited use, deployed in many Apple retail stores and some Major League Baseball stadiums.

Apple is expected to reveal more iBeacon plans at its World Wide Developers Conference in San Francisco starting Monday, where it also intends to preview new versions of its iOS mobile-operating system and Mac OSX software. To promote iBeacon, Apple will place beacons throughout Moscone Center and offer sessions for developers on how to implement the technology.

Here is how the technology works: Transmitters called beacons emit a low-power Bluetooth signal to smartphones within about 500 feet, depending on conditions. Apps are programmed to respond to those signals, so that a retailer can beam a coupon for detergent when a shopper is in the appropriate aisle, for example.

By understanding a user’s location, apps can begin to guess what users need or want to do next. It opens the door to a world of “ambient intelligence,” an industry phrase describing an environment that senses a person’s presence and responds accordingly.

Virgin Atlantic Airways Ltd. has installed beacons in London’s Heathrow Airport so a passenger’s smartphone automatically displays a boarding pass when he approaches the gate or airport security. LabWerk, a Dutch startup, has an app to help drivers navigate parking garages and alert them to empty spots or guide them to their cars.

“This has the potential to be transformative,” said John Jackson, analyst at research firm IDC. “It could be the technology that underpins a future where anything you’d want or need to know is delivered to you in the most intelligent of ways.”

Most early iBeacon deployments are focused on retail, because the technology offers the promise of linking online purchases with in-store visits, a long-sought goal by retailers. Kenneth Cole Productions Inc. uses beacons from Boston-based Swirl Networks Inc. to send coupons to shoppers based on criteria such as how often they have visited a store recently; it then tracks campaign results.

Swirl Chief Executive Hilmi Ozguc estimates that more than half of the top 100 U.S. retailers will start testing beacons in stores this year. ABI Research said it expects beacons to be installed at more than 30,000 indoor locations world-wide by year-end.

Beacons are the latest, and most precise, location-based technology for smartphones. Global Positioning System signals enable features such as GoogleGOOGL +0.19% Maps, but don’t work well indoors. Some companies use Wi-Fi signals indoors to track locations, but that can drain a phone’s battery.

” ‘Where are you?’ is not a question that a phone should ever ask,” said Benedict Evans, a partner at venture-capital firm Andreessen Horowitz. “GPS gets you some of the way there. But iBeacon gets you absolute positioning.”

Beacons are relatively cheap, between $5 and $20 apiece. Swirl’s Mr. Ozguc said he expects prices to fall to less than $2 next year, allowing organizations to deploy lots of beacons inexpensively.

Eventually, beacons will be “everywhere,” said Steve Cheney, senior vice president for Estimote Inc., a startup based in Krakow, Poland, that creates hardware, services and software for iBeacon.

Nearly 20,000 developers are paying to use Estimote’s software kits. The company worked with Virgin Atlantic on its Heathrow test. A passenger who downloads a boarding pass to Apple’s Passbook can receive alerts such as offers to change currency with Virgin partner MoneyCorp or directions to the airline’s Clubhouse. Reuben Arnold, the airline’s director of brand and customer engagement, said iBeacon can provide passengers with a more personalized experience.

Privacy remains a concern. Apple says tracking fears aren’t well-grounded because the signals are one-way and the beacons don’t know anything about the user. But apps that use iBeacon might have personal data, to which they can add location details. “There are some privacy holes in there—people might not notice that they are giving up some information if it’s not handled correctly,” said Michael Healander, general manager for GISi Indoors, a company that specializes in geolocation technologies.

Apple requires app developers to have users opt in before receiving pings, and allow them to opt out later. Apple said it monitors apps’ adherence to its privacy standards.

Currently, iBeacon is limited in part because the technology only works when users download an app or pass that works in conjunction with the signal. This adds an extra step, compared with the more privacy-invasive alternative of tracking users anonymously. That alternative provides businesses more latitude with the data they gather.

Airports, retailers and stadiums have invested in technologies in recent years that allow them to track customers without their knowledge by using sensors that pick up Wi-Fi and standard Bluetooth signals.

Regarding iBeacon, Mr. Healander said: “It’s in its hype cycle right now.”

Apple views iBeacon-enabled apps as an advantage for iPhones over those using the Android operating system from rival Google Inc. Some recent Android phones work with beacons, but many older models don’t.

In recent months, Apple has made subtle changes to promote iBeacon. It turned on by default the Bluetooth connection that iBeacon uses, and made apps responsive to pings even when a user closed the app.

Some companies are considering beacons to smooth payments. PayPal has installed devices in a handful of stores in the U.S. and Australia that connect wirelessly to customers’ PayPal apps, so that users don’t need to pull out their smartphone to make a purchase. Provided customers opt in, the device alerts merchants when PayPal users enter the store and could supply them with other information, such as previous visits and purchases.

Apple has also expressed an interest in mobile payments, hoping to leverage its 800 million iTunes customers—the majority of whom have registered a credit card with the company. It hasn’t indicated that iBeacon will be part of its strategy.


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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