Unobtrusive Salesman or The Age of Beacons

September 1, 2014

A bit more than a year ago, in June 2013, a slide was shown at the keynote at Apple’s WWDC conference mentioning a word that few people had heard before, iBeacons. In the following months, it became a much-hyped term in the technology press, “the next big thing” that was promised to change the world in general and retail in particular.

A year later it’s possible to look and see how the technology has evolved and even speculate of what does the future hold for it, although keeping in mind that these days are just the infancy of iBeacon and similar solutions.

How does it work?

First of all, let’s get ourselves familiar with the terminology. The word iBeacon means both an actual device produced by any vendor and the technology developed by Apple on top of the Bluetooth Low Energy (BLE) communication protocol. It works with more than 200 million Apple devices across the world running iOS 7 or OS X Mavericks, or higher.

The idea of iBeacon is to allow precise detection of user’s location — or, to be more accurate, the distance from user’s iBeacon-enabled gadget to the beacon itself. The latter constantly scans the space around and is able to distinguish three types of proximity: immediate (within a few centimeters), near (within a few meters), and far (more than 10 meters away).

After finding a receiving device — e.g. a smartphone, — in the vicinity, iBeacon sends out a unique ID that triggers a respective action like a push notification or opening a certain page in the Internet browser. All this, however, is only possible if the user has set Bluetooth on and installed the beacon owner’s app.

“From an opportunity perspective, I’d say everything is in place, and this thing is poised to be huge. The real question is over the next year there’s going to be a lot of experimentation, learning, etc.,” said Rob Murphy in comment to Washington Post back in January.

It’s safe to say that adoption of iBeacon indeed opens up very wide if not unlimited perspectives for businesses with offline presence, from brick and mortar shops to airports and stadiums. On the other hand, hardware and software developers are also among those who can benefit from the new technology.

Here’s how they’ve been dealing with the new opportunities so far.

Hardware is hard

From the perspective of hardware makers, the main trend of the general BLE beacons market and iBeacon in particular is that their prices are steadily decreasing, as more and more companies jump on the bandwagon.

ABI Research recently published a report, forecasting that BLE beacon shipments will reach 60 million units by 2019. In terms of money, however, this whopping number translates into just $500 million in revenues, meaning that margin in beacons will decrease rapidly in the nearest future.

Despite the grim forecasts, the number of players in the beacon market is increasing, their list including both bold and disruptive startups like Estimote, as well as established microchip manufacturers like Qualcomm.

Beacons themselves can be purchased for anywhere between $5 and $50, depending on many characteristics including range and power type, which can be either a battery for independent units or USB for devices connected to computers.

Who needs beacons

The first and most obvious use case of beacons is in retail stores — think of an unobtrusive salesman who would offer you a 10% discount on a TV after you spent a few minutes looking at different models, or a staff member who helps you navigate a huge shopping mall to find what you need.

There are already hundreds if not thousands retail brands employing or trialling BLE beacons on their premises, including giants like American Eagle, Tesco, Waitrose, CarrefourWalmart, and many others.

Another type of iBeacon advocates is airlines, such as Virgin Atlantic, EasyJet, American Airlines, and Japan Airlines. Their iBeacon apps are aimed at helping passengers navigate the mazes of major airports and stay up to date with info about their flights.

In museums, iBeacons can be combined with augmented reality technologies to give visitors an unforgettable experience. Here’s an example from Ruben’s House in Antwerp, seemingly using Estimote BLE beacons:

Major online payment platform PayPal went even further by creating BLE beacons of its own that allow shoppers to make “hands-free payments” without even having to open their wallet or interact with their phone.

As an example of less orthodox uses of the new tech, Japanese company Tzukuri is about to launch sunglasses with integrated beacons and a special iPhone app, which will alert you every time you forget to take the pair with you.

Is it worth it?

The best thing about iBeacons is that the hype is actually getting a base of real evidence. According to recent data from iBeacon advertising platform inMarket, users who received a beacon message in store interacted with advertised products 19 times (!) more than other shoppers.

In addition to that, the data that covers a 30-day period in April-May 2014 shows that receiving a beacon message led to 16.5 times greater in-store usage of the app.

Moreover, those who got a beacon message to their smartphone in store were 6.4 times more likely to keep the store’s app, which is an important metric of a campaign’s success.

Adoption and conclusions

All in all, beacons in general and Apple’s iBeacons in particular have a great chance to become “the next big thing” for so many different businesses that need to further connect their online activities to offline presence.

There is, however, a possibility that the great and promising technology could repeat the fate of QR-codes — remember them?

In a column for The Guardian, Somo’s Joel Blackmore writes:

There’s a very real danger of businesses clamouring to deliver cheap, quick experiences using iBeacon technology without putting much thought behind them. This is ultimately likely to deliver poor user experiences, putting off consumers from activating the technology on their devices and creating a knock-on effect for other, more considerate, businesses. Poor experiences delivered by the minority could lead to a negative user-reaction that impacts on the majority.

The consequences could be that iBeacon heads the initial way of the QR code in Western Europe – a cost-effective technology, poorly implemented, which delivered little or no use to consumers in a poor user experience. In Asia, QR codes are a phenomenal success, simply because they’ve been implemented effectively, but in Western Europe it will take a long time for the QR code to make a recovery and by then it could be too late.

The danger Blackmore is talking about gets even bigger when taking into account that iBeacon is a technology that users have to opt-in to use by enabling Bluetooth on their smartphones and installing respective applications. With this in mind, the importance of not spamming your customers senseless via beacons is hard to overestimate.

As of now, however, iBeacon has definitely not exhausted its credit of trust — so turn on Bluetooth and stay tuned for the improvements it brings to your everyday life.

Images courtesy of AppleInsider.comWolf PaulusTzukuri.

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