iBeacon - common misconceptions

I am frequently hearing couple of misconceptions about iBeacons and I just want to clear those in this post.

Misunderstanding 1 - I understand a iBeacon device transmitting standardized coupons. But how does the iBeacon device transmit customized offers? How will iBeacon device be enabled / connected to recognize a customer / his preferences and then send relevant offers? Can the iBeacon tag be programmed to relay some identification back to the server to enable BLE tag to offer something customized? 

iBeacon cannot transmit any offer/data other than constantly emitting a signal. Think about it as a lighthouse that constantly beams light. The mobile app on the smart app listens to these iBeacon signals and sends the signal to the merchant backend servers in the cloud along with the customer info (who ever is logged in on the phone). The server can identify the exact beacon by interpreting the signal. 

For ex: Beacon in Men's apparel section in Macy's on Broadway Street, New York emits the signal and the app on Joe's smartphone sends that signal to the backend servers. Now based on the location and based on Joe's past history/preferences/interests, Joe can receive the custom offer on his smartphone. I will talk about the signal characteristics and how you identify Men's apparel section in Macy's New York store in next question, but remember that offer is pushed from internet to smartphone, not from iBeacon to smart phone. iBeacons sends a signal and the signal gets converted into personalized coupon and pushed back to smart phone from merchant's back end servers as illustrated below:

Misunderstanding 2 -Someone walks into Macy's with their phone turned on. As soon as you come in proximity of a iBeacon tag, can the tag prompt you to enable / accept a Bluetooth pairing? How fast can this pairing be established? How does the iBeacon tag recognize an eligible phone for pairing?

The first time you install Macy's app on your smart phone, you can enable/disable in-store notifications. If you enable, you receive the coupons/offers as soon as you enter into the beacon's zone, magically no pairing required. If you disable, you cannot receive notifications/offers/coupons. Enabling notifications is one time thing, and unlike regular Bluetooth you don't need to pair with iBeacon. How do iBeacon tag recognize an eligible phone to send the signal? iBeacon tag won't recognize eligible phone, instead phone (the app on the phone) will recognize eligible iBeacon signal. Being said, this is the time to get into the beacon signal characteristics.

Every iBeacon device emits signal constantly. This signal is nothing but an identity (unique identifier) of iBeacon device. Every ID is 20 bytes long and is divided into three sections: proximityUUID (16 bytes) + major number (2 bytes) + minor number (2 bytes).

UUID is a property, which is unique to each company/chain of shops.

Major is a property, which is unique to shop or you use it to specify a related set of beacons.

Minor is a property, which is unique to aisle, or you use it to specify group of products or you use it to specify an individual product/beacon.

For ex: see the below screenshot:

When a smartphone is running Macy's app, it can be programmed to look for the Macy's UUID. In the above example, it is "B9407F30-F5F8-466E-AFF925556B57FE6D".  When Joe walks into Macy's store, the app on his smartphone detects this UUID and it looks at the major and minor values to determine which of the Macy's store you are in as well as the aisle your are in. So the major of 28600 indicates it is Macy's on Broadway Street, New York and minor of 55855 indicates it is Men's apparel section. Now the app sends major, minor properties along with Joe's userid to backend systems and in return Joe receives personalized coupons based on the aisle he is in and his past history etc.

Original post - BLE/iBeacon - common misconceptions

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Macy's is the first retailer to use iBeacons

When I wrote the article on iBeacons, I used Macy's store as an example. Incidentally Macy's is the first retail store to use iBeacons in stores. My prediction was so accurate!!!  Also my prediction of iBeacons becoming a force in retail space is happening. GigaOm's writer Kevin Fitchard alluded that my prediction was so right. Here is the Gigaom story:

"When Apple rolled iOS 7 in June, it quietly included a proximity-based service called iBeacon, which Gigaom contributor Hari Gottipati predicted would become a force in retail and location-based services. It didn’t take long for retailers to get wise to iBeacon as well."

Full post at http://gigaom.com/2013/11/20/macys-is-the-first-retailer-to-use-apples-ibeacon-for-in-store-presence/

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Google’s focus is on NFC; Apple’s focus is on Bluetooth

Google has been heavily focused on NFC from the beginning and it didn’t add platform support for BLE until the release of version 4.3. Lot of the apps that rely on BLE couldn’t release the apps for Android phones. Some Android OEM vendors recognized the need and rolled out their own implementations. Google finally listened to the demand and made it part of Android 4.3. But Google has continued to push on NFC and rolled out the NFC-based Android Beam in Android 4.0.

Apple has avoided NFC, and all the rumors about NFC getting added to iPhone 4 and iPhone 5 are turned out to be false. Instead of NFC, Apple worked on alternatives using Wi-Fi and Bluetooth. During the introduction of iOS 7′s AirDrop at WWDC in June, Apple’s mobile development chief Craig Federighi said, “There’s no need to wander around the room, bumping your phone,” referring how NFC phones need to be very close to transfer the data. As stated on Apple’s website:

AirDrop lets you quickly and easily share photos, videos, contacts — and anything else from any app with a Share button. Just tap Share, then select the person you want to share with. AirDrop does the rest using Wi-Fi and Bluetooth. No setup required. And transfers are encrypted, so what you share is highly secure.

At WWDC in June, Apple quietly announced iBeacon, one of the more prominent features of iOS 7. Craig Federighi, Apple’s senior vice president of Software Engineering, mentioned nothing about about it in the keynote, and Apple hasn’t provided any details about it; it was only seen on one slide in the WWDC keynote.

Nor did Apple say anything about it during the iPhone event Tuesday. But I’m sure this is going to be a big deal, and startup companies like Estimote agree, announcing its support for Apple’s technology Tuesday and releasing this demonstration video.

Why is that so? For a couple of reasons: it opens a door to new set of applications such as indoor maps and in-store marketing, it makes the internet of things a realty and it might kill NFC (near-field communications), the wireless technology most linked with mobile payments.

Apple is betting on Bluetooth Low Energy (BLE) powered iBeacon to rival NFC payments. Paypal already announced Paypal beacon which is similar to iBeacon.

PayPal Beacon is a Bluetooth Low Energy device to connect to a customer’s PayPal app when they enter a store. With one vibration or sound on your phone, you’ll know you’re checked in. And when you’re ready to make a purchase, all you have to do is say you’re paying with PayPal and the transaction is automatically completed: no cash, cards, taps, or signatures required—all hands free.

For more details on  iBeacon and BLE, read my Gigaom article here.

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iBeacons vs. other payment technologies (NFC, Geofencing)

Here is a quick comparison of iBeacon with other mobile payment technologies:

General	Phone can communicate to the cloud/online payment service provider without a signal (great for thick concrete walls, Victorian buildings)
Geofencing	Drains battery life, less accurate, requires pre-selecting a limited number of locations, relies on Wi-Fi or cellular network
NFC	Requires you to pull out phone to pay (slower to tap a phone), requires NFC-enabled phone
Regular Bluetooth	Drains battery
iBeacon	iOS only
Other Beacons	iOS and Android

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Apple’s location-tracking iBeacon is poised to explode across retail faster than anyone can imagine

Businessweek reporter Sam Grobart contacted me couple of weeks back to talk about the significance of iBeacon. He is right, iBeacon's had a low profile so far. But I iBeacon's momentum is getting started and going to be exploded faster than anyone can imagine. He highlighted my quote on iBeacon's momentum in this BusinessWeek article - Apple's Location-Tracking iBeacon Is Poised for Use in Retail Sales:

Search Google (GOOG) for “Apple iBeacon” and you won’t get any results from Apple.com. Look for the term on the company’s website, and you’ll get one hit, a link to Apple’s list of trademarks. IBeacon is software that enhances the location-tracking services in an iPhone, an iPad Mini, or any device running iOS 7. For retailers desperate to turn smartphones from distractions into a sales tool, it provides a quick way to target ads and other messages to consumers as they walk through a store. For Apple, it’s a chance to collect valuable shopping data and to build a mobile-payment platform into a dominant retail standard. Apple declined to comment. “IBeacon’s momentum is just getting started,” says Hari Gottipati, an independent tech consultant in Phoenix, “but it’s going to explode faster than anyone can imagine.”

Beyond detecting your entrance, the software could send you messages that lead to a particular garment. “With iBeacons you can target the customers with more personalized offers based on preferences, history, or the current location within the store,” Gottipati says. “The more you personalize, the higher the chances are to up-sell to a customer.” Along with coupons, iBeacon can store credit card information to pay for purchases.

Retailers have to invest some money to make their spaces iBeacon-friendly, but the cost isn’t onerous. IBeacon’s range is about 84,000 square feet, Gottipati says. A typical Macy’s store of 175,000 square feet would need two or three iBeacon transmitters. Third-party manufacturers such as Estimote sell a three-pack for $99. 

Mac Daily News made it as a headline - Apple’s location-tracking iBeacon is poised to explode across retail faster than anyone can imagine:

Grobart reports, “iBeacon is software that enhances the location-tracking services in an iPhone, an iPad Mini, or any device running iOS 7. For retailers desperate to turn smartphones from distractions into a sales tool, it provides a quick way to target ads and other messages to consumers as they walk through a store. For Apple, it’s a chance to collect valuable shopping data and to build a mobile-payment platform into a dominant retail standard… ‘iBeacon’s momentum is just getting started,’ says Hari Gottipati, an independent tech consultant in Phoenix, ‘but it’s going to explode faster than anyone can imagine.’”

eFinanceHub, another news outlet highlighted the iBeacon's momentum in this article - Apple Inc. Launched Location-Tracking iBeacon:

According to Hari Gottipati, an independent tech consultant in Phoenix, it is just start of IBeacon’s but its quest will blow up faster than anyone can visualize. GPS and Wi-Fi tower triangulation were used by iPhones and other Apple mobile devices to track their location before this software. But those technologies are only precise within 30 feet or so. That’s fine for passengers in airports but GPS and Wi-Fi are less functional in smaller spaces such as stores. IBeacon can give location more accurately because it uses Bluetooth Low Energy.

Gottipati says that this software provides opportunity to retailers to target the customers with more personalized offers based on preferences, history, or the current location within the store. Besides coupons, credit card information can be stored on iBeacon for purchases. Near-field communication was anticipated as the next big location-services technology which appeared on some smartphones and tablets running Google Inc (NASDAQ:GOOG)’s Android operating system. It was largely developed by Nokia Corporation (ADR) (NYSE:NOK), Philips, and Sony Corporation (ADR) (NYSE:SNE) and NFC’s selling point was that you just have to tap your phone onto a cash catalog to make a payment from your online wallet. 

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With iBeacon, Apple is going to dump on NFC and embrace the internet of things

I wrote a guest post for GigaOm on iBeacons in which I detailed how Apple is going to embrace Internet of Things and dump NFC. I also detailed about significance of iBeacons in indoor location based services and in-store marketing. Google is betting on NFC, but Apple is moving forward with iBeacons. Here is the Gigaom post - With iBeacon, Apple is going to dump on NFC and embrace the internet of things.

Nor did Apple say anything about it during the iPhone event Tuesday. But I’m sure this is going to be a big deal, and startup companies like Estimote agree, announcing its support for Apple’s technology Tuesday and releasing this demonstration video. 

Why is that so? For a couple of reasons: it opens a door to new set of applications such as indoor maps and in-store marketing, it makes the internet of things a realty and it might kill NFC (near-field communications), the wireless technology most linked with mobile payments.

Even CNN picked up the article from GigaOm. Here is the CNN link.

Wall Street Journal used excerpts from my GigaOm article - What People Are Saying About the New iPhones.

Hari Gottipati writes on GigaOm about what wasn’t talked about at the launch: iBeacon, a bluetooth-powered location technology that will ship inside iOS 7.

Gottipati’s rational on why iBeacon might kill NFC:
NFC tags are pretty cheap compared to NFC chips, but NFC tags are required on each product because NFC works only in very close proximity. In theory, NFC range is up to 20cm (7.87 inches), but the actual optimal range is less than 4cm (1.57 inches). Also, mobile devices need to contain a NFC chip that can handle any NFC communications. On the other hand, iBeacons are a little expensive compared to NFC chips, but iBeacons range is up to 50 meters. Not all phones have NFC chips, but almost all have Bluetooth capability.

This kind of technology gets us closer to the Internet of Things, Gottipati writes. 

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