In the world of Bluetooth LE, Estimote has become synonymous with beacons. Through brilliant promotions, fantastic product shots that have appeared on every major technology blog as the accompanying “beacon photo”, and more than 10,000 developer kits delivered worldwide the company is a Y-Combinator superstar.
But while the company has never claimed to be at any stage other than a developer preview, persistent problems and questions are cause for concern: because for now, as Estimote goes, so goes a wide swath of opinion about what we affectionately call the becosystem.
Estimote Is A Major Success
First, let me say I’m thrilled by the success of Estimote. It’s hard to fault them for not anticipating how the iBeacon industry would resemble a tsunami. They represent the potential of the proximity industry as a whole and have set the bar in how that industry is promoted and packaged.
Start-ups always dream of hockey-stick growth curves. But even Estimote would have had a hard time anticipating how we’d go from a standing start with the launch of iOS7 to major brands rolling out thousand of beacons a few months later.
Estimote is in the enviable position of needing to act like an established player in an industry that popped up over night.
Customers and developers expect them to act like and have the resources of Google or Apple. Their promotions and press coverage certainly make them seem big and polished and established.
But as you peel away the marketing layer there are persistent problems that are, at the least, irking developers.
Estimote has rushed to open offices in at least 4 major cities (most of them, it seems, focused on business development), is scrambling to build out its systems, and has a back-log of orders and anxious developers who don’t want to miss the iBeacon bandwagon.
They’re still in an enviable position. There’s lots of time for corrections.
But while there are some short-term issues that have obvious corrections, there are much bigger questions that might strike a note of extreme caution for anyone planning to build a service business around their turtle-shaped beacons.
Get Me My Estimotes
One of the biggest challenges for Estimote seems to be production. Orders exceeded capacity in late 2013 causing a delay of up to six weeks. They now promise 4-week delivery windows for new orders according to responses on their Facebook page.
Estimote’s response to the delays was to ask for understanding: they’re still working on a pre-order model. This is an understandable tactic for a start-up that doesn’t want to run production costs ahead of demand. And so they only do production runs based on actual orders in hand.
Last week, Alex Santos responded to concerns about the delays in shipping (emphasis added):
I appreciate your analysis. We are on a pre-order model at this time so we expect customers to understand that there may be a delay to ship times. We have shipped a great deal of beacons in a timely fashion but there are customers who are still patiently waiting, which we sincerely appreciate. We have an SDK and an app that can help developers employ a virtual beacon (through our free app) to begin their development cycle until their beacons arrive.
Again, I completely appreciate the question, I do see your point but at this time we are still offering dev kits inside the paradigm of a pre-order model. I am confident that we will move away from this model but we are still maturing vectors around the hardware to reach that level. Thanks for raising the concern.
No, Alex. You can NOT expect customers to understand.
The beacon industry is NOT on pre-order, it’s on deployment. You have $3.2 million in the bank. I’d expect by this point that Estimote would either be producing beacons ahead of the demand curve or be able to do a lot better job using predictive analysis to anticipate production runs.
And I’m not sure what “maturing vectors” refers to? Does anyone know?
But perhaps what’s more frustrating than the shipping delays is the inability to actually track your order. Some kind of dashboard might help. Instead, the Estimote Twitter and Facebook timelines are littered with requests for confirmation on orders and promises to respond by e-mail.
So hang tight, everyone. When you order your Estimote, it’s put into the next production order because – you know, they’re still too small to just produce ahead of the demand curve. Which would be fine, I suppose, if I couldn’t order and receive beacons from other providers with 3-4 days notice.
Just Change the Battery
Our own experiences with Estimote date from the earliest days. We received a set of beacons from one of the first production runs and they had a bug in their firmware which meant the battery ran out in 2 weeks. Bugs are to be expected in an early release so that wasn’t a problem.
But it DID give us an important insight. To replace the battery, we needed an Exacto knife and some crazy glue (see the photo at the top of the post) – and it felt almost tragic to disembowel the beautiful packaging of the Estimote.
It reminded us that you DO need to treat Estimote as disposable – and come up with a plan for replacing them entirely when the retail chains you’re servicing have ‘motes whose batteries run out. For developers, this is a key question: will Estimote provide a ‘replacement’ policy for beacons whose batteries drain before their time?
Fleet Management, Security and Content Management
This week, Estimote launched a new version of their virtual beacon to the Apple app store allowing you to toggle the signal strength so that when you’re testing your app you don’t need to walk 100 feet before interactions occur and provided over-the-air firmware updates.
It’s a great addition to the virtual beacon.
But perhaps more important, they launched the ability to change the UUID of your beacon – something they resisted at first but eventually gave into following a discussion on GitHub.
But this update came up somewhat short – because the demand for securing your beacon from ‘spoofing’ and the need to authenticate ownership will have to wait for a future release:
There is not yet beacon ownership authentication in the current firmware. That means that anyone can change the UUID of your beacons using our SDK. Authentication is coming soon in a future update…
If you are building a mission critical app where security is important please make sure to implement security on your end. You can use our SDK to rotate the UUID or combine it with other signals, e.g. from GPS. We plan to publish a security layer in a future firmware release. When it becomes available, you will be able to update your beacons with the Estimote iOS App.
Estimote is also a week or so away from launching a “very early stage” version of a content management system, about which you can find out more by contacting them directly. How robust this system is, I guess we’ll have to wait and see.
The Strategic Issues With Estimote
At a much higher level, however, developers and partners need to take stock of several unknowns and make informed decisions about what these unknowns mean for investing development time in the Estimote platform.
There Is No EULA or Software License
Again, unless I’m missing it, there’s no current license for Estimote. Without knowing what warrants, restrictions or rights Estimote is demanding of developers, you’re in a legal grey zone which might take you by surprise once it’s released. In theory, Estimote might require you to ‘pass along’ certain terms and conditions to your users, they may reserve rights to aggregated location or usage data or analytics, or may require you to use their SDK and back-end as part of their service.
There Is No Pricing Structure in Place
It’s unknown what Estimote will charge in addition to the costs of the beacon, if they charge anything at all. They may allow “free” use of the beacons and charge for optional back-end services. Or, like Qualcomm, they may require you to use their back end services and charge monthly fees or fees by volume of users.
Estimote is Competing With You
Estimote is meeting with major brands and retailers. They may be (according to some accounts we’ve received) providing road maps and services that compete with what developers are building around their beacons directly to the companies who you hope will be your future customers.
Certification and iBeacon Compatible
No one knows what Apple’s final iBeacon specification will look like – and it’s unlikely it will have much of an effect if any on beacon developers. We don’t see this as a major issue, yet it’s worth noting. What might be of more concern to your legal team, however, is whether the beacons you’re putting up in stores are FCC, IC or CE certified. While it’s unfair to expect that a developer kit would have these certifications, you might want to consider the timing by which it will happen before you start planning large-scale roll-outs.
We’re In This Together
Estimote is the flag-bearer for the industry. For now, they’re still the poster child for what a iBeacon can be in the public imagination.
On January 4th, Estimote said they were 2 weeks away from an important release. Three weeks later, they’ve launched a new virtual beacon and some tweaks to their SDK.
My own predictions seem to have fallen flat. In fact, not one of my predictions came true – other than my idea that a “basic CMS” was on its way. Instead, I’ve found myself looking at Lighthouse or Beaconic for examples of the kinds of systems that can be built in astronomically short time frames.
But we’re all in this together. Estimote is still the company to watch if you’re looking for one of the places that massive scale adoption of beacons can become a reality. But as they say in about the stock market we’re recommending for now at least that you treat Estimote as a ‘hold’ rather than a ‘buy’.
What has your experience been? Has Estimote exceeded your expectations? What do you wish they’d solve as you figure out your own strategy for a beaconized world? Drop a note in the comments below or drop it to me anonymously via e-mail (doug @ mylocolo.com).