The Future of iBeacon: Trends for the Year Ahead | Guest Post

Future of iBeacon

Where will iBeacon go next? What’s the future of proximity technology?

We’ve moved far more rapidly than I think even Apple could have expected – shifting from pilots to large scale deployments across multiple industries in a compressed time period.

Stefan Wolpers, who’s a stand-out thinker on the technology (and published a compelling overview of the role of beacons in omnichannel retail) offers these predictions for the future.

Guest Post by Stefan Wolpers

Stefan Wolpers
Guest Author: Stefan Wolpers

The next 12 months won’t just see more and more retailers embrace beacon technology. We’ll also see advances in hardware and back-end systems. Here are some predictions of what comes next.

Beacon Hardware:

Beacons will become a hardware commodity within the next 6 to 12 months:

Competition: Barriers to entry for beacon production are low and the market will be driven by economies of scale. The current delivery problems–if they exist at all–are nothing but a temporary latency effect while beacon production is ramped up. This will result in the usual decline of prices and margins as well as a broadening of the offering. As a startup, you don’t want to be caught up in that process.

There is no enterprise-grade hardware available: Who wouldn’t love Estimote’s beacons? Unwrapping my dev kit was pleasant experience, given the attention to detail that went into building and packaging them. But they are R&D toys at the moment, and not built for real operative use.

As corporation, I could care less whether a beacon is $30 or $150 a piece. Buying 356 beacon for the AnkaMall, for example, merely qualifies as noise in the financial reporting: Biggest iBeacon Deployment .

So, what would an enterprise-grade beacon look like? There are at least three features that need to be provided:

  • A permanent power-supply: Try to replace a battery of an Estimote beacon and then imagine that you need to service 356 of those, all of them either broadcasting at different frequencies or shielded electro-magnetically by factors in the building in which they’re placed. So, you’ll never know when a battery has become exhausted unless you personally check each beacon in regular intervals. Not scared enough? What about a outdoor location-based advertising network, consisting of thousands of beacons, that your company is renting to advertisers for contextual mobile campaigns?
  • Remote management capabilities: Don’t force me to update each beacon’s firmware by hand. This needs to be a function of the beacon management software (BMS). Which would require the beacon to have some sort of network access. And while we’re at it, let me diagnose each beacon, and turn it either on or off via the backend, too.
  • Motion sensors: Tell me when a beacon is moved from it original location. And here is one reason why this is handy: If you like to reward customers each time they come to your location you create an inherent incentive to take a beacon back home. And don’t underestimate the ignorance of other staff members or contractors with little black boxes they cannot identify.

Beacon Management Software (BMS):

Enterprise-grade BMS will become the most lucrative market for software providers. The usual experience with enterprise software is that there is almost no incentive to change a running system. In other words: once a client, always a client. So, growing the user-base is the key to success for those BMS providers.

This growth will positively influenced by: hardware manufacturer independence (the BMS should handle all beacons built to the standard) and remote beacon management features (see above).

As well, enterprise will require enhanced security features such as:

  • Prevention from UUID spoofing
  • Provision for secure one-to-one user identification
  • Multiple devices per user administration

WE’ll see performance-based licensing models come to market in which there’s:

  • No set-up fee
  • No device-fees
  • Free SDKs
  • Charging for notification delivery only.

AdSense for Locations – or the Rise of Beacon Networks:

The first beacon application idea (beyond 2-for-1 offers pushed to you upon entering a store) that came to my mind was location-based ad networks.  I even measured how many beacons it would take to fully cover the epicenter of Berlin’s startup-scene–the vicinity of the Rosenthaler Platz–it’s just 130 beacons.

However, I dropped the idea because the underlying business model of renting beacon networks to mobile advertisers requires a lot of financial stamina. You requrire both network effects and a recognition that there is a low barriers to entry for competitors. (Think of railroad and telephone companies; the problem is really not new and actually worse than in the past.)

Nevertheless, the land-grab has started, see for example: “Mobiquity switches on its Bluetooth #beacon network covering 100 U.S. malls“.

Will those networks be built on a successful business-model? It will probably turn out to be profitable for two or three survivors.

Generally, consumers will not benefit that much from these kind of networks. (Why would a consumer opt in to notification spam?) Incorporating them into existing (venue) apps, however, might prove to be a better solution.

Service, Service, Service:

There are numerous use-cases for beacons and the most promising in my eyes will be those that seamlessly provide services to the users. Here are a few examples of what I mean:

Access to services that require a degree of identification, e.g.:

  • WiFi
  • Coffee-machines (Locly@iBeacon Hackathon UK), printers or copy-machines
  • Electronic tickets.

Time-saving:

  • Upload your shopping-list to a retail app and once you enter any store of the chain the app is creating the perfect route for you to pick up your groceries. (No more need to memorize where stuff is in a store.)
  • Pick up copies your from your newspaper subscription at a kiosk.

Health-care:

About the author:

Stefan Wolpers is a thought leader, mentor, start-up guru and leader in the Berlin tech scene.

He can be followed on Twitter or you can connect with him on LinkedIn.

Share Your Thoughts

Join our weekly e-mail list for more on iBeacons. Join the conversation on Twitter, or connect with me on LinkedIn.

Where do you think beacons are headed in 2014-2015? Do you agree that network effects and low barriers to entry will only leave a few companies standing in developing location-based ad networks? Are there ‘enterprise-grade’ iBeacon solutions on the market?

35 Responses to “The Future of iBeacon: Trends for the Year Ahead | Guest Post”

  1. zubin

    Great article. I’ve been developing a great app for customer specific retail navigation using this technology .massive interest from the funding world….watch this space…..:)

    Reply
      • mthome

        Aren’t retailers already a step ahead of this? When you upload your shopping list the retailer picks your order and has it ready for check out when you arrive. No shopping required! Amazon has taken it a step further and will deliver to your home/office. No need to get near the beacon.

        This technology will have to provide more value to a consumer than navigation prompt.

        Reply
  2. Really good summary. I think the key to success is going to be the services (or app) side as long as they are compelling and meet a genuine need. Stefan gave the example of home care service levels. Beacon could work well, i.e. app on carers phone detects when they enter the home of the client via a beacon installed in the residence or carer carries a beacon and connected device detects when they enter.

    However most domiciliary care providers get the carer to call a number from the clients fixed line phone (most elderly clients still have a land line) as the CLI is recognised its then easy to update the system that the carer is onsite at a particular residence. The advantage of this system is that a) it uses existing ubiquitous technology b) is straightforward to use c) by using the fixed line CLI it cannot easily be ‘spoofed’, I hope this example illustrates that its essential when looking at beacon apps to consider what’s already ‘doing the job’ and what is the ‘delta’ a beacon based solution would provide.

    Reply
    • Absolutely, Tim. The key will always be to ask: “Where is the (Beacon)-Beef?” I also like new gadgets, but a lot of ideas that are going around at the moment are doubtful at best.

      Reply
  3. I agree that an enterprise BMS is needed for some solutions. But don’t forget the small to mid size business that can benefit. They still need a high quality BMS as well, so the whole spectrum of business users needs to be served, because micro-location is not just for the big guys.

    Also good point on the life cycle management of beacons. We expect better hardware will help simply this but totally solve the challenges. Again there you need a good BMS. And we expect the technology to evolve as mentioned by the author.

    Most of the mentioned security issues can be solved within the app and proper configuration by the BMS/CMS.

    But also at the end of the day it is about the user experience and building apps that engage and not spam people.

    Reply
    • Agreed, Sam. It remains to be seen, what of the still needed functionality to facilitate a great user experience with beacons will finally find its way into iOS and Android. For a general acceptance of the technology I do hope for Apple to become a much strong advocate of its own technology than today. If iOS leads, Android will follow – which will be a good thing for consumers.

      Reply
  4. Matthew Davis

    Great summary. Thank you for exploring the business side of beacons more in-depth, and for providing examples beyond retail. We’re all just scratching the surface of possibility here, and it’s really freakin’ cool.

    Reply
  5. Simon Harris

    Curious to see how iBeacons develop not only as ad networks but also as a new distribution channels for location-based content and storytelling.

    Reply
    • I’m curious, too. That will be an interesting new content channel provided the information is relevant. So many use-cases, just think of travel: museums, exhibitions, history monuments etc.

      Reply
  6. To play devil’s advocate,

    * We’re ~ 9 months into this thing and there are only a handful of real iBeacon implementations and they’re hardly earth-shattering. It has had zero impact on my life or anyone I know so far.
    * iBeacons are useless for indoor positioning. So we have rough proximity as the feature. If the rumors of NFC support in the iPhone 6 are true, then we have even fewer use cases.
    * Apple doesn’t really seem to care so much about iBeacons anymore. Their own rollout failed; iOS has not supported iBeacons reliably now for 2 months… maybe this is heading the direction of passbook.
    * Many of the useful iBeacon use cases (not all) are adequately handled by GPS
    * Most iBeacon use cases are unrealistic because you can’t assume that proximity is the same as intent in most cases. I don’t want my phone yelling at me when I walk to the back of the house without my sunglasses or to automatically turn on a stereo when I walk into a room or save me pressing a button on the coffee maker when I approach, especially since I don’t want a coffee – I was just standing there talking to someone.
    * The handful of current implementations are lame. If I go to Tesco’s, it tells me the order I placed earlier is ready. You should tell me when it’s ready before I get there, not make me drive and then tell me when I arrive. Plus GPS could do this fine.

    This is coming from someone with iBeacon support built into his app. But the more I look at this, the more skeptical I’m becoming.

    Reply
      • I’m building an Advice Network… it’s an open network that connect third party domain expertise into our in-venue purchase processes. Kind of like a 24×7 personal shopper that uses information about store inventory, personal preferences and the advisor point of view.

        How beacons work now is that as you wander around the store, we show department-level application content. Let’s say you approach Spanish wines. We know there are 9 Riojas at the store, so we’ll push a Spain Guide that has some educational content on Rioja and also includes interactive Advice Cards that help the customer identify the best wines for them. The idea is that we should be able to make well-researched purchases just as easy as we can make impulse purchases.

        We also use beacons or GPS to determine if the user is at the store (or has left the store) in the first place.

        Reply
        • Great! That’s precisely the contextual information I like to receive while standing cluelessly in front of a shelf.

          I am thinking about creating a small blog covering location-based marketing & content as well as Retail 2.0 and iBeacon technology. May I reach out to you for an interview, once the everything is up and running?

          Reply
          • Sure. FWIW, maybe a good niche is to be realistic about the constraints we find both with technology and human behavior. The concept is broad enough that I’m hopeful someone will unstick some great use cases that actually work in the wild. However, I’ve grown weary of stories about weekend hacks that we gin up as successful deployments.

  7. Ulrich Theilmann

    good summary of up coming problems. What I experienced is also the missing accuracy and the limited reach – even in line of sight

    Reply
    • This problem is in my eyes particularly nasty as many of the “good” use-case reply on a proper localization. The spray-and-pray approach may work with coupons but certainly not in any form of indoor routing scenario.

      Reply
  8. Hi Stefan,

    Really great piece. You hit the nail on the head about how they are not enterprise ready yet. I can understand Michael Brill’s thoughts too, as I agree that many implementations so far are not setting the world on fire. My personal fear is that bad implementations will spam users and sour the concept for everyone.

    We have been working on prototypes which reverse the communications and instead of pushing spam to users inform systems at a location as to the presence of an individual. This way real world experiences can be personalised without seeming pushy and human interactions can be more informed. Again the tricky part is not spooking the consumer and making them feel like their privacy has been invaded.

    Regards

    Richard

    Reply
    • Richard, I actually look forward to a whole bunch of spammy implementations because then we can move past that. My belief is that we have several waves of mediocre stuff to get through before we see the real value of beacons… and that the future is really about putting APIs on top of physical venues that expose location and inventory and then allow third parties to create experiences on top of those.

      Retailers won’t be good at providing digitally-enhanced experiences as they have all sorts of business risks/friction that will keep them timid. However, there is a nearly-infinite stream of third parties who can provide great experiences within retail environments – some of them (e.g., brands, publishers, distributors) already have direct financial motivation to do so while others could be motivated by retailer compensation based on conversion.

      But imagine trying to get a retailer to allow any third party to reach beyond their walls to guide the customer experience. Good luck. It’s only once we get past solutions that don’t work will we be more compelled to take some risks.

      Reply
      • @Richard: “My personal fear is that bad implementations will spam users and sour the concept for everyone” – Richard, I could not express my concerns in a better way.

        @Michael: Question is: How much collateral damage can a nascent technology absorb, that is both prone to spam and privacy concerns at the same time?

        Reply
        • Stefan, my feeling is those are nice problems to have. Those are Facebook- and Google-class problems. Right now we have a much larger problem which is that we’re all talking about ideas and the future and doing a few POCs but real high-value in the wild implementations aren’t really happening. The only real way to make progress is to put something out there – as annoying and embarrassing as it may be – and iterate, iterate, iterate.

          As an aside, I personally don’t believe that spam or privacy are real issues with beacons. Beacons don’t know you exist and don’t send you messages. For the time being, beacons are basically a “feature” of a venue’s app. It’s the app that is spammy or privacy-leaking… and the app could spam you with a GPS-based geofence and post a tweet about the My Little Pony Action Adventure Set you bought with no beacon in site.

          Reply
          • You’re right, it might be a Google-class problem. And this perception is exactly the reason why an irrationally concerned user, who fears to be tracked down to the last aisle, might skip the technology once and for all.

            Trust is the beginning of all. From the UK perspective, this might be a lesser issue if the benefit is right. For continental users, and this is my understanding at the moment, this is a huge issue.

  9. Richard brings up an important point – privacy. We’re charting new territory here, and getting privacy right is crucial. Has anyone surfaced resources that begin to address beacon & privacy?

    Reply
    • Hi Matthew… except in P2P phone-as-beacon scenarios, I’m not iBeacon brings anything new to the privacy discussion. We’re going to see a beacon tied to a specific app for the foreseeable future. I don’t really see beacons creating more privacy concerns than, say, GPS and it’s much more likely that it’s user actions inside of the app that will be much more sensitive than simply where a person is within a venue.

      Reply
      • http://www.fiercedeveloper.com/story/80-consumers-would-give-location-data-offers-discounts/2013-10-04

        So I get the high-level privacy concern. I get that it’s controversial. However, I believe to my core that people will give it all up for a trinket. This isn’t a beacon issue. It’s an issue of exchange of value. If you ask me for something (like location) and in return you give me nothing, then I’m going to freak out and say no. If you ask me for location and in return you tell me you’re going to give me driving directions or special deals on products I always buy at your store, then I’m going to say yes. If you throw too many spam at me, then it’s not privacy issue, it’s a shitty user experience and I will turn it off just like I’d turn it off if it gave me wrong pricing or provided no value.

        If you look at those stories, they’re all about one-sided value and the way the question is asked. Ask them if they want to be tracked and 80% say no. Ask them if they want to be notified of a 20% discount on products they typically buy then 80% say yes.

        Even if privacy isn’t a complete red herring, let other people take on that battle. Look, beacons can’t track you, don’t know who you are and don’t even know you exist.

        Reply
        • Maria

          Hi Michael Brill can ou provide me a contact or Linkedin link, so I can contact you? Thanks

          Reply
  10. Maria

    Hi Michael Brill can ou provide me a contact or Linkedin link, so I can contact you? Thanks

    Reply
  11. Oh my goodness! Amazing article dude! Thank you
    so much, However I am encountering difficulties
    with your RSS. I don’t understand the reason why I can’t subscribe to it.
    Is there anybody else getting identical RSS problems? Anyone that knows the answer will
    you kindly respond? Thanx!!

    Reply
  12. Tom Paulson

    Thanks and great reading!! I am just learning about this technology!

    Reply

Leave a Reply

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>