Apple's iBeacons Aren't A Magic Bullet, But They Have Cheap Possibilities

Is iBeacons really the killer new iOS feature that some Apple watchers think it is? According to various claims, iBeacons is Apple's (NASDAQ:AAPL) solution for payments, for "indoor GPS," for replacing RFID tags, for tracking customers everywhere and for in-store mobile marketing. Most of that is the usual technology-lust silliness. But iBeacons really do have some interesting in-store possibilities for retailers. And the technology is cheap enough—and low-risk enough—that, for once, chains really can have some fun experimenting with technology. Here's the basic concept: You can put small, free-standing, battery-powered Bluetooth transmitters called beacons at key spots in your stores. When a customer running the right smartphone app comes close enough, the beacon sends out a message—longer than a Tweet but smaller than a web page—for the app to display. The beacons are cheap (starting at about $35 each), easy to move and reuse, and short-range (so they really can send messages to just people in, say, the produce department). Think digital signage without that expensive, bulky sign and you've started to scratch the surface. Actually, it turns out that you can play around with Bluetooth Low-Energy (BLE) beacons without shelling out even $35 for an actual beacon. At least one vendor is already offering an iPhone app that will make the phone temporarily mimic a $35 BLE beacon. And because the messages that the beacons send out can be as simple as basic signage—"Bartlett pears for 89 cents a pound" or "Pumpkin Ale now in stock!"—experimenting with BLE beacons really is low-cost and low-risk for retail IT developers. Beyond that, what's it good for? Let's start with what most retailers won't use it for. Payments? Yes, PayPal's (NASDAQ:EBAY) latest in-store payments idea uses BLE beacons too. But aside from the problems involved in getting yet another untested payment technology OKed by your QSA, there's nothing about BLE beacons that suggests they will be any more successful when it comes to payments at U.S. stores than contactless, chip-and-PIN, QR codes or NFC. The problem isn't in the technology, it's in retailers' willingness to push it for payments instead of mag-stripe cards. BLE beacons have the disadvantage that they haven't been tested, but they'll eventually get hardened up. But that won't make them a magic bullet for payments. Indoor GPS? Sure, BLE beacons can tell you that you're in the men's department. And since the usual purpose of in-store location is to figure out what department you're in so targeted marketing offers and coupons can be sent to you, you could use BLE beacons and Wi-Fi to do that. Or you could just have the BLE beacon send the offers to everyone. If a customer is in the men's department, he's already a target, right? Replacing RFID tags? There's a very small overlap between what RFID tags do and what BLE beacons do. Customer tracking? Since that's usually for the purpose of figuring out where a shopper is, we're back to doing something very complicated to get a simple result. Well then, aside from the basic send-a-virtual-sign function, what are BLE beacons good at? One thing is to tell app users (or just the apps themselves) where the customer is. That could be used to trigger information the app already has, such as coupons and offers that are already stored in the app. Another, more elaborate, possibility: Replace the standalone beacon with an iPad-based kiosk running beacon-emulation software. The customer walks by, the kiosk sends a message to the app saying (in effect) "I'm a kiosk," the app responds with its own "I'm Harry Smith's phone" ping by Bluetooth or Wi-Fi, and the kiosk can display a personalized message—presumably selling Minority ReportDVDs. Something potentially more useful: Beacons aren't necessarily good for in-store mapping because they send low-bandwidth messages that don't carry much information. But that might be fine for acting as virtual signposts. If the beacon just sends out the names of a dozen departments along with what compass direction they're in, an app could use the information plus the phone's ability to mimic a compass to point a shopper in the right direction. Of course, there's a downside to the fact that BLE beacons are so simple: That means they're likely to be simple to imitate, too. Even if pranksters don't find and move your beacons, they have access to the same beacon-mimicking apps that you do, so they could theoretically walk through your store sending out bogus information, directions or coupons. Could they create problems beyond that? That will depend on their creativity. On the other hand, pranksters can already move your stores' physical signs around, or install their own signs. Some things don't require a killer technology—just the desire to cause problems.