Apple's iBeacons To Let Stores Beam Location-Based Offers To iPhones

Apple's (NASDAQ:AAPL) new iPhone 5S has generated lots of attention for its fingerprint authentication, but for retailers a more significant feature will be iBeacons, which allow stores to send offers and messages to customers who are using their mobile phones in-store.

With the new iOS feature, merchants can place small Bluetooth Low-Energy (BLE) devices called beacons at appropriate points in a store. When a customer comes close enough, a beacon will send a message to the phone, such as an offer, coupon or marketing message. The beacons are relatively inexpensive (less than $35 each in an evaluation kit from one vendor) and can be hidden behind or under displays, so the message can be targeted at customers near specific products.

The beacons don't require connection with a network and run on conventional batteries, so they can be placed at any location in a store. They are also expected to be reprogrammable, which should make them at least as easy to reuse as other forms of digital signage.

The advantage to iBeacons is that virtually all smartphones are already equipped with Bluetooth and can receive BLE messages. In addition, iPhone apps are already available from some vendors to make a phone behave like a BLE beacon for testing purposes. That should simplify development.

The downside: Although BLE support is now built into both iOS and Android, it's going to take some time for retail developers to figure out how to use it in apps, since it's not clear what the standard formats will be for those BLE messages. More crucially, customers will have to get used to location-dependent messages when they're in a store. If a shopper doesn't get the "20 percent off all Huffy bicycles" message until she is several aisles past the bicycles—or before she has come in sight of the bicycle aisle—that's going to be more annoying or confusing than effective.

Another potential problem is that BLE sends its messages relatively slowly compared with Wi-Fi, so coupons and offer messages will have to be small and concise, and there may not be the bandwidth to send images.

For more:

- See this GigaOm story

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