The way in which smartphones connect with the infrastructures of various venues, retailers in most cases, will be a vastly lucrative sector. After a multiyear ramp up, 2014 is the year in which winners and losers will be anointed.
The vague phrase with which I introduced the topic is more cumbersome than usual (I hope). The fuzziness is because the two main players, near-field communications (NFC) and Apple’s iBeacon, have different orientations. NFC, though it can do a great number of things, rolled the dice by creating an early identification with mobile payments and electronic wallets.
Apple stayed conspicuously clear of the NFC bandwagon. It’s possible that Apple saw what ultimately is slowing NFC: Implementing eWallets is a gargantuan task that involves all sorts of hard-to-do things beyond the core NFC technology itself, such as deploying special in-store systems. Thus, NFC tethered itself to a slow-moving business segment. The dissatisfaction is mutual: The eWallet players have largely moved away from NFC.
iBeacon works with Bluetooth 4.0 (also known as Bluetooth Low Energy) to interact with consumers while they are in the store. For instance, somebody passing a particular category of food may get a coupon sent to the smartphone. With iBeacon, all of the time wasted roaming around trying to find the spices or the yams may be a thing of the past.
iBeacon is rolling and it seems to be accelerating. This week, inMarket rolled iBeacon out to Safeway and Giant Eagle grocery stores, according to AppleInsider and other sites. The deployment will start in San Francisco, Seattle and Cleveland and expand. Another company, Shopkick, last year started a similar initiative with Macy’s, the story said.
It appears iBeacon will quickly become common:
InMarket plans to activate its iBeacons at more than 100 Safeway and Giant Eagle locations in the next few weeks, contributing to the over 150 stores included in the initial rollout. The firm has its eye set on thousands of locations in the top 20 markets by year's end.
NFC can perform much the same task as iBeacon. So the question is whether the non-eWallet implementations of the technology will keep it in the game against the Apple entrant and other technology, such as plain old Wi-Fi, that fit the bill in particular use cases.
The news isn’t good for NFC, according to Brandon Workman, a contributor to Business Insider Intelligence. In a video at The Motley Fool, Workman said that “NFC is dead in the water,” barring a game-changing event.
The reason is that the costs to retailers to outfit themselves for mobile payments via NFC are too great when alternatives exist. That dramatic, game-changing event, he said, would be a move by Apple to adopt the technology. It’s unlikely. And even if it happens, Workman said, customer acceptance is far from a foregone conclusion. It is interesting that Workman and his interviewer, The Motley Fool contributor Jay Jenkins, treated the future of mobile payments and NFC as being synonymous.
iBeacon already is acting as a mobile payment option in Apple stores. At Forbes, Tristan Louis provides a technical perspective. His conclusion:
And since any iOS phone can turn into a point of sale, the last thing remaining in your wallet can easily be replaced as Apple has turned your phone into both an outbound payment system and a system that could potentially receive money too, with no physical credit card being required.
The bottom line seems to be positive for iBeacon and negative for NFC. What remains to be seen is whether NFC can carve out a large enough non-mobile payment niche to become more than a marginal platform.