The iBeacon Market Set for Success

Carl Weinschenk
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Mobility: How It's Changing Our Lives

Yesterday, I wrote about small cells and the enterprise. Another important new technology is making waves as well. Beacons are radios in portable electronic devices that call out to nearby radios integrated into advertising displays, products or just about anything else. They are increasingly common in commercial establishments. This is a consumer-facing sector that is expected to explode. ZDNet briefly explains how beacons work:

Once a consumer has an app enabled, the business can use it to trigger various types of campaigns for approaching consumers. The most common trigger used in beacons is a service called Bluetooth Low Energy, or BLE.

It is going to be a big business. This week, ABI Research said that beacons will be a 60 million-unit market in 2019. The report says that the market will expand to incorporate connected homes and personal asset tracking. Commentary in the release suggests that beacons are part-and-parcel of the Internet of Things and that per-unit costs will drop. The release pointed out that the $500 million in revenues beacons will generate by 2019 is a relatively modest number in light of the huge number of units sold.

The heart of the ZDNet story that provided the definition is a look at some of the emerging competitors to iBeacon: Gimbal from Qualcomm, the Android-based Datzing, Philips’ VLC, MPact from Motorola and the Swarm Portal. The variety of the offerings is testament to the wide open nature of the category.

The Verge offers a good example of what is possible with iBeacon or a similar technology. Taxi Magic offers a premium to consumers who download its app into their iPhones and enable them to ping others with the app. If the receiver ends up using the referral code to order a cab, the person who originated the message gets a $10 credit.

The industry must deal with several marketing challenges and a key technical obstacle. Ray Pun, writing at Wired’s Innovation Insights, puts iBeacons in their proper perspective. His take is that iBeacons have tremendous potential, but must be used carefully by retailers. The bottom line: What may seem cool to a company may seem creepy to somebody walking down the street.

The technical challenge was reported upon at GigaOm. Testing done by Aislelabs found that these services significantly drain batteries. The problem is that devices constantly search out beacons with which to connect. That takes power. As beacons proliferate, the strain will increase as each makes demands on the phone’s battery. A lot of variables affect just how severe the drain is:

So newer devices are affected less than older devices, and it’s possible to find settings that draw a solid compromise. Still there are conflicting interests involved: a beacon that pings more often is better able to accurately guess physical location, but kills phone batteries. More beacons can provide better personalized shopping experience and more useful information for retail marketers, but more beacons consume more energy on consumer devices.

If history is a guide, it is unlikely that the effect of beacons on battery life will be a deal breaker. Ways will be found to deal with the issue. It is something with which chip makers, vendors and service providers must deal, however.

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