Proximity Marketing, Mobile Payment, Navigation iBeacons: Simple Technology with Potential

Since Apple mentioned iBeacon for the first time in 2013, the Bluetooth LE-based technology has been on everyone's lips. At present, above all, it is applied in marketing. Despite – or perhaps precisely because of their simplicity – iBeacons might well conquer other domains of the mobile world.

You enter a shop and are welcomed in person on your smartphone. You are standing in front of a shelf of breakfast cereals and your smartphone informs you about special offers and provides tips for breakfast. How come? An app on your smartphone has noticed iBeacons, little transmitters in plastic boxes which are mounted at the entrance and fixed to the shelf.

How does it work?

Just like beacons or a lighthouse, iBeacons send out signals at regular intervals. And that is all they do and all they can do. The signal contains a unique identification composed of three parts: the proximity UUID, a major and a minor code. The app on the smartphone recognizes in consultation with its backend system/server, whether the signal origins from an iBeacon that belongs to the app's vendor – usually based on the proximity UUID – and, if yes, at what location it is (major code) and which object or product (minor code) the iBeacon represents. In addition, the strength of the signal allows the app to detect how far the iBeacon is from the smartphone. This works up to a distance of approx. 70 m (signal range) and at close range to a precision of approx. 5 cm. If the app picks up signals from at least three iBeacons simultaneously, it can calculate the position of the smartphone by triangulation. For the smartphone to pick up iBeacon signals in the first place, the user needs to allow it to use location-based services and have the matching iBeacon app installed.

Endless uses

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iBeacons: communication logic

What can you do with iBeacons? So far, the technology is used in marketing in accordance with the expected ROI, e.g., proximity marketing: according to position and profile, customers are provided with product information, loyalty points, vouchers and shopping tips (cross-selling, upselling); their attention is drawn to products they are looking for and have entered in their online shopping list (live watch list alerts).
Already these ideas are not only interesting to retail or commerce. Museums, for example, can provide something like an exhibition catalog with descriptions and additional multimedia information for their visitors in the desired language.

 

The application fields tracking and indoor navigation, for which iBeacon was originally planned and defined as a standard by Apple, are also interesting. They let you identify which route customers take within the shop and which offers are attractive to which customers. Vice versa, an iBeacon app can guide visitors as personal shopping assistant or museum guide through the location. Visually impaired people may find such offers particularly helpful.


Organizers of big events also take advantage of these features. Major League Baseball in their US stadiums, for example, offer first time visitors hot-dog vouchers and navigation to their seats. In addition, it would be possible to guide visitors to the food stand with the shortest waiting queue or improve event security by real-time monitoring and management of the influx of visitors.

At ATMs also, iBeacons may help improve security. If the smartphone belonging to the card holder is located directly in front of the ATM, it is highly probable that it is him- or herself who withdraws the money and not a fraudster who stole the card or its data.

The start-up Tzukuri pursues a useful idea for a completely different usage. Thanks to spectacle frames with an integrated iBeacon, the smartphone notices when the owner is further away from his or her glasses than usual and shows the location of the glasses on a map.

Not least, iBeacons lend themselves also to mobile payment. Paying in a shop could be imagined in two different ways: The customer can be registered already at the shop entrance (store check-in) and is displayed on a list, possibly with a photograph, to the sales person at the cash register. Like this, the customer can be tracked and guided, and the sales person can debit the merchandise at the cash register after the customer confirms the purchase on his or her smartphone.
Alternatively, iBeacons may be mounted only at the cash register and initiate the payment process when the customer steps up to the counter and presents his or her smartphone (tap-to-pay). Regarding privacy, of course, this is the more attractive scenario for the customer.

How secure?

À propos payment, how is it with iBeacons and security? To begin with, iBeacons have an advantage over other technologies because they transmit no critical information. They never host information about the provider, the position, the product or the smartphone owner, i.e., there is nothing to be intercepted. A possible issue is just the fact that they constantly send out their identification unaltered and readable for everybody. Attackers might pick up the signals and play them back again elsewhere at their leisure. Like this, somebody could gain by trickery, e.g., bonus points from a shop. Or they could interfere with the navigation in a building by differently positioned copies of iBeacons, which may well be critical at train stations and airports. In addition, "cuckoo" iBeacons in a shop could point to offers of competitors. Hardly any competitor would dare this though. It is more likely that a hijacking app, e.g., a price comparison app, brazenly reacts to iBeacons of a vendor by comparing prices or presenting competitors' offers.


If iBeacons need to be distinguishable from copies, you can use so-called hybrid iBeacons that are able to receive and process information. Such devices can, e.g., send back a response to a challenge from a smartphone or forward a one-time password from a backend server as minor code to the smartphone, and thus considerably improve security.

Nothing works without the customer

The much larger challenge for beacon technology, however, is to win smartphone owners' acceptance. They need to actively enable their smartphones and install the corresponding apps. Of course, this can be promoted with monetary incentives. But key will be that overall the advantages prevail for the iBeacon apps' users, and that they receive information that is useful to them.

Good chances for success

A credit for iBeacons, apart from their explicit simplicity and low manufacturing costs (approx. 10 USD/piece), is that their proximity technology is the first to be supported by all important mobile platforms. The iBeacon standard is based on the Bluetooth Low Energy (BLE) standard. Thus iBeacon signals can be received by all BLE-capable devices1 with corresponding OS2, i.e., by presently approx. 80% of all smartphones in Switzerland. Together with the much larger range, this is a considerable advantage vis-à-vis the quite a bit older NFC technology, which is an alternative to iBeacons in some areas but is not even supported by 50% of the Swiss smartphones.


Because smartphone owners can decide for themselves whether and which iBeacons they want to listen to (opt-in), and because iBeacons don't save any user data, they are a consumer-friendly concept. It is important that vendors respect the user's need for quiet and privacy also in their applications and systems. If this is the case, the new technology has good chances to gain wide acceptance.
 

1 from iPhone 4s, Android devices (new generation), BlackBerry (new generation), Nokia Lumia

2 from iOS 5, Android 4.3, BlackBerry 10, Windows Phone 8