Apple iBeacons Poised To Legitimize Hardware-Based Indoor Location

Nov. 7.13 | About: Apple Inc. (AAPL)

Apple (NASDAQ:AAPL) has a fascinating way of coming into a new area, developing a device or feature that has been done before but never achieved mass-market adoption, and being the first to bring this new device or feature to the masses. Sometimes they manage this because they implement the device or feature better than others, sometimes it's because they introduce their own new twist, and sometimes it's just because they're Apple. But the power of Apple to legitimize an already existing area when they enter it is seen time and time again.

The early iPods brought a revolution to the music industry, but there were MP3 players from companies like Creative (OTCPK:CREAF) for years before the first iPod was launched. But these early MP3 players remained an early-adopter curiosity until iPods came on the scene. Part of this was bundling the device with a music store, part was the wheel-like user interface, but a lot of it was just Apple's flair.

The story repeats itself. Many tablets were on the market before the iPad, but only since the iPad's launch was the device category successful. As long as Apple offered only the big-sized iPad, smaller-sized tablets from other companies failed to get traction, but as soon as the iPad Mini was launched, smaller tablets were in. Sony (NYSE:SNE) and Samsung (OTC:SSNLF), along with numerous smaller companies, launched smart watches, and the pundits focus on whether there is truth behind rumors of an iWatch.

A few months ago Apple launched a new concept that they called iBeacons. iBeacons are Apple's biggest foray to date into the growing area of indoor location services, and are aimed directly at one of the lucrative segments of this area, namely retail in-store mobile applications.

What are iBeacons? In a nutshell, an iBeacon is a device that is positioned inside a store, either at the entrance, at the cashier, or at other significant places in the store. When an iPhone enters the range of the iBeacon, such as entering the store, approaching the check-out, or going close to a particular product, the store's app on the iPhone automatically wakes up and does something appropriate for that location.

What Apple has done is enabled apps on iPhones and iPads to monitor regularly when they've entered the range of a iBeacon. This expands on Apple's support for GeoFencing applications, which activates apps when entering a outdoor GPS-based area, called a GeoFence. In a nutshell, iBeacons take Apple's GeoFences indoors. GeoFencing applications are an area that Apple is taking seriously.

BLE-based beacons have been in the market for a while. Start-up companies like Estimote and WiseSec are commercializing BLE technology for indoor location services, and start-ups like PoleStar, SenionLab and Insiteo have integrated BLE beacons with their other indoor location technologies.

Until now, however, many big malls, exhibition centers and other indoor sites have been hesitant to invest in radio beacons to put around their site, opting to deploy indoor location apps based purely on software technologies. While these have worked in many sites, they often don't work on iPhones, and often don't deliver location positioning as accurately or reliably as people are used to having outdoors.

What Apple is poised to do is legitimize, so to speak, the use of new hardware beacons in indoor locations for the purpose of location-based applications. Until now, deploying new hardware around a site was considered an extra, and maybe avoidable, expense. But if Apple is promoting iBeacons, then hey!, doing so is "normal."

Once deploying hardware beacons for indoor location-based applications is accepted, the floodgates will open for companies that are taking this technology to the next level.

In addition to the companies list above who are bringing BLE beacons to market, other companies are working on wireless technologies that can do distance and location measurements much more accurately and reliably than Bluetooth. One candidate is ultra-wideband, UWB, which transmits data in a manner that supports more accurate and reliable distance and location measurements. DecaWave has just launched a chip based on the 802.15.4a protocol, and BeSpoon has just demonstrated their UWB chip. At the same time, Quuppa is building next-generation highly accurate location technology based on BLE.

Interestingly, Apple themselves have not yet iBeacons for indoor location positioning, where a device's location can be tracked step-by-step as it moves around a site. To date, they have focused exclusively on the GeoFencing discussed above. But Apple did buy WiFiSLAM earlier this year, so indoor location positioning is clearly something that they take seriously.

Regardless of what iBeacons can actually do right now, and whether Apple will sell them directly, it's important that Apple has bestowed their unique blessing of legitimacy on indoor location beacons. The biggest beneficiary of that blessing will be the small companies bringing beacons to market, particularly those who are developing the next generation of accurate and reliable indoor beacons, or integrating beacons into indoor location solutions.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: I wrote this article myself, and it expresses my own opinions. I have no business relationship with any public company whose stock is mentioned.