Now that the long-rumored "Touch ID" (fingerprint sensor in the new iPhone 5S following the Authentec buyout by Apple) is reality, some analysts and AAPL watchers see the longer-term potential for
- personal identification
- transactions of all kinds (data exchange, payments, physical access)
So far so good.
Transactions with "Touch ID" are just working on iTunes for the time being, third parties don't have access (yet). A middle ground would be to enable the Passbook app with "Touch ID" support in the future.
But doesn't Apple still miss NFC for transactions? Haven't analysts clamored for years that Apple should (finally) add NFC chips to their phones?
NFC may work fine for payments and other use cases in proximity, i.e. very short distances, but not for everything else:
This year's WWDC (Apple's Developer Conference) news combined with the new "Touch ID" fingerprint sensor shipping in some of the new iPhones should finally provide an answer - enter iBeacons:
Apple's implementation works over a wider range in physical spaces with no quasi-physical access (ie. no direct NFC "bumps") required!
Rather than to rehash, I will link to this excellent article from GigaOM:
With iBeacon, Apple is going to dump on NFC and embrace the internet of things
Using Bluetooth Low Energy(NYSEMKT:BLE), iBeacon opens up a new whole dimension by creating a beacon around regions so your app can be alerted when users enter them. Beacons are a small wireless sensors placed inside any physical space that transmit data to your iPhone using Bluetooth Low Energy (also known as Bluetooth 4.0 and Bluetooth Smart).
For example, imagine you walk into a mall with an iPhone 5s (comes with iOS 7 and iBeacon). You are approaching a Macy's store, which means your iPhone is entering into Macy's iBeacon region. Essentially iBeacon can transmit customized coupons or even walking directions to the aisle where a particular item is located. It can prompt a customer with special promotions or a personalized messages and recommendations based on their current location or past history with the company. Smartphones that are in an iBeacon zone will benefit from personalized microlocation-based notification and actions.
In the age of context, iBeacon can provide the information you needed when it is needed. Just like NFC, iBeacons even allow you to pay the bill using your smart phone. The best part? iBeacon can run for up to two years on a single coin battery and it comes with accelerometer, flash memory, a powerful ARM processor and Bluetooth connectivity. Also, you can add more sensors to iBeacon to provide better context.
iBeacon could be a NFC killer because of its range. NFC tags are pretty cheap compared to NFC chips, but NFC tags are required on each product because NFC works only in very close proximity. In theory, NFC range is up to 20cm (7.87 inches), but the actual optimal range is less than 4cm (1.57 inches). Also, mobile devices need to contain a NFC chip that can handle any NFC communications. On the other hand, iBeacons are a little expensive compared to NFC chips, but iBeacons range is up to 50 meters. Not all phones have NFC chips, but almost all have Bluetooth capability.
AppleInsider was one of the first publications to discuss these options in June 2013:
This particular application makes iBeacons an extension of the geofencing Apple enabled in last year's Passbook, which lets an installed pass, ticket or loyalty card popup on the lock screen when you cross the geofence threshold of a defined GPS location. Using BLE, a merchant or other provider can define more targeted "micro-locations" to trigger an alert, in some cases requiring that you be in the presence of an iBeacon in order to validate a Passbook entry.
In short iBeacons is geo-fencing on a smaller physical scale than Wi-Fi or mobile tower triangulation. It's ideally suited for information access and mobile commerce in a shop, museum, cinema or similar locations - direct NFC "bumps" are no longer required, but iBeacons/BLE can also worky at very close ranges for payments. Apple apparently discussed three ranges at WWDC: Immediate (payments) - Near - Far.
Now go back and read all analyst reports on AAPL from the September 10, 2013 iPhone and the prior WWDC event. How many mentioned the word "iBeacons"?
To credit Seeking Alpha, there was at least one author casually mentioning iBeacons back in July 2013, but he seemed to have missed its impact:
The new iOS 7 will bring new features, such as iBeacons and even motion detection, but the most striking feature may unfortunately be the change in how the iPhone's default icons appear. This may not be enough to spur growth and excitement for the iPhone.
(I searched for "iBeacons" on the Seeking Alpha website as well as the professional analyst reports available to me. If you have professional AAPL analyst reports discussing iBeacons before September 2013, thanks for mentioning them in a comment below or in a message.)
Summary: In my view, the future potential of a fingerprint ID sensor in combination wth iBeacons/Bluetooth Low Energy has been missed:
Touch ID coupled with iBeacons could be the new Apple ID for the physical world in 2014 and beyond once it's available on all iPhones - this technology combo could be ideally suited for the rumored iWatch project as well (and possibly Touch ID buttons on Macbooks).
PS: I already mentioned iBeacons in my longer Instablog entry (Five Take-Aways from Apple's iPhone event) yesterday but opined the topic was worth its own blog entry - since 99% of analysts seemed to focus on shiny new iPhone 5C color patterns rather than iBeacons' potential.
Disclosure: I am long AAPL.
Disclosure: The author is long AAPL.