Large-scale Deployments Increase Growth Potential for BLE, iBeacon

by Kathryn Nassberg | 01/31/2014

Bluetooth Low Energy (BLE) technology is poised to revolutionize consumer in-store experience in 2014, further augmenting already existing mobile retail applications. VDC research from last year revealed that 23% of retail organizations had rolled out mobile applications to supplement their current in-store services, and that an additional 42% planned to deploy mobile applications in 2014. BLE technology, like that of Apple’s iBeacon, strives to address this gap with increased location and engagement services by allowing devices to communicate directly with one another.

A cheaper, more precise way to engage consumers

BLE represents a drastic improvement from existing solutions like Near Field Communication (NFC) and GPS-based geo-location. Bluetooth beacons eliminate the need for close proximity for interaction between devices by vastly increasing the data transfer range from the current distance of 8 inches to 150 feet, and at a much reduced cost. Additionally, BLE has a greater potential consumer reach, as all mobile devices come equipped with Bluetooth capabilities, instead of requiring a specific installation, as is the case for NFC. The greater range and improved precision also allows for retail stores to use micro-triangulation services in-store to improve both analytical capabilities and in-store promotions, creating endless opportunities for personalized marketing strategies on an individual level. Consumers who opt in will be able to view information such as reward points, daily deals, and history of purchases upon entering a given store. Such interactions have the potential to increase both consumer spend per visit and overall brand loyalty.  As of January 2014, a handful of companies have begun trial runs for BLE technology, with Macy’s, American Eagle Outfitters, and Safeway Supermarkets all running iBeacon in select stores across the US.

iBeacon goes mobile

Other companies are looking to take the new technology out of the store and onto the road. This week, smart driving assistant maker Automatic announced its device, which plugs directly into a car’s data port will now support iBeacon, representing one of the largest BLE beacon deployments to date. Automatic speculates the roll out will transform the traditional iBeacon retail framework to provide their users with similar automotive services such as pay for parking, gas, or automatic alerts as they drive. If successful, this could help pave the way for greater integration of BLE as a payment solution, boosting acceptance for other POS solutions, like that of PayPal, which was announced in September of last year, but has yet to gain widespread adoption.   

BLE is lucrative, but barriers remain

While many of the advantages that BLE offers revolve around its energy efficiency and potential reach, these strengths are tempered by existing barriers to adoption. Although the energy requirements for businesses deploying BLE are low thanks to its design (the technology can run on coin-cell batteries for months or even years), this is not the case for mobile device users, who frequently keep their Bluetooth capabilities switched off to conserve battery life. VDC estimates that only small fraction of device users keep theirs switched on. Another barrier is the limited access for Android devices and even Apple devices to a certain extent. BLE’s current reach within the Android ecosystem is severely limited (the technology requires Android 4+) and Apple’s reach is not as pervasive as believed: only iOS devices from the 4S generation have the same capabilities. However, with the imminent launch of Android-based Datzing as an Apple competitor that can function on older phones, Android’s present gap in this market could narrow significantly in the year to come. Barriers also remain on the enterprise side, as BLE in its current incarnation requires individual apps. Currently, there is no central iPhone app to interact with retail beacons using iBeacon. For businesses that already have mobile apps, this presents less of a limitation, as the functionality can be added, but for firms, a dedicated app will need to be designed to capture the benefits of the new technology.

Privacy remains a primary conern

One of the remaining hurdles that BLE technology will need to overcome is the most pressing of them all: that of privacy. Right now, beacon technology is based on company-specific applications that require opting in. However, the question remains whether, despite the current opt-in setup,  users will want businesses to know their every step and whether payment software can be trusted to charge the correct amount to a customer’s  credit card. More importantly, the issue remains as to whether BLE can succeed given the current environment in which revelations of security breaches like that of Target are becoming increasingly prevalent. Additionally, there are growing concerns surrounding data collection and overall privacy that many companies will need to address in order to allay consumer fears. VDC believes that the inherent effectiveness of the technology has tremendous capacity for consumer buy-in and will likely overcome most concerns surrounding privacy and security, but firms will nevertheless have to work to earn and keep consumer trust as BLE continues to gain traction. 

(By Kathryn Nassberg.Research and written contribution by Katelyn Moroney, Research Intern for Mobile and Wireless)