The “internet of things” (IoT) is the promise of everything around us being connected. One very cool technology that’s come about recently is the beacon. While the terms beacon and iBeacon are used interchangeably, Apple first introduced iBeacon technology in 2013. So what is a beacon or iBeacon?
A beacon is a very small device that contains a power source (typically a coin battery), a chipset, and an antenna to communicate with phones up to 230 feet away. We’ve probably all heard of Bluetooth, a communication protocol used for inter-device communication. Beacons cannot use Bluetooth, because it would use too much power. Instead, beacons are enabled by a technology called “Bluetooth Low Energy” (BLE) which has such low energy requirements that it can last up to 3 years on a single coin cell battery. Not only that, but it is also 60-80% cheaper than traditional Bluetooth. Here’s an idea of how small beacons are when compared to a $5 HKD coin:
For our readers who don’t know what Hong Kong currency looks like, a $5 HKD coin is about the same size as two U.S. quarters stacked. These very low profile beacons can be placed anywhere in a store and can communicate at a predefined proximity which can reach up to 230 feet for up to 3 years. Let’s take a closer look at a company called Estimote which just raised $10 million in seed round funding to help deploy this technology to some of the largest retailers in the U.S.
Founded in 2012, New York startup Estimote has taken in $13.8 million in funding with their Seed A funding round of $10.7 million closing just yesterday. Estimote has two product offerings; Bluetooth beacons (3 for $99) and sticker beacons (10 for $99):
So what value does iBeacon technology bring to your typical bricks and mortar retail store? Let’s first address the “Amazon will rule them all” myth which suggests that online selling will replace bricks and mortar retailers. It hasn’t even come close yet. According to A.T. Kearney, 90% of sales are transacted in physical stores. That’s a lot of shoppers that you can potentially communicate with based on their location within your store. Your initial thought might be to use beacons to “push” in-store coupons, but that’s just one possible application. Beacons can also be used to enhance the shopping experience by providing product information and recommendations to shoppers. You could use your smartphone to summon a customer service agent anywhere in the store, or even have a shopping list that re-sorts itself based on the path you are taking through the store, essentially guiding you to each product on your list.
That’s great. We can’t wait to watch everyone walking around in Target bumping their carts into each other with their faces glued to their phones. Go ahead and stand right there in the middle of the aisle with your cart blocking everyone’s way grandma while your face is buried in your iPhone trying to find out how to save 50 cents on your can of Pringles. Let’s hope all of these stores go “clicks and mortar”, and then we can just shop in the comfort of our homes and leave all that fun to everyone else.
Does anyone else think this will be incredibly inconvenient to the small majority while 95% of shoppers will think this technology is the next best thing since sliced bread? That’s our take on the future of beacon technology, so how can we invest in Estimote? At the moment, Estimote shares are privately held, and the company is in the early stages of investment rounds. Estimote isn’t the only player in town, and in a future article we’ll take a closer look at the many other players in this game that are trying to attack a relatively new market.
Beacons have a bigger battery and were designed for venues like retail stores, museums or airports. Stickers can turn things into “nearables” – smart objects fully detectable by your mobile device. So are retailers interested in buying this technology? They sure are. All kinds of retailers have began piloting beacon technology in their stores recently. TechCrunch has speculated that Estimote is the beacon provider to Target, and has been rolling out their innovative sensing technology to its 1,800 stores around the United States. While Estimote only has 45 employees, they claim to have over 45,000 smaller, developers toying around with their beacons which leads to constant product improvements and larger contracts within the retail industry. Estimote claims to be working with several of the top retailers in the U.S.
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