Apple Could Make a Killing on This Little-Known Device

The iPhone is getting stale, or at least, not expected to drive growth as smartphone penetration reaches its peak. Unless consumers start carrying around two iPhones, investors are still waiting for Apple  (NASDAQ: AAPL  ) to come up with the next profit-driving monster.

Many think this might be a role for the rumored iWatch. However, at an estimated selling price at half of an iPhone, around $300, and a consumer interest yet to be confirmed, especially based on sales of early Samsung smartwatches, the iWatch might not live up to expectations.

But, one device that links up with iThings anywhere just might give Apple an iPhone-sized financial boost: an iBeacon transmitter for every home and business.

iBeacon possibilities. Source: Estimote.com.

iBeacon
Imagine walking past the grocery store and receiving a notification of a sale on your favorite brand of cereal. Or, after sitting at a bar for an hour, receiving a coupon for your next round of drinks. Or, leaving a clothing store and automatically being charged for the items that you ordered to fit. iBeacon can do these things with low-energy Bluetooth technology, or BLE.

As opposed to NFC, which requires a distance of about four inches between devices in order to communicate, iBeacon and BLE can be broadcast up to 150 feet. This makes the possible applications much broader. For example, the NBA has used iBeacon to offer upgraded seats closer to the court to fans in cheaper seats.

Apple-made or licensed
Apple introduced iBeacon in 2013, and recently came out with standards needed to earn consent for use of the trademark. There are many variations of iBeacons that third-party manufacturers have designed, like Estimote's rock-shaped transmitter, or the more utilitarian AIRcable USB dongle.

Estimote's iBeacon device. Source: Estimote.com.

AIRcable iBeacon USB dongle. Source: aircable.net.

However, a more Apple-esque design might come from the company. According to FCC filings, Apple has tested an iBeacon transmitter that it would manufacture itself.

Diagram from Apple FCC filing. Source: FCC.

How much could Apple make from its own iBeacons?

Apple iBeacon potential
Estimote sells three of their beacons for $99. This means that while the selling price of any Apple-made iBeacon would be low, especially compared to an iPhone, there's a chance for massive volume. Unlike a phone, which a consumer typically buys only one of, or a smartwatch, which the average consumer might have a hard time justifying buying any, the Apple iBeacon could sell many units per customer. And while it seems like businesses would be the first to utilize iBeacons, consumers just might be as keen on the technology as Apple comes out with its home automation software, HomeKit.

If Apple wins the standard in geographic-oriented mobile alerts, the potential benefits would be incalculable. It would strengthen the already strong ecosystem of iOS devices, place multiple Apple devices in one business or home, and strengthen Apple's positioning around payments, where it could take a cut from iBeacon-related purchases.

Apple will need to fight its competitors to win this space, of course. While Google's push with NFC payments seems to have stalled, making up 2% of global payments in 2013 with expections of only 5% in 2017, it has since pivoted to champion similar Bluetooth technology it calls Nearby.

A smartwatch may nudge revenue forward for Apple, but iBeacon holds a revolutionary industry in its radio waves.

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Read/Post Comments (11) | Recommend This Article (16)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 15, 2014, at 10:15 AM, twolf2919 wrote:

    While, unlike the iPhone, Apple may be able to sell multiple iBeacons to each customer, the customers are businesses - and there are a couple of orders of magnitude fewer businesses than there are smartphone customers. Combine that with the low cost of an iBeacon (you mention $99) and I don't see Apple making much money - much less a "killing".

    You do say that Apple could sell this to consumers instead of businesses. For businesses, you gave a use case - but for the consumer, you do not and merely mention "Home Kit" - as if that explained everything. It does not! Please give an example of a useful application of a standalone "iBeacon" device in the home! There isn't really one. *Especially* not in the decentralized architecture promoted by Home Kit. In a HomeKit world, each device (e.g. the outside "smart" door lock) would notice you approaching (perhaps using iBeacon tech) and unlock the door. An indoor light switch might detect your approach to turn on the lights. And you might be able to control either from your smart phone if you're in a different room.....none of these use cases requires a standalone iBeacon device.

    So this article makes no sense.

  • Report this Comment On July 15, 2014, at 12:49 PM, pondee619 wrote:

    "Imagine walking past the grocery store and receiving a notification of a sale on your favorite brand of cereal"

    just what everyone needs or wants. To be constantly bombarded with ads for stuff we may not need (at that time) may not want or may not afford, not at a time of our choosing but at the time of the merchant's choosing. WONDERFUL! Walking down the boulevard with my favorite squeeze and as we pass the local CVS an ad for condoms pops up on my phone.

    As I go through the store all of my compulsive picking ups get charged to my account without the benefit of a check out line review.

    "BLE can be broadcast up to 150 feet": I guess I can forget my favorite tunes on the radio as the bluetooth monster will cut in with any manner of interruption imposed by a seller of something as I drive by.

    A population that fights so loudly over its "privacy" sure does seem willing to give it up over the thought of a possibly missed "bargain".

    More noise, more interruptions, someone else knowing exactly where I am at any point in time, what I'm buying, what i'm drinking, what i'm eating etc. (if it knows who I am, where I am and what I'm buying, it can report that to anyone (hacker or authorized). NO THANK YOU.

  • Report this Comment On July 15, 2014, at 3:56 PM, twolf2919 wrote:

    @pondee619,

    You do realize that you can disable this (or, perhaps it's disabled already by default as Apple does with the "Frequent Locations" feature)?

    Unlike Google, whose success depends on knowing as much about you as it possibly can, Apple doesn't care how or whether you use the feature. It sold you a phone that's capable of doing all these things - some may be interested in getting coupons as they go into a store - but you don't have to use the feature. I'm sure there are other features of the phone you don't use either. It's up to you.

    Not sure if your rant was serious, but in case it was - your observation about getting charged without the "benefit" of a checkout line "review" - you're one of the few folks who would label a checkout line as a "benefit". But, again, all you have to do is turn the feature OFF if you don't like it.

    This feature (BLE) has other applications than the ones you mention - it'll help in home automation, for instance.

  • Report this Comment On July 15, 2014, at 4:29 PM, pondee619 wrote:

    towfl:

    You have never seen the pile of picked out, yet unpurchased, goods at the check out line of stores?

    Someone will be using the info we give out using the function. I find it surprising that in a nation of people who claim to vaule thier privacy, this is viewed as a positive.

  • Report this Comment On July 15, 2014, at 5:41 PM, twolf2919 wrote:

    @pondee619,

    Your concern about privacy is about 10 years late. You do know that Google ingests/processes *everything* you do on its services, right? Right down to every single e-mail you receive or send (as an experiment, try sending out an e-mail that mentions lawn care and see how long it takes for your Google side-bars to mention Home Depot.) But nobody forces you to use gmail, right? It's a bargain you entered willingly - the benefits of a single mailbox were worth the lack of privacy to you.

    That's my point. You always have a choice. Apple will ask you whether you want to turn on iBeacon when you install iOS 8 - just like it's currently asking you whether you want to give location information access to an app that requests it for the first time. If you don't want to give stores the ability to 'see' what you've purchased using iBeacons because you think it's an invasion of privacy - don't turn it on! But, just as with gmail, there will be lots of people for whom this loss of privacy is more than offset with the benefit of not standing in line.

    As an aside: you know the checkout counter you've been using for a few decades and the store card you always hand over to get the better price on some items? You do know that the store ties everything you've just purchased to the store card - so they already know everything you purchased! You lost your privacy a long time ago - you just didn't realize it.

  • Report this Comment On July 16, 2014, at 9:50 AM, pondee619 wrote:

    You missed my point. I'm not complaining on a personal level. I'm fully aware that these things can be turned off, not used or otherwise avoided.

    My point has always been, as stated above, that I am surprised that a nation of people who fight and claim so loudly, try to defend and protect, their privacy and right thereto, so readily give it up to someone who only want to sell them something and , possibly, by extention, to everyone in the world.

  • Report this Comment On July 16, 2014, at 10:37 AM, twolf2919 wrote:

    And you apparently miss my point:

    Why are you surprised at all?

    Yes, people fight (not so much in US, more so in Europe) to protect their *right* to privacy. That simply means that an individual should be able to decide what happens to his/her private information - the decision to share it should not be in the hands of other individuals, companies, or governments.

    But people can choose to share their private information in return for goods and services. People have done this for ages in the form of the aforementioned grocery store cards: in return for getting discounts on your groceries, you let the grocery store track your buying habits and, potentially, send you ads. Google is the biggest, most extreme case of this bargain: in return for free gmail, google searches, etc., you agree to let Google slice and dice your personal information in order to send directed ads to you.

    In other words: iBeacons adds nothing new to the privacy discussion. Therefore, you should not be surprised now.

  • Report this Comment On July 17, 2014, at 5:55 PM, contactcardme wrote:

    I'm with pondee619. The iBeacon idea just doesn't scale. It's analogous to email spam. 90% of all email is unsolicited attempts at selling us something we don't want.

    I understand that you have to open an app and opt-in. Guess what.. This presents and opportunity for the super apps like FB to sell iBeacon impressions to advertisers. One way or another iBeacon spam is going to reach us.

  • Report this Comment On July 17, 2014, at 6:16 PM, contactcardme wrote:

    One more opinion: Nobody is going to buy a standalone iBeacon device. Why not? Because our smart phones can turn into iBeacons. It is called BLE Peripheral Mode and every app that wants can broadcast iBeacon advertisements.

    Like twolf2919 observed: There is currently no use case. Even if someone comes up with one, Gimbal sells their beacons for $5. Nobody will ever pay $99 for a standalone iBeacon. Apple better keep looking for the post iPhone killer device. It's not iBeacons.

  • Report this Comment On July 17, 2014, at 6:17 PM, contactcardme wrote:

    One more opinion: Nobody is going to buy a standalone iBeacon device. Why not? Because our smart phones can turn into iBeacons. It is called BLE Peripheral Mode and every app that wants can broadcast iBeacon advertisements.

    Like twolf2919 observed: There is currently no use case. Even if someone comes up with one, Gimbal sells their beacons for $5. Nobody will ever pay $99 for a standalone iBeacon. Apple better keep looking for the post iPhone killer device. It's not iBeacons.

  • Report this Comment On July 19, 2014, at 6:10 PM, Mathman6577 wrote:

    The agreement forged between IBM and Apple might open up a brand new market for Apple devices: the enterprise. It could be big too.

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