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Target Corporation Experiment Could Bring Apple Inc iBeacon Mainstream

By Andrew Tonner – Aug 16, 2015 at 4:30PM

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After years of waiting, Target's important trial with Apple iBeacon technology in-store could finally bring this potentially game-changing standard out of the cold.

After briefly capturing the attention of the tech world two years ago, Apple(AAPL 0.23%) iBeacon technology quickly faded from the discussion of potential growth drivers for the world's largest publicly traded company.

However, this largely dormant technology resurfaced again recently when retail behemoth Target (TGT -2.56%) announced a pilot beacon program, and Target hopes Apple iBeacon software will help finally allow this still-promising standard to eventually go live across its entire retail empire.

What exactly is an iBeacon?
For those unfamiliar, Apple unveiled a new communication standard it named iBeacon at its 2013 Worldwide Developers Conference. However, in popular usage, the term iBeacon causes confusion at times because people, and even Apple itself occasionally, use it to refer to both the hardware and software aspects of the technology.

Technically speaking, though, iBeacon refers to Apple software that helps iOS users connect to third-party beacons deployed in some real-world settings, such as a Target retail store.

In terms of their practical application, beacons effectively create a connected network of sensors within a given space that enable companies to monitor where and how consumers navigate through their stores. In theory, these beacons benefit both retailers and consumers by allowing the retailer to, for instance, alert a customer of a deal on a nearby product as they flow through the location, driving incremental revenue for the retailer, while also allowing consumers to save on products that interest them.

Apple's embrace of the standard two years ago triggered widespread discussion that beacons held the potential to revolutionize a host of consumer experiences including retail, healthcare, education, hospitality, tourism, and more. In fact, in anticipation of what many believed would be a coming boom, a host of beacon manufacturers have launched in the past several years, including better-known names like Estimote, BlueCats, Bluesense, and Gimbal (owned by Qualcomm).

The standard quickly faded from popular focus in the intervening years, although Target's upcoming experiment certainly revived at least some optimism that iBeacon, and the technology overall, might finally begin to realize the potential so many saw in it.

Targeting Apple iBeacons
According to a number of reports, Target plans to deploy beacons in-store at 50 locations throughout the country. Given the great popularity of Apple iPhones in the U.S., the iBeacon software will provide a critical link between many Target customers and the in-store beacons.

The idea initially failed to gain traction, because consumers needed to have a particular app downloaded on their smartphones and have location services enabled in said app to begin interaction with beacons. Reportedly, Target will also require users have the latest version of the Target iPhone app downloaded in order to receive special offers and other notifications through iBeacon.

Target has pledged to limit the number of notifications and alerts users receive to a maximum of two per visit to avoid disenfranchising users over the long-term.

Bigger picture, Target plans to improve the service as it gains additional insight into consumer engagement habits ahead of a planned national rollout of the technology later this year. At least to an extent, it appears the iBeacon may soon have its moment in the sun.

How does iBeacon benefit Apple?
To be honest, the Target and iBeacon storyline yields no direct financial benefit to Apple or its investors. However, Apple's position as the go-to standard for this emerging technology still matters for at least one intriguing reason that I can see.

Much has been made about beacons and their potential within the broader context of another overused tech buzzword: the Internet of Things. Apple clearly sees an opportunity within the IoT space, having launched its own in-home IoT operating system, HomeKit, last year. If the Apple iBeacon can serve as a software and connectivity platform akin to a public version of HomeKit, then iBeacon could grow to become an important piece of the Apple ecosystem in the years to come.

Again, iBeacon as an IoT platform lacks a direct monetization component. However, positioning itself as standard for what many believe will become technology's next massive growth market should help keep both users and developers engaged on Apple's ecosystem, which will indirectly drive hardware sales for the company.  

Either way, the iBeacon storyline remains very much in its nascent stages. However, if Target can successfully prove the concept on a national level, the retailer could help bring this standard mainstream, which will hopefully benefit consumers and Apple alike.

Andrew Tonner owns shares of Apple. The Motley Fool recommends Apple and Qualcomm. The Motley Fool owns shares of Apple and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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