The global iBeacon market was valued at $0.4 million in 2014 and is forecast to reach $97.7 million by 2019, growing at a CAGR of 200.3%, says Technavio.
The world is undergoing a third industrial revolution with the development of smart infrastructure built around the Internet of Things (IoT). iBeacons—Apple’s answer to Bluetooth low energy (BLE) technology—provide location-based information and alerts to nearby iPhones and other iOS devices using small, inexpensive Bluetooth transmitters.
These devices are facilitating an evolution of contextual marketing, thanks to the widespread use of Apple products like iPhones and iPads, which has created a built-in user base. And with prices expected to drop in coming years, iBeacons are being tapped as a technology that might replace other location-based technologies like NFC.
Rise of proximity-based marketing
Retail is, by far, the biggest iBeacon end-user. And for good reason— iBeacon technology is demonstrably increasing retail app use through mobile advertising. It is helping enterprises interact better with customers, sell more products, build brand loyalty, increase customer retention, improve the customer experience, and ultimately build customer advocacy.
iBeacons also facilitate proximity-based marketing, which targets customers with promotions based on their shopping history. For example, a frequent shopper in a clothing store can be shown ads based on their history with that store, or a consumer who lingers by a certain shelf would be sent promotions applicable to those products.
Privacy issues and proprietary nature of iBeacons will be issues to watch
Despite the skyrocketing growth rate, the introduction of iBeacons hasn’t been without its challenges.
Even though targeted, tailored advertising might seem like a dream for advertisers and retailers, getting constant notifications (sometimes without permission) can grind on consumer.
In the US, the Federal Trade Commission settled charges against Nomi Technologies Inc. for its in-store tracking systems. Nomi had collected the media access control addresses of over nine million devices, while its opt-out mechanism could be activated only by visiting the company website — it could not be deactivated in-store.
Similarly, the Privacy Commissioner of Canada also reached similar conclusions when a telecom operator used online-tracking-based technology to display ads while leaving the opt-out instructions vague. The Federal Trade Commission also took a stance that online data mining is opaque and leads to unfair financial treatment of customers.
The lesson here is that retailers have to provide an easy, transparent opt-in/opt-out policy if iBeacons are going to see significant buy in from consumers.
But privacy issues are hardly the only barrier to iBeacon market dominance. The introduction of Eddystone, Google’s open source, cross-platform answer to iBeacon will also present a significant challenge to Apple’s standard over the forecast period.
Like everything Apple makes, iBeacons are proprietary and only work with other Apple technology, whereas Eddystone can be used with all devices, making it a much more flexible option.
According to a recent article from Ars Technica, only opening iBeacons to iProduct users “means it’s cutting out half of the US smartphone market and 80 percent of the worldwide smartphone market.”
This is no small beans in such a competitive market.
These concerns will remain relevant for both consumers and vendors in the market through 2019. However, the massive untapped potential of iBeacons will give the technology the leverage it needs to capture the hearts and minds of retailers and shoppers, and continue to grow through the forecast period.
Want more? Check out Technavio’s new report on the global iBeacon market.
