One of the biggest Apple
(NASDAQ:AAPL) innovations in development right now is iBeacon, the company's answer to near field communication (NFC). The Apple iBeacon is a small wireless device that uses Bluetooth low-energy technology to detect and communicate with iPhones within a range of 160 feet.
Essentially, it functions like an ultra-precise indoor GPS system that businesses can use to engage with customers in various ways. For example, once a potential customer and her or his iPhone comes within the range of a retailer's iBeacon, the retailer can transmit a coupon to the iPhone to encourage the customer to stop in. If this succeeds and the customer enters the store, the iBeacons (they are sold in a set of three) can triangulate a customer's exact location within a store and send specific promotions based upon which products the consumer is closest to.
The technology was touched upon by Apple at the company's World Wide Developer Conference in June, and it had not received any major reveals or keynotes from the company until iBeacons were deployed in Apple's 254 US retail stores on December 6. With speculation mounting that the technology could make retailers a lot of money, and with a lot of coverage from tech writers like myself, interest in beacons has been growing. As Apple does not have patents on the technology involved in the creation of its iBeacon, competitors are coming forward with their own beacons.
(NASDAQ:QCOM) has just announced its own line of the technology: Gimbal proximity beacons. Qualcomm's beacons function in much the same way, but with one significant difference: They will work with both Apple's iOS and Google's
(NASDAQ:GOOG) Android. As Apple is unlikely to offer functionality on Android with its iBeacons, and more phones run Android, this would give Qualcomm's Gimbal a considerable competitive edge. (According to ComScore's latest mobile phone market share report
, Android commands 52.2% of the US mobile phone market, while Apple's iOS holds 40.6%.)
Qualcomm is also competing with Apple on the price of the devices. As Rocco Fabiano, President of Qualcomm Retail Solutions, said in a press release
on Monday, "Given the affordable pricing of the beacons, retailers and venue operators can install a network for customer engagement that is both more accurate and less expensive than other location-based systems.”
According to that press release, Gimbal devices are available to retailers for as low as $5 for the smaller Series 10 beacon, or $10 for the more powerful Series 20 (the pricing further depends upon order volume). Meanwhile, it has been reported that Apple will sell a set of three iBeacons for $99. Cheapest of all, NFC sticker tags are sold for about $1 per sticker.
Given that cheap NFC technology was never widely accepted by retailers, more expensive beacon technology will certainly have to prove itself as a viable resource for retailers. Moreover, Apple will have to prove that it offers retailers a premium product, because the Gimbal beacons are already much less expensive and, with its Android functionality, can target more shoppers than the iBeacon can.
Apple, Qualcomm, and PayPal
(NASDAQ:EBAY), which introduced a similar Beacon product back in September, certainly all believe they have a disruptive technology on their hands. Will retailers, and most importantly, consumers, agree?
For more on Apple's iBeacon, please read The Biggest iPhone 5S Feature Nobody's Talking About
by my colleague Mike Schuster.
Follow me on Twitter: @JoshWolonick and @Minyanville
No positions in stocks mentioned.