Euromonitor Interview Series: The Rise of Beacon Technology and Prospects of it Displacing NFC (Part 1)

Euromonitor International is pleased to present an interview with an executive of Estimote, a US-based start-up that creates small, wireless sensors known as beacons that use Bluetooth Low Energy (BLE) to detect the location of nearby smartphones. Euromonitor’s Consumer Finance Analyst Michelle Evans had a recent conversation with F. Mark Modzelewski, senior advisor to Estimote, about the fast-rise of beacons and the potential loyalty and payments applications. In the second part of this interview to publish next week, the two will discuss the possibility of BLE displacing NFC technology.

Euromonitor: What was Estimote’s original vision for the product?

The original concept was really about retail. We wanted to do a better version and less-expensive version of NFC and really work more from a consumer environment side. We were looking at how to empower consumers within an indoor environment from a mapping sense. That idea really grew much bigger to the point now that it is really viewed as a platform that creates any interaction at that close level whether it’s in a retail environment, the medical environment or some other type of infrastructure. Now you are really talking about something along the lines of an operating system for the physical world.

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How do Estimote beacons work?

Basically, most smartphones are now coming standard with a Bluetooth Low Energy chip. That was really the big change in empowering this technology. By putting these Bluetooth Low Energy sensors in the environment, you could instantly create that connection. That’s really been something that has only been available for the last year and a half. The new iteration that just came out with the new iPhones and will be available in the next set of Android phones is a better version that makes it significantly easier to put a platform on top of it.

What are the potential applications of Bluetooth Low Energy?

A great example is if you were at a shelf and you were looking at different types of colas and you choose brand B as opposed to brand A, Brand A could instantly coupon you and say, “We will give you 20% off, if you pick us instead.” It would know your body position and where you were standing within an aisle. A company could know you were standing next to a rival product instead of their own. That would be a small example of something that could be done relatively easy. There’s a lot of ability and knowledge that it can give someone. The technology can pinpoint down to a little less than two inches.

What are the potential payments applications?

The term that is generally used is corralling. You almost want to think of it like there’s almost an invisible fence. When you pass through that, it can instantly activate the sensors that would be directly on products and it would be able to send an instant payment. Once a product has an individualized beacon on it, it could do an instant payment. I don’t think anyone is ready to go there right now. They are just trying to do some of the basics, but I would point out that there are already people working on that app. That app is really something that could be demoed in a few weeks. It’s just a matter of adoption. Looking at the conversations we are having right now, the adoption cycle is going to be a lot more about providing benefits to consumers, in terms of coupons and feedback. The payment thing as far as the maturation process is going to be 24 to 36 months off in terms of someone trying that in the real world.

How could these products change the shopping experience?

What we think it will do is allow the consumers to get more benefits, in terms of coupon, pricing and things along those lines. We think the stores are very excited about it not just from a promotion standpoint, but also in the sense of being able to do price matching, instant payments, inventory control and loss issues. Having this type of system in place will certainly be helpful in that regard. The store can still have a non-theft programme on the beacon. The store could theoretically track a consumer that walked off with a product. There are a lot of things that could be done in that regard. As this whole environment becomes more and more ubiquitous, there would means of tracking your dog, tracking your car keys or items that you need at the store. You have this internet of things where everything is available to you.

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What is the benefit for the consumer?

This is about efficiency and savings. It’s their ability to get deals and coupons and get their prices matched. I showroom with Amazon all the time when I’m shopping, but if someone says, “You could walk out the door with this,” I would do it as that would be so much easier than waiting. The ability to have instant gratification is pretty choice. I think it is also some of those efficiencies like the ability to get reminders that you are low on stuff. The ability to have all those things on your car keys. Parents being able to throw one of these into their kid’s book bag so they know where they are.

How does Estimote dissuade consumer privacy concerns?