Apple's Secret Retail Weapon Is Already in Your Pocket

Apple iPhone 5c showing iOS 7 Photograph by David Paul Morris/Bloomberg

It’s been a month since Apple unleashed iOS 7 onto the world, and while some of its flashier features have garnered a lot of attention, the most important part of iOS 7 is one you’ve probably never even heard of—even though, if you’ve upgraded, you already have it.

Search Google for “Apple iBeacon” and you’ll get plenty of results, but none from Look for the term on Apple’s site and you’ll get one hit, a not-very-illuminating link to Apple’s list of trademarks. Don’t be fooled: iBeacon is important. It’s software that enhances an iPhone’s location services (or an iPad Mini’s, or that of any device running iOS 7), and may prove to be a pretty big deal when it comes to the iPhone’s role in retail—something Angela Ahrendts, Apple’s new retail chief, will likely be thinking about as she settles in at Cupertino.

Quickly: Prior to iBeacon, an iPhone relied on GPS and Wi-Fi tower triangulation to know where it was. Those are great technologies and continue to be a part of iOS. But they have their limits. While GPS and Wi-Fi can determine your location, they can only do so to around 30 feet or so. That’s fine if you’re walking into an airport (something you may have already noticed if you use iOS’s Passbook and see your boarding pass pop up when you arrive at LAX). They’re less useful in smaller spaces like, say, stores.

IBeacon is a third locating system, one that runs on something called Bluetooth Low Energy (BLE). “It’s a game-changing technology,” says tech blogger Steve Cheney, who has written extensively on the topic. See, standard Bluetooth is great when you want to sync your phone to your car, or play music over a Bluetooth speaker, but it sure does sap your phone’s battery. BLE can’t do the same heavy lifting that regular Bluetooth can, but it can allow a phone or other device to do simple things on a near-permanent basis. With BLE, your phone can announce its presence to other devices in range in an extremely power-efficient way.

And since Bluetooth is designed for short distances (about 150 feet or less), it can be more accurate. With iBeacon, any iOS 7 device becomes a potential BLE beacon, and it’s already in place in every new and updated iPhone and iPad. For retailers to make their spaces iBeacon-friendly, they’ll need dedicated beacons, like the $99 three-pack from Estimote.

Now, this is not the first time someone’s tried to create a way for your phone to take advantage of location services in smaller spaces. For the last couple of years, we heard about near field communication (NFC), which appeared on some Android devices. NFC’s selling point was that its range was designed to be very short, measured in inches. You could just tap your phone onto a cash register to make a payment from your online wallet, which would make things secure, convenient, and—let’s not forget—very futuristic.

Except NFC requires an NFC chip, which not all devices have; most smartphones and tablets already come with Bluetooth. And a short range is fine for the security of sales-counter proceedings, but it doesn’t let a store do much more than jazz up the payment process. It also required the cooperation of credit-card companies, which added a layer of complexity to its implementation. “Bluetooth is so much better,” says Cheney. “Not only is it already in every single iPhone dating back two years, Android can support this, too, when Google catches up in software.”

Given all that, the implications of BLE and iBeacon are potentially much greater than NFC. Now a store could tell if you’ve walked in. Once you have, it could, if you wanted it to, alert you to what was on sale in that location. Not only that, but if you said, “Yeah, that sweater looks boss, and I dig that it’s 30 percent off. Where is that fly garment?” that store’s app, with an assist from iBeacon, could guide you right to it. With stored credit-card information on your phone, payment could also be conducted via iBeacon. Your phone wouldn’t even have to leave your pocket for the transaction to take place.

Major League Baseball intends to roll out an iBeacon-enabled program at stadiums next year. Visitors to participating ballparks who have MLB’s At the Ballpark app will be able to get map guidance to their seats, coupons, and offers at concession stands. Visits to specific locations in the stadium can call up additional information, like a short video you can watch about the home-run apple at Citi Field when you’re standing next to the home-run apple.

So if Bluetooth LE and iBeacon are supposed to be to location-based services what iTunes was to music downloads, why isn’t Apple shouting it from the rooftops? Partly because iBeacon only reaches its full potential when retailers and other partners get on board, and that’s a work in progress. Apple doesn’t want its users to have to learn about a new technology, they just want people to enjoy its effects. As Apple’s software chief, Craig Federighi, told me earlier this year, “We tend to think: How can we make it so effective that there is nothing to teach?”

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