Low Energy Bluetooth based location systems are the newest entrant in the indoor location services toolkit. Built to respond to existing weaknesses in indoor positioning and proximity services, Bluetooth beacons are an agile and portable solution to providing context for tracking and communication.
Small wireless devices called beacons (or ibeacons) broadcast signals using Bluetooth Low Energy, a power-friendly version of traditional Bluetooth. Smart devices nearby listen for these signals, trigger actions and/or record analytics via mobile apps based on device proximity.
Beacons are the signal transmitters (senders) in a BLE location system. They are battery-powered, stick to almost any surface and can be configured from a mobile app, making them scalable and highly portable. And, since they operate on a low energy form of Bluetooth, a single device can last 1-3 years. However, unlike a universal system like GPS, installation of these transmitters is required and maintenance to replace batteries or beacons themselves is necessary. (-1)
Fast Fact: 60 million beacon units are expected to be installed by 2019
A big benefit of beacon systems is that they primarily use mobile devices as the receiver system. And because smart devices and cellular networks have become ubiquitous (even in remote areas and developing countries), the receiver network is highly accessible. Because a mobile app is required, for a beacon system to achieve high penetration, the value proposition to download an app and turn on location services must be high.
Source: We Are Social; Digital, Social, Mobile Report 2015
Beacons operate on the 2.4 gigahertz frequency which is also the most commonly used WiFi frequency. Like all radio signals at high frequencies, reliability of Bluetooth signals is impacted by the environment. However, since the beacon system is highly flexible, issues of line of sight (LOS) and signal reception that impede WiFi and GPS accuracy indoors can all be addressed by freely altering the Bluetooth beacon network, either by manipulating the individual beacons or simply adding more.
Beacons are generally known as a 'proximity' service, meaning that they sense when another device is in range. Beacon ranges can be configured to project from approximately 3 to 50 meters. It is also possible to achieve accuracy as low as 1m using a range of techniques (e.g. signal ranging, location 'fingerprinting' and or trilateration).
Since BLE beacons broadcast outbound signals, there is no inherent security risk embodied in the transmission. The risk lies primarily in the apps that use these signals. In this sense, beacons are no better or worse than any other location service communicating via a mobile device. However, systems like NFC that enable secured sessions emulating the way contactless cards (e.g. credit cards, ID cards, etc.) transmit data are generally considered more secure for things like payments. (-1)
One threat to beacon security is often referred to as "Beacon Hacking". Basically, beacons with weak security measures can be discovered by hackers in public places and their UUIDs, Majors and Minors changed. Some manufacturers have put measures in place to prevent this from happening but, depending on the beacon manufacturer and their built-in security, it may still be a risk. (-0.5)
Another criticism of beacon systems is "piggybacking". Basically this occurs when a 3rd party discovers your beacon UUIDs, and then leverages your beacon network without permission. Many beacon providers now provide UUID scrambling to prevent this occurring, though it will remain a weakness in less sophisticated deployments. (-0.5)
Though public education on beacons is still required, we think they win points on privacy. Unlike WiFi which is able to detect an individual's presence without opt-in, beacon systems allow the user to control their settings by turning Bluetooth and location services on or off. And permissioning gates are in place to ask the user as they download the app. Businesses are forced to make a compelling case to consumers and employees for turning on tracking capabilities. One common misconception is that beacons themselves track and store smart device location. In fact, most beacons only broadcast an outbound signal, and so do not receive or store any additional information.
The main costs associated with a beacon system are: the beacons hardware (including the cost of deployment), the licensing / data service costs and the receivers or devices.
Beacons themselves are relatively cheap. These days you can typically find beacons from $5-$30 apiece depending on volume and that cost is expected to drop considerably as the technology matures. In fact, according to an ABI Research report, total revenues for 60M beacon units expected by 2019 will be $500M, indicating a per unit cost of only $8. The number of beacons required depends on the size of the space and range required. For a business, it's more expensive than GPS, but less than RFID readers or WiFi access points. (-1)
Receivers or device costs depend on the use case. In consumer uses, this is generally free as it is just using existing personal smart devices. For enterprises cases, a business may prefer to supply a device to employees. Basic, no frills smart devices can start at $50 per unit and go up from there.
Other costs not considered in this analysis are any fees associated with a custom mobile app, integration with other systems and licensing. App and integration costs really depend on the use. Licensing fees are typically dependent on the volume of interactions being processed.
Beacons may be the new kid on the block, but as long as there is a clear value proposition for an app, we think it is the best option for indoor location positioning, communication and analytics. The combination of flexibility, accuracy and a low-cost infrastructure edges out WiFi and RFID. In addition, the opportunity to seamlessly integrate with existing and new mobility applications greatly improves its benefit to businesses. However, for outdoor uses, secure payments or SKU-level tracking, other systems like GPS, NFC or RFID may be needed to complement a beacon system.