This report is best read alongside our newer, July 2014 beacon updates:

THE BEACONS REPORT: Market Forecast For The Most Important Retail Technology Since Mobile Credit Card Readers »

THE BEACONS EXPLAINER: Everything You Need To Know About Beacons And Apple's iBeacon System »

 Key Points

  • To state the obvious: Modern, smartphone-toting humans spend most of their time indoors. But indoor spaces often block cell signals and also make it nearly impossible to locate devices via GPS. Beacons are a solution.
  • Beacons are poised to transform how retailers, event organizers, transit systems, and educational institutions communicate with people indoors. Individuals might even want to deploy them around the house. Beacons are a low-cost piece of hardware that utilize low-energy Bluetooth connections to deliver messages or prompts directly to a smartphone or tablet. This technology is revolutionizing the way devices can connect and interact with each other, and physical spaces.
  • In-store retail and offline payments are in the first wave of beacon applications. Retail outlets are adopting beacons to provide customers with product information, flash sales or deals, and to speed up the checkout process with a completely contactless payments system.
  • Consumers seem receptive to beacons as a way to enhance their in-store shopping experience. Half of American adults already utilize their mobile devices in stores.
  • But there's a barrier to wide adoption of beacon technology: three layers of permissions. Customers have to turn on Bluetooth, accept location services on the relevant app and opt-in to receive in-store or indoor notifications.
  • Meanwhile, Apple is in the driver's seat with its iBeacon technology. The company recently announced that 200 million iOS devices are already compatible with iBeacon. But PayPal and Qualcomm will look to challenge Apple with hardware of their own, while smaller vendors like Estimote, Swirl, and GPShopper are entering the mix by providing beacon management and consulting services on top of hardware or software platforms.
  • New beacon applications will be deployed sooner than we think. Beacons can and will eventually be used for a variety of applications: delivering content at museums and music concerts, keeping conference-goers informed, enhancing in-store loyalty programs, and pushing real-time updates to travelers at airports and train stations.

Beacons: What Are They? How Do They Work?

Beacons are primarily used to locate [...]