2014: Big Move to Retail Indoor Location Market

Macy’s added Shopkick indoor location beacons in preparation for holiday shopping. (Photo by Nicholas Eckhart is licensed under CC BY 2.0.)

This year was filled with hope and some success for the location industry. In what was probably the biggest deal, Qualcomm bought United Kingdom-based CSR for $2.5 billion — at the same time, spinning off its own location beacon company, Gimbal. While the connected car continued to get a lot of press at the biggest trade shows, indoor location technology matured to a point that many retailers are believing it’s a way to get consumers back into the stores — and away from their computers.

As we come to the end of 2014, many industry observers view indoor technology and markets to be like where outdoor location was in the early 1990s: many technologies and providers all pushing different solutions. However, the gap between the beneficiaries of the market, the retailers and brands, and the indoor location technology providers is narrowing as tests become more prevalent.

Such retailers as Walgreens, Home Depot, Lowe’s, Macy’s and CVS have rolled out, or planning to launch, tests that include indoor mapping and a product locator.

“iBeacons and other beacons proved to be the fastest location-proximity technologies that are being deployed full scale by Macy’s, CVS and other retailers for a first quarter 2015 rollout,” said Kris Kolodziej, an indoor location-based services advisor. “I see more acquisitions like the one of Groupon acquiring Swarm Mobile, a beacon platform for smaller tier-two retailers and businesses. In addition, we will see more partnerships like the one between Gimbal and Urban Airship to provide a holistic outdoor-indoor solution for geofencing and engagement platforms.”

Location companies paid attention to mobile carriers’ focus on launching and advancing their LTE services in 2014, said Keith Bhatia, TeleCommunication Systems vice president, business development.

“2014 has been the year of transitioning location-based services from 2G to 3G to complete 2G-3G-4G platforms,” he said. “The other significant location market event for TCS during 2014 has been growth of user plane services by (over-the-top) apps. The operators who have chosen to compete with OTT players have seen location requests exponentially expand.”

TCS believes that the location market, in the next five years, will evolve to a machine-to-machine and Internet of Things (IoT) concepts that will expand into consumers’ everyday lives, Bhatia said. “From the connected car to telemedicine, health devices, connected home and smart cities, all mobile connected devices will benefit from location-based services,” he said. “We believe that location services will continue its rapid growth for years to come.”

Selling retails on the promise of indoor positioning and proximity marketing has been tough in the past few years — and some providers have focused on the wrong message, Bhatia said. “As mobile device adoption continues to surge, indoor positioning and proximity marketing will become an important tool for many retailers. A significant barrier so far has been too much focus on coupon delivery,” he said. “We believe the retailers will find real benefits in terms of understanding layout, traffic and congregation of users. Combining this location information with their retail data will provide early insights into trends and early indications of potential challenges.”

Dave Hutingford, CSR director of product line for location, believes the big selling point for retailers is striking the balance between what benefits they obtain from the app versus what benefits the consumer gets — what he calls the equity balance.

“Too many irrelevant notifications while walking around the shop will result in people not wanting to run the app, and can potentially harm consumer acceptance of retail applications. The interest is already there from the retailers’ side as the benefits are somewhat obvious, but the question is what do you give back to an increasingly technology-smart consumer?” he said.

Overall, the indoor location market is attracting major interest from retailers — which is refreshing to many industry observers after seeing online sales cut into brick-and-mortar stores’ profits.

“Removing the need for dedicated infrastructure to run indoor location was a big hurdle removed from the ecosystem. Certainly we expect to see good pick-up of the solution over the next few months for a wide variety of location services, and being handset-agnostic is a big benefit for any developer,” Hutingford said. “However, if you are looking for accuracy down in the meter range, you will need to add infrastructure to supplement the location calculation, which can come in many forms.”

Connected-Car Market Made Headlines in 2014

If an industry executive attended any of the bigger trade shows this year — CES, CTIA in Las Vegas, or the Mobile World Congress in Spain, it was the same thing — connected vehicles are the big story. Adoption by automotive manufacturers, as a number of analysts have pointed out this year, was the most important news story for the connected-car industry in 2014, said John Horn, Kore Telematics executive vice president and chief strategy officer.

“Essentially every vehicle that rolls off the assembly line in 2015 will have an element of connectivity built into it. To keep up with the level of demand, we are starting to see scale and scope really start to matter to the companies that power this type of connectivity,” he said. “2015 will prove to be another huge year for industry consolidation, which will be necessary to keep up with the global demand for connected-car technologies.”

The biggest trend in 2014 connected-car technology was the emergence of infotainment content for connected cars, said Scott Frank, Airbiquity vice president, marketing. “Before 2014, the most an average consumer would expect out of a high-end vehicle head unit were features like navigation, basic cell-phone connectivity, and hands-free calling,” he said. “Today, drivers are able to get a wide-variety of apps in their vehicles to do things like stream music and keep up with their social media channels. User experience advancements were also made to provide a seamless transition for digitally oriented drivers as they moved from office, to car, to home, and back again. For example, with the NissanConnect Mobile Apps system, someone listening to a streaming music app like Pandora on their PC in the office can put it on hold, get into their car for the drive home, and pick up the song right where they left off — as well as see their favorite playlists, album selections, and cover art.”

However, as with any industry that experiences quick growth, there will be growing pains, Horn said. “The automotive world has already started to experience some of those pains as connected technologies continue to advance at a rapid pace. We saw how the analog shutdown left many OnStar customers stranded with obsolete hardware,” he said. “We’ll likely see similarities as 2G, 3G, and 4G networks are eventually turned down in favor of more advanced technologies. I’ve been saying this for years, but now is really the time for the removable module. Connected technologies will turn over much faster than cars, and the only way I can see to future-proof against this is through the removable module.”

Airbiquity’s Frank said that there are definitely consumer acceptance and technology barriers for the automotive industry going forward related to connected car as we know it today and autonomous car as its being forecast going forward.

Like waves of technology that have come before, functional consumer awareness and adoption will follow the technology adoption curve, Frank said. “Certain generations and user types will be early adopters and more likely to accept new and evolving connected-car technology and features — and the user experiences and value that come with it — the minute it’s made available,” he said. “While others will be either blissfully unaware of the technology built into their car — and the value it could bring them — or are simply satisfied with traditional technology like basic AM-FM and satellite radio. One thing for sure is there’s a correlation between early adopters of technology like smartphones and early adopters of connected-car technology and related features.”

Frank quoted a recent Parks Associates study that found 48 percent of vehicle owners that own smartphones are very interested in the ability to view maps — or receive directions in their cars. This compares to 37 percent of vehicle owners that own/don’t own smartphones. “Like flip-phone users that transitioned to smartphones after understanding the end benefits, consumers will increasingly become aware of and use their connected-car systems,” he said. “We’re seeing evidence of the connected-car adoption curve in the increasing activation rates and time of usage for our customer’s connected-car programs.”

Horn, who headed RacoWireless, which was acquired by Kore for an undisclosed amount this year, said in 2015 industry will start to see the connected car become much more easily monetized. “We’ve seen this first hand, as we have just rolled out some new features with AT&T and Audi. Now, your Audi Connect subscription can be part of your AT&T Mobile Share plan and treated just like another line,” he said. “It is going to be easier than ever to consume in-vehicle connectivity and the business model will advance to the point that makes it appealing for both the consumer and the solution provider.”

In 2015, driving-centric apps and services will begin to appear and eventually become as important as infotainment content in the consumer purchasing process, Frank said. “The current automotive manufacturers’ focus on providing infotainment delivery reflects their desire to meet the expectations of digital lifestyle consumers who are heavy users of smartphones and want to use their favorite apps and services inside their cars,” he said. “This is a logical first step, but these savvy consumers will increasingly value apps that are truly useful and relative to the driving experience. An example is an app that proactively and dynamically recommends modifications to a driver’s high-frequency routes to help them optimize fuel consumption, lower CO₂ emissions, minimize engine wear, and avoid road hazards. As a result, apps that don’t add to the consumer experience relative to driving will eventually die off from lack of use, and automotive manufacturers will replace them with more and more driving-centric apps to satisfy their customers and differentiate themselves from competitors.”

The rise of autonomous vehicles, a derivative from connected-car technology, will keep automakers, carriers, suppliers and government agencies busy for decades.

“When it comes to autonomous vehicles, we expect the adoption curve to be more extended than what we’ll see for the connected car, given the increased consumer concerns about safety and adapting to the new fangled idea of riding in a car without a human driver,” Frank said. “Consumers will not only want to know what this fancy new technology is and how it works, they will also need to feel confident that it will run perfectly and not put themselves, their passengers, or other people and property in harm’s way. Consumers will also have concerns about who will be legally and financially liable if an accident occurs.”

In other location news:

• Two Trimble companies, PeopleNet and ALK, recently provided real-time tracking of the 2014 Capitol Christmas Tree’s cross-country journey from the Chippewa National Forest in Minnesota to the front lawn of the U.S. Capitol Building in Washington. The companies used enterprise products for routing, mileage, mapping and visualization to track the tree.
• LBS Insider’s Kevin Dennehy will be attending the 2015 Consumer Electronics Show in Las Vegas next month. Please contact him at kdennehy@gpsworld.com with your story ideas.