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The Physical Web vs. iBeacons vs. Eddystone vs. IoT

Confused about terms like Eddystone, iBeacons, or “The Physical Web”? So are we. Let’s explain these technical terms simply starting with IoT. The Internet of Things (also abbreviated as IoT) is the notion that everything around us will eventually be connected to the Internet. This could be anything from your car being connected to your insurance provider, your house sending you smart alerts about itself, or small battery powered devices called “beacons” or “iBeaconsbroadcasting information in a traditional retail store that enhances your shopping experience. In a previous article, we highlighted a company called Estimote that provides “beacons” within a retail store, say Target as an example. You can download the “Target app” and then while you walk around the store, the beacons physically located within the Target store that you’re shopping at will inform you about product details, discounts, or any information that can enhance your shopping experience. These beacons communicate with your Apple (NASDAQ:AAPL) device using a protocol called iBeacon. Don’t get confused here about the usage of the word iBeacon. We can refer to Apple’s protocol as “iBeacon” and also the physical beacon device can be called an “iBeacon”.

This works great if you’re a regular Target shopper who downloads the “Target app” because you shop there so often. The problem with this approach is that you now have to download an app for every store you shop in that will allow you to access the in-store beacons. This is not scalable. What would be much more preferable is to simply open one app or browser and see what intelligent beacons are around you broadcasting at any given time. Enter Google (NASDAQ:GOOGL) with their ecosystem called the “The Physical Web” which uses an open source communication protocol called Eddystone to communicate with people. Google’s vision is as follows:

People should be able to walk up to any smart device – a vending machine, a poster, a toy, a bus stop, a rental car – and not have to download an app first. Everything should be just a tap away.

While iBeacon works only with Apple devices, Google’s Eddystone communication protocol works across all devices. Browsers that have announced support for the Physical Web include Google’s Chrome, Opera and Firefox OS. There are also a number of stand-alone Physical Web scanners such as the “BKON Browser” and the “Physical Web” App, both available on iOS and Android. Many IoT startups have developed beacons that support both iBeacon and Eddystone communication protocols. Using our previous Target example, shoppers can either download the Target app or just open a browser that supports “The Physical Web” and see the same content.

So let’s review. The IoT is where everything around us can talk to the Internet and convey useful information (location, temperature, movement, etc). or IoT connected devices can broadcast their own information (coupons, discounts, product information, etc.). A beacon or iBeacon is a battery powered device that emits information that people can access via their smart phones. The information can be accessed using a browser called “The Physical Web” which is just like an internet browser:

Physical_Web_Browser

Source: BKON

That browser uses a protocol called “Eddystone” to communicate with the beacon. You could then whip out your iPhone and communicate with the same beacon using Apple’s protocol which is iBeacon. Apple’s iBeacon is a “closed beacosystem” and Google’s Eddystone is an “open beacosystem”.

As investors, we try to figure out which direction a disruptive technology takes so that we can place our bets effectively. In the case of IoT beacon technology, the solution that sounds more scalable and usable is the idea of an “open beacosystem” where everybody can collaborate and improve the technology platform leading for quicker adoption. That’s the idea behind Google’s “Physical Web”. Here’s just a few IoT beacon vendors that support the Physical Web:

Beacons_Eddystone

If we’re looking to pick an IoT beacon vendor that is most likely to succeed going forward, we’d have to pick one that supports iBeacon and the Physical Web. It doesn’t seem likely that Apple’s “iBeacon” application of this technology will dominate an open source application. The takeaway here is that unless your beacon supports both the Physical web and iBeacon, you’re not taking full advantage of the opportunity that present itself.

As for us retail investors, we get to watch from the sidelines to see how this all pans out. There are no pure plays yet for beacon vendors that we’re aware of. We’re long Apple but not because of IoT. We’re long Google as well, but not because of IoT. We’re not in any position to predict which of  the probably 100s of IoT beacon startups will be a success. What we can deduce however, is that the successful IoT beacon startup among the pack will be one that supports both iBeacon and Google’s “Physical Web”.

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