Indoor location tracking is one of those ideas that seems to forever be on the verge of breaking into the mainstream.
Now that millions of people are toting around sophisticated, Internet-connected phones, it should be possible to beam coupons and other sales-increasing nudges right to their home screen as they prowl the aisles of the local retailer, right?
“It’s been the next big thing for, like, five years,” says Dan Ryan, CEO of Boston-based ByteLight.
But it takes some prodding for big, established industries like bricks-and-mortar retail to latch onto the next big thing. In this case, the prodding came from a little company called Apple, which last year rolled out support for what it calls iBeacons, a Bluetooth-based technology that can track locations indoors.
At ByteLight, which is developing technology that turns LED lighting into a location-tracking system, things started to get more interesting.
“Two years ago, when we were talking pilots with retailers, we were in the R&D shops,” Ryan says. “Now, in the CMO’s office at top retailers, they are tasked with coming up with an indoor location roadmap.”
That goes a long way toward explaining why ByteLight, founded about three years ago, is teaming up with General Electric on a location-tracking light project. Yes, that General Electric, the one that was in the light bulb business long before it made locomotives and wind turbines.
Others in the lighting industry are getting serious about the idea, too. Earlier this year, Dutch electronics giant Philips announced that it was working on LED lighting systems that can track and communicate with a smartphone.
The Philips system is based on technology called visible light communications, abbreviated as VLC. In a VLC system, pulses of light that can be picked up by a smartphone’s camera—but are too quick to be perceived by humans—can be used to transmit data.
That happens to be the same kind of technology used by ByteLight, which raised a $3 million Series A venture investment last fall. Its work with GE will also incorporate Bluetooth Low Energy transmitters, the same technology used by the Apple-branded iBeacon system, among others.
It’s obviously a big deal for a small startup to be working with GE, even if it’s just a trade show demonstration—the two companies are planning to show off their collaboration at a big lighting-industry conference in Las Vegas next week. Ryan declined to discuss any details of the business relationship between the two companies, but he said it’s more than a one-off exhibit: “We are teaming up to take a solution to market.”
So why are these old-school lighting companies getting all excited about indoor location technology? Their market is changing dramatically, driven by both business competition and government regulation.
With the federal government mandating higher efficiency standards for lighting, manufacturers are trying to get ahead of the next big switch in lighting infrastructure for business customers. And they’re also grappling with bulbs that last a lot longer, Ryan notes, which means fewer bulbs being purchased over time. “So the question that the lighting industry faces is, where is my margin tomorrow?”
And since LED lights are already a digital technology, these companies would clearly like to have some of that future profit margin come from additional digital services that can be added to lighting systems, Ryan says.
If those providers can capitalize on the big industry change, ByteLight should also be one of the beneficiaries. The long-term plan for the startup is to make money from the software platform that connects to indoor location systems, not from the devices themselves. And Ryan thinks there’s a lot more than coupons for cat food and T-shirts around the corner.
“The opportunity for indoor location is beyond just the obvious, `Hey, I’m giving you promotions,’” he says. “It is going to be an enabling technology for applications and services that we couldn’t even conceive, in the same vein as GPS. Nobody predicted Uber when GPS first came out—indoor location is going to be just as transformational.”
