Tim Cook gave a nice interview to Bloomberg over the weekend and in it he confirmed that Apple Watch will be able to track its users via Bluetooth signals as they walk around.
The confirmation is something Apple observers have suspected for a long time, but it's interesting that the company is now saying more about it publicly. Here is what he said:
And of course, we have iBeacon over on the side that a lot of people have forgotten about—a very interesting technology that we’re using in our stores. And you can imagine a future connection there that is interesting.
In principle, Apple Watch wearers will be tracked via Bluetooth signals coming from real-world locations, like shopping malls. The immediate purpose will be so that users can get alerts from nearby businesses who think you may be in the mood to buy something. (Walk near a Starbucks, for instance, and a Starbucks app on your phone or watch may suggest that you nip in for a quick coffee.)
For marketers, this type of hyper-localized advertising is gold.
Specifically, the tracking mechanism on Apple Watch will be similar to the little-understood mechanism currently used in Apple's iPhones. It combines Bluetooth 4.0 (the localized wireless signal system that lets you transmit or receive data from a nearby device), iBeacon (signal-emitting beacons that Apple is seeding all over stores and other physical locations in the real world) and NFC (another wireless transmitting system that Apple has incorporated into iPhone 6 and iPhone 6 Plus, and the Apple Watch). If you didn't understand any of that, there is a good primer on iBeacons here.
What's new in Apple Watch (according to Apple's press release) is the Bluetooth, iBeacon and NFC combo. Previously, iPhone users could be tracked by iBeacons if they had their Bluetooth switched on. (Keep it off and you're invisible.) But even if an iBeacon detected you, all it did was send a signal to an app that could alert you. That was useful — as in the Starbucks example, it could send you an offer for a muffin, for instance — but it doesn't necessarily result in a sale that can be attributed to the system, especially if after seeing the iBeacon alert you paid in cash.
The NFC aspect closes the loop, as marketers like to say. Now, an Apple Watch or iPhone 6 user might get a signal from a beacon, that might trigger an app to send the user an offer, and the user can use Apple Pay (which uses NFC) to complete the purchase. At that point, marketers will be able to see exactly how successful their tracking of Apple customers is, and which types of offers work best. It will also generate a ton of data, especially in terms of your exact location at any given time, as the devices only detect iBeacon signals if you walk right next to one.
iBeacon technology is limitless in scope, you can use it any physical location where emitting a signal might be useful. The beacons themselves don't actually record your location — that happens on your phone or watch when you switch Bluetooth on and the signal interacts with the apps you're using or are signed in to.
The system will generate a massive amount of data on users' locations and shopping habits. It might also, in theory, produce a massive map of the indoors of large public buildings.
