In early September, Apple (AAPL) announced that the iPhone 11 would contain a chip they called U1, which supports Ultra-Wideband (UWB) radio. UWB is a radio technology that supports, among other things, very precise location measurements. This is particularly valuable for indoor localization, where GPS signals are not available. Other radio technologies, including cellular frequencies, Wi-Fi and Bluetooth, can be used to measure location indoors, but only to within meters. UWB can measure location within centimeters.

Apple’s interest in UWB is not new, and nine months ago I noted a renewal in Apple’s involvement in UWB working groups. Apple has long been interested in improving the iPhone’s indoor localization, and acquired 3 related start-up companies between 2013 and 2016, giving Apple a strong foundation of self-learning localization technology called SLAM that has not yet been productized. They also popularized Bluetooth beacons with their iBeacon initiative. Now they are adding the UWB chip in the iPhone to support better accurate and reliable localization. At the very least, UWB-based distance measurements between iDevices can likely improve iDevice SLAM-based localization. But Apple has indicated that UWB will be used for new things.

The biggest question, of course, is what iPhones will be able to do with UWB. Coverage to date has discussed two specific use-cases. The first is having an iPhone track other items, like wallets or keychains, that have a special UWB-enabled tag attached. There are several products on the market that enable smartphones to track tags attached to wallets and keychains, but they are generally all powered by Bluetooth, not by UWB, and they do not work as well as a system powered by UWB would work. The quality of UWB-based tag-finding can be seen in videos of other products that use UWB, like this video of a product called Pixie, but this is not directly indicative of the accuracy and user experience that Apple will deliver.

The second use-case that has been discussed is sharing media and data between two iPhones. In this concept, two iPhones can use UWB to detect that they are being held next to each other, and are very close to each other while being further away from other iPhones in the vicinity. This precise proximity can then initiate the transfer of media or data between the phones.

Neither of these use-cases, however, appears to be valuable and revolutionary enough for Apple. They’re valuable applications, but Apple tends to add features that enable multitudes of use-cases, not a few. The use-cases I suggest below are speculative, but are based on the overlap between Apple’s current areas of focus and the value of highly precise location measurement.

Most importantly, UWB in the iPhone will open up precise localization to 3rd party applications and products. Any such apps and products that can benefit from UWB will only be released on iOS, and not on Android, until Android phones start to include UWB as well. More on this point later. So UWB is likely to bring app makers to iOS in the near term.

One big use of precise location measurement, or more precisely, precise distance measurement, that will be a strong differentiation for Apple, is in payment systems such as Apple Pay. One current vulnerability of electronic payment systems is that they are vulnerable to what are called “relay attacks,” essentially where a thief connects to a victim’s phone and mimics a payment station, in order to grab the phone’s credentials, and sends those credentials to a partner’s phone to use for a real payment in a store, with the partner phone making a purchase at the expense of the victim’s account. Relay attacks are common in both in-store payment systems and car payment systems. UWB has been used to prevent relay attacks by ensuring that the phone of the person whose payment credentials are being used is in fact right next to the payment station, but was of limited use until now because of UWB not being in mobile phones. An iPhone with UWB would be able to offer more secure payments than non-UWB enables phones, which could drive both iPhone sales and Apple Pay adoption.

Another big potential use of UWB-enabled iPhones would be if Apple was planning to release new kinds of iDevices which would be controlled or interacted with by iPhones. Were Apple to compete with the Nest connected appliances (Nest is owned by Google (GOOG) (GOOGL)) then precise distance and location measurements could be strongly leveraged. Such appliances could know the location of every iDevice in the vicinity, and could react intelligently based on who was nearby. It could also take co-location into account to prevent being hacked by someone not in the vicinity. If Apple Watches are also UWB-enabled, then the likelihood of a homeowner or resident being virtually always detectable goes up even more. An Apple line of connected home appliances could include security cameras, thermostats, media devices, door and cabinet locks, and more, all benefiting from knowing the precise locations of people in the vicinity.

The same would be true if Apple were to launch a line of drones or robots. One of the challenges that many drones face is being able to track the location of its owner, either to keep the owner in the center of a video while moving, or to return to the owner’s hand. UWB-based precise location and distance measurements would make these things much more accurate and reliable. Based on Apple’s history, they could find a specific use-case for drones or robots, such as flying or moving cameras that track iPhone or Apple Watch users, and enter that specific market with their usual flair for design and usability.

Apple is already working on autonomous cars. One of the big challenges in autonomous cars is recognizing all the other vehicles and people moving in the vicinity. This is not as likely as the other uses, because clearly an autonomous vehicle would need to recognize people and vehicles without iPhones, but it might provide an additional source of data to augment other systems already in place. Apple is known to be iteratively refining their car’s sensor array, and if UWB were to be common among iDevice users, this might speculatively add to the range of data the car could use. This speculation is contrary to Apple’s stated goal of using cameras only, but it’s food for thought.

Even if Apple would not use UWB for the core operation of their autonomous vehicles, UWB has many other uses in cars, such as reducing theft by only opening if the owner’s phone is close to the vehicle, activating airbags based on where passengers are located, detecting when items are left in a car, and more.

Of course, whatever Apple’s intentions, there is no guarantee that their plans will succeed. When they introduced their iBeacon initiative, they believed strongly in a vision of iPhone apps and features being launched automatically when users entered stores and other iBeacon-enabled establishments, a vision which has not reached significant mainstream use. Not all Apple initiatives succeed. But that said, Apple’s initiatives have a history of propelling forward new technologies and device uses.

In the longer term, other phone makers are likely to copy Apple’s addition of UWB to smartphone capabilities. The biggest beneficiary of this shift will be companies currently making UWB chips. Ireland-based Decawave is currently the leader in this area, with deals and trials in place with many of the major chip and mobile companies. NXP (NXPI) is also strong in the UWB chip market. Other companies making UWB chips include Time Domain (owned by Humatics) and BeSpoon, among others.

A recently updated report on acquisitions in the indoor location industry by Grizzly Analytics (the analyst firm I founded) showed that many of the top-valued acquisitions were in the chip industry. I believe that Decawave could command one of the highest acquisition prices to date in the indoor location industry, and other UWB companies are likely acquisition targets as well. Likely acquirers are either chip companies interested in a strong position in the area that Apple has given the company’s stamp of approval, or phone makers wanting to lead the Android move down the path that the iPhone is creating. To date, Invensense has been the biggest chip company acquiring indoor location companies, but Intel (INTC) has explored UWB in the past and Qualcomm (QCOM) and Broadcom (AVGO) have location-related chips in their product lines and may likely want to extend that to support UWB.

Whichever direction Apple decides to take their UWB capabilities, it appears clear that it will provide short-term benefits to iPhone over Android phones, and is likely to promote a shift in the industry to support this new technology. In the longer term, UWB definitely has the potential to impact many areas that are dear to Apple’s heart. Which of them will Apple transform with their new UWB chip? As with many of Apple’s innovations, the true benefits will only be clear only later.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.