The update will apparently be called "Bluetooth 5" without a point number in an effort to "[simplify] marketing." It's primarily of interest because the update promises to double the range and quadruple the speed of Bluetooth 4.2. It also adds "significantly more capacity to advertising transmissions," which is more exciting than it sounds because it doesn't necessarily have anything to do with what you normally think of when you think of "advertising."
In the Bluetooth spec, an "advertising packet" allows Bluetooth devices to send small snippets of information to other Bluetooth devices even if the two aren't actually paired or connected to one another. For instance, when you go to pair a Bluetooth keyboard or speaker with one of your devices, advertising packets can let you see the name of the device before you've paired it so you can distinguish it from all the other Bluetooth devices that are within range. The same technology is used by wireless beacons to transmit information about the location you're in and by Apple's AirDrop and Handoff features to let your Macs and iDevices know what your other Macs and iDevices are up to.
Current advertising packets are 47 bytes in size, of which 31 are available for data. We don't know how large Bluetooth 5.0 packets are yet, but expanding the size of advertising packets makes it possible for Bluetooth devices to send each other more detailed information, which could in turn expand the number of things that are possible for wireless beacons or Handoff-like features.
We don't know whether existing Bluetooth hardware will be compatible with the new spec after a software update, though it seems unlikely—Bluetooth 4.0 could be updated to 4.1 using software, but usually a new Bluetooth version requires new Bluetooth hardware. In any case, at the current rate of adoption, we can probably expect Bluetooth 5.0 laptops, tablets, phones, and accessories to start appearing at some point next year.
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