Vdc 2010 kiosk report excerpts

Kiosks

2010 Retail Automation Equipment Planning ServiceTrack 1, Volume 6

AutoID & Transaction Automation PracticeNed Daubney, Senior AnalystTom Wimmer, Director Chris Rezendes, Executive Vice President

Retail Self-Service Kiosks

Petroleum Payment Station

Customer Loyalty

Endless Aisle Guided

Selling

Self-services addresses the need to provide targeted campaigns and information to in-store customers

Gift Registry

VDC defines a self-service kiosk for the retail (including hospitality) market as a freestanding, interactive, multimedia system used to provide information, or enable a transaction.

Self-service is defined as the capacity for consumers to fully serve themselves without assistance, or interaction from the retail staff.

VDC’s self-service kiosks are customer-facing and exclude ATMs, photo, self-ticketing, HR, self-checkout, basic price checkers, and gas pump

kiosks, each of which offer their own market dynamics.

Retail Self-Service Kiosks Defined

2 – 2010 VDC Research Group, Inc.AutoID & Transaction Automation Practice

E-Commerce Bill-PaymentFood

Ordering

Product Vending

(e.g.DVDs)

Self-Checkout

HR Applications

ATMs

Self-TicketingMultifunctional Price Checkers

PhotoKiosks

Basic Price

Checkers

Executive Summary – Market Size & Growth

• Retail and hospitality self-service kiosk suppliers realized nearly $474.6 million during calendar year 2009, with the average supplier signaling a dramatic market (nearly 20%) decline from 2008.

• The market is expected to grow at 9.3% CAGR over the next five years to $740.4 million in 2014.

• In 2010, most vendors are seeing significant return to normal or better as dead 2009 projects sprang back to life, with increased retailer conviction for kiosks.

• The few major vendors that did see revenue growth in 2009 characterized this growth as projects just too far along to cancel.

• But the big story for self-service kiosks is future expectations. Accelerated global adoption of retail self-service kiosk solutions is expected for the coming years. A stream of new applications mature involving mobility, iPad / tablets, product vending, motion sensors,

biometrics and analytics. As kiosk technologies continue to converge, integration with other in-store technologies will be critical.

• The value propositions associated with self-service kiosk solutions, coupled with the rapidly changing cultural demand for self-service by global consumers, will appropriately position these solutions as a center of convergence for a retailer’s customer service, transaction automation, and branding over the next five years.

What 2009 took, 2010 gave back – postponed 2009 projects revived in 2010


Executive Summary – Trends – New Technologies

Trends – New Technologies

• Disruptive Opportunities: Potentially disruptive technologies including: interactive digital signage, mobile applications and iPads

are generally not mentioned as threats by kiosk suppliers. Instead, these retail automation technologies are seen as complementary and integrate-able tools that can be deployed to meet application specific requirements. However, clearly there are risks associated with each new development.

• Strong Interest in Mobile Applications, but not yet any large scale demand: The highly anticipated demand for mobile applications has come much slower than expected. For

many, this market is still in the “buzz phase”, with no large-scale roll-outs. Technology challenges remain, but we expect to hear about many mobile solutions sometime within the next year or two, as mobile standards evolve.

• The iPad is Making its Mark: Strong retailer interest in, but conflicting supplier opinions on iPad kiosk solutions – a large number

of national pilot programs currently underway suggest a potentially large market impact, despite the tool’s fragility and novelty state.

• Interactive Digital Signage blurring with kiosks: Digital signage, and most notably interactive digital signage, is growing fast globally and often blurs

with interactive kiosks. The big question going forward is how kiosks will integrate or otherwise co-exist with digital signs.

Kiosk vendors face a barrage of new technologies – but are they friend or foe?


Executive Summary – Trends – New Applications

Trends – New Applications

• Product Vending converging with traditional self-service kiosk solutions. Redbox’s DVD kiosk success replicable and being tested for multiple other wide-ranging applications. Sleeker, pedestal-form vending kiosks will soon (within 2 years) noticeably alter the image of product vending. DVD rental kiosk business likely to transform into digital download kiosks – and into sleeker kiosk form factors.

Product vending kiosks seek to bridge the gap between traditional stores and online shopping Other parts of the world are less hesitant. In Europe and Asia, consumers buy anything from underwear to

prescription drugs from kiosks. Japan has one vending machine for about every 23 people, according to one source. The country’s fascination with technology have made it a vending paradise.

Also contributing to the proliferation of this “automated retailing” is the new capacity to remotely monitor and service the machines. Remote device management technology actually provides both technical support and marketing data.

• Loyalty Programs make a comeback Suppliers characterize this comeback in part due to higher-end retailers, who needed to cut prices during the

recession, pushing loyalty programs to satisfy long-time loyal customers, as they reel-back their price-cuts and raise them back to normal levels.

• Green Movement growing Some leading kiosk suppliers actively tapping into the growing global interest for cleaner solutions – which

to them spells an opportunity for new applications, and a competitive differentiator.

• Biometrics & Motion Sensors Hearing a lot of buzz about, and some small rollouts with, these, but little demand on any significant scale.

Product vending kiosks, green solutions gaining steam; While loyalty making a comeback


Retail Automation SolutionsALL Infrastructure: Hardware, Software and Services

TRADITIONAL DELIVERY PLATFORMSPOS Terminals / Workstations

POS Receipt PrintersPayment / Transaction Terminals

Emerging Delivery PlatformsImaging Solutions

Self-Checkout SolutionsKiosks

Personal Shopping SystemsElectronic Shelf Labels

Interactive Displays & Digital Signage

EM

EA

Retail & Hospitality Vertical Markets

Regional Markets

Technical Dimensions

Groce

ry / S

uperm

arke

t

Depar

tmen

t Sto

res

This study covers demand for a number of technologies in a range of retail and hospitality segments worldwide

AP

AC

Am

eric

as

Gas &

Conve

nience

Drug

Store

s / Pha

rmac

y

Specia

lty S

tore

Mas

s M

erch

ants

DIY

Primary Segmentation Parameters


Hospita

lity

Deployers versus Developers

• We count revenues earned from the manufacturing and sales of self-service kiosks. These revenues pertain only to shipments from kiosk manufactures and do not include companies such as Redbox,

Kodak or Blockbuster. In addition, these values reflect solely the movement of product from the point of manufacture to the first point of distribution and do not include any channel markup.

• A deployer installs kiosks as their own; earning revenues from transactions, not from the sales, or lease of the kiosk (e.g. Redbox, Blockbuster) As Redbox does not sell kiosks, nor does it produce any revenues from the actual design, or construction of kiosks,

they are not included in the study – Their revenues more simply come from DVD rentals.

• A developer is a firm that, on an OEM basis, designs and / or produces partial or complete kiosks. Some firms such as Flextronics builds kiosk for other kiosk developers (IBM) or deployers (Redbox).

Flextronics is thus a critical part of the kiosk production supply chain – their revenues come from building kiosks, and so their kiosk revenues are included in this study, while RedBox’s are not.

Why kiosk deployers (e.g.Coinstar’s Redbox, Kodak and Blockbuster) are not included in this study

Type Supplier Examples

Deployer – installs kiosks to earn transaction revenue Coinstar / Redbox, Kodak, Blockbuster

Branded Developer – Sells part / complete kiosks with its name on the kiosk

NCR, IBM, Fujitsu, Vigix, Wincor Nixdorf

Unbranded Developer – Sells part / complete kiosks as OEM / PLP Flextronics, Oleo

Hybrid Developer – Sells both direct and to branded developers Meridian, KIS, Frank Mayer

We highlight this distinction to make

clear just who is making money from the building

and selling of kiosks.


Tablet PCs

Product Vending

Machines

Digital Signage

Price Scanner

KIOSK MARKET

Kiosk Market Boundaries Blurring

Interactive Digital Signage

Product Vending Kiosks

TabletKiosks

Multi-functional

Price Scanners

Self-service kiosk market continues to mix with other retail automation technologies

Is the kiosk market expanding, or are modified

comparable solutions encroaching kiosk territory?

It may all be semantics as even the leading suppliers admit

this “blur” is indefinable.


Self-Service Kiosk Market Commercial Value Chain

• The commercial value chain for Kiosks is comprised of a number of direct and indirect selling relationships.

• Direct-to-end-user and OEM / private label partnerships are the most common distribution routes.

• Tier 1 retail organizations most often seek a direct relationship with the self-service kiosk supplier, who assumes project management responsibilities.

• For these accounts, VARs and system integrators

often play a key supporting role, ensuring that local post sale commitments are met.

• VDC expects partnerships with ISVs (independent software vendors) to increase as hardware suppliers look to provide their customers with best-of-breed customizable kiosk software solutions aiding in seamless integration with digital signage, mobile applications, POS and other in-store technologies.

End-UserEnd-User

OEMOEM

VADVAD

Sys. Int.

Sys. Int.

ISVISV

Self-Service Kiosk SupplierSelf-Service Kiosk Supplier

VARVAR


Self-Service Kiosk Market Regional Shipment Models

201420

13201220

11201020

092008

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

Amer

icas

EMEA

Asia-P

acific

Regional Demand for Self-Service Kiosk Solutions

2009 = $474.6 Million

(Mill

ion

s o

f Do

llars

)

• In 2009, the global retail market for self-service reached $474.6 million with unit shipments surpassing $203 million, down roughly 20% from 2008. VDC anticipates that revenue shipments for Self-Service kiosk will grow at a CAGR of 9.3%, approaching $740 billion by 2014.

• Sales in the Americas region continue to be driven by Tier 1 retailers, although large-scale kiosk rollouts appear few and far between. Retailers in 2009 were extremely cautious with spending, but have clearly spiked up demand for self-service kiosk applications.

• The Asia-Pacific market is expected to be the fastest growing region over the next 5 years as retail in China and India continues to scale. This demand will be fueled by: Multinational corporations expanding their foot print in the region; and Tier 1-2 retailers continuing to make initial investments in kiosks.

Slow and steady growth will be fueled by pent-up demand for self-service solutions and new applications


Self-Service Kiosk Average Factory Selling Price

2014201320122011201020092008

1,800

1,900

2,000

2,100

2,200

2,300

2,400

2,500

Amer

icas

EMEA

Asia-P

acific

Global AFSP for Self-Service Kiosk

2009 = $2321.8

Americas EMEA Asia-Pacific

(Do

llars)


• The AFSP (price from the factory to the first point of distribution) varies with the system components integrated.

• The AFSP in each region will continue to fall as display prices decline, cheaper I / O components enter the market, and smaller form factors win favor.

• Another major downward pricing influence will be the movement of the larger, global suppliers to provide more standardized solutions for large-scale deployments of the most popular kiosk applications.

• The upfront capital investment required has been a barrier to adoption for many retailers, particularly in the current environment. Some suppliers have responded with managed services and SaaS models that enable retailers to invest for less.

AFSPs vary widely depending upon the application, form factor, component makeup and quality

Competitive Landscape

• The kiosk market ecosystem consists of hundreds of relatively small and several large companies providing various parts of the complete kiosk solution.

IBM, NCR, Frank Mayer, Fujitsu and Kiosk Information Systems (KIS) continue to be the market leaders regarding self-service kiosk solutions within North America. KIS’s position within the North American market is a direct result of extensive product portfolio and their advanced level of customization and engineering regarding application / vertical market solutions.

IBM and NCR continue to leverage their easily customizable product portfolio and strategic partnerships to secure their market-leading positions across several vertical markets.

• The global market for self-service kiosk solutions remains highly fragmented. Characterized by distribution channels that lend themselves to an increased level rebranding due to the multiple OEM and supplier organizations that interact via strategic and short-term partnering agreements, the kiosk market continues to be extremely convoluted.

• Kiosks still lack that killer application that warrants multiple Tier 1 retailers to order large-scale kiosk rollouts. While several applications currently enjoy widespread adoption, most orders are of the size that niche vendors can fulfill. Regional top vendors such as KIS and Meridian thrive in this market.

• In the projected market environment, VDC expects certain market consolidation as larger, global suppliers seek to standardize products and compete more successfully on price and global support.

• VDC projects strong near-future demand for more standardized, off-the shelf solutions for these most popular applications, enabling the global solutions providers (IBM, NCR, Fujitsu, Motorola) to more capably build in their economies of scale. The world doesn’t need 500 variations of a product guide kiosk. Standardization, for popular kiosk applications, will likely rearrange the industry structure soon.

Under this scenario, global vendors will dominate large-scale Tier 1 rollouts, high-end niche vendors will remain the industry thought leaders and dominate the lucrative, customized kiosk demand, while low-middle-end kiosk developers will serve lower-tier retailers, while needing to tighten their market niches to grow.


Niche marketplace has changed little, but that may change

Competitive Positioning

KioskSophistication

RegionalSupplier

Global Capabilities & Presence

Established leaders, many niche players, little vertical integration

NeoProducts

AdFlow Networks

IBM

Kiosk Info Systems

Fujitsu

Wincor

SeePoint

Meridian

Frank Mayer

NCR

Flextronics

Olea

ZoomSystems

Ultimedia

Radiant

High-end customizers – flourishing in current market.

PFU

Global giants – poised to see economies of scale provide price/support advantages.

Low-middle market players need to

consolidate or find tight niches to compete with global leaders.

LiveWire

HashkioskPartech

friendlyway Motorola


About VDC Research Group

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2010 VDC Research Group, Inc.

Vdc 2010 kiosk report excerpts

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