March 08, 2004

KIS in the news

Kiosk company expecting employment, sales growth

From the March 5, 2004 print edition
Kiosk company expecting employment, sales growth
Tom Locke
Denver Business Journal

After a couple of tough years in 2001 and 2002, kiosk maker Kiosk Information Systems Inc. is back on the fast-growth track, almost tripling its year-over-year production of kiosks to nearly 8,000 in 2003.

This year it expects to double that number to 16,000 units and increase employment to about 100 by the end of 2004, up from an average of about 70 now and 45 a year ago, said President Rick Malone, 46, who founded the business in 1993.

The new employees will be added at the company's 65,000-square-foot headquarters building in Louisville, where it assembles kiosk parts it outsources from various parts of the country and the world.

"They're one of the leaders, if not the leader, in the business. They're doing great," said Francie Mendelsohn, president of Rockville, Md.-based kiosk consulting and research firm Summit Research Associates.

Mendelsohn said the firm produces high-quality kiosks, is cost-effective and can deliver quickly. And though competitor IBM Corp. has picked up some of the big digital photograph kiosk orders in 2003 from Fuji and Kodak, the little company in Louisville can definitely compete with IBM, she said.

"Not only are they good guys, they have a very impressive work ethic," Mendelsohn said. "They just don't ship subpar products."

Amy Garland, marketing manager for Portland, Ore.-based health and lifestyle information company Healthnotes Inc., said her company picked Kiosk because of its "expertise in developing kiosks for the retail environment." It has provided an "excellent amount of service" to Healthnotes, she added.

Even the battle against terrorism comes within the Kiosk domain. Kiosks from the company are being tested at the Miami and Baltimore airports to check foreign visitors entering and leaving the United States by taking their pictures, scanning the bar codes on their passports and recording their thumbprints.

The demand for such kiosks by the Department of Homeland Security for airports, seaports and other departure/entry points might be about 10,000 units, Malone said, but even that "could be scratching the surface." He foresees the potential for using such security kiosks for checks at ordinary office buildings, for instance.

"It sounds a little James Bond, but how far are you going to go with your security?" he asks.

Of the company's 2003 revenue, about half came from kiosks designed for human resources uses, 30 percent from public Internet systems and the other 20 percent from miscellaneous uses.

In the HR arena, Kiosk's customers include the U.S. Postal Service, Pepsi and other big names. It supplied 2,700 units to Wal-Mart last year for job-application kiosks and nearly 400 kiosks to the Walt Disney Co., which enable cast members at theme parks to schedule vacation time and check out their health insurance plans.

The HR kiosks have a payoff period of as little as three months and are attracting considerable interest because of their accuracy, elimination of waiting lines and cost savings on labor.

Kiosk also produced 3,000 public-Internet kiosks last year. Examples can be seen at Denver International Airport, where the kiosks provide Internet-access uses such as checking e-mail or stock quotes for 25 cents a minute. The airport has eight "Shibby" kiosk locations, with four units each, on its three concourses.

Within 90 days, the public Internet units made by Kiosk will have the capability of downloading music to either a memory device, such as an MP-3 player, or a CD provided by the kiosk.

Mobile phone company Cricket Communications Inc. uses kiosks to enable users to "recharge" their phones with incremental minutes by putting cash in a machine at the kiosk. And Kiosk has a QuickPix product that lets users manipulate digital photographs -- and even insert balloons with smart-alecky captions -- and then print them immediately.

Kiosk has grown fast for most of its life. Yearly revenue rose from $60,000 in its first full year in 1994 to $1.2 million the next year, and then to $1.8 million, $4 million, $5 million, $7.5 million and $13 million by 2000.

Kiosk was projecting revenue of $20 million for 2001, but then the Internet bubble burst and the company posted lower revenue in 2001 than 2000, the first year-to-year decline in its history.

That was partly because retailers hurt by the economic slowdown cut kiosk marketing experiments, and partly because dot-com companies using Internet-related kiosks closed down. Plus, travel dove after the Sept. 11, 2001, terrorist attacks and that hurt the use of travel-related kiosks.

Some kiosk uses just haven't worked, Malone said. For instance, kiosks are too expensive for advertisement or marketing purposes, he said, and single-purpose kiosks devoted to sales of products such as flowers or car insurance also have been unsuccessful.

The hybrid public Internet kiosk is exciting because of its potential multiple purposes, including everything from Web access to music CD creation, photo prints and money orders, Malone said.

The company's revenue rose in 2002, but still not to the $13 million level of 2000. It posted minimal losses in 2001 and 2002 but made it back to profitability in 2003, when revenue took off again, reaching two-and-a-half times the level of 2002.

Malone declined to provide an exact revenue figure for 2003, but said it was "well into the mid-20s" in millions of dollars.

Kiosk prices can vary widely, from as little as $1,200 to as much as $20,000. That's why the number of produced units could increase 100 percent this year while producing a rise in revenue of only 50 percent.

"We would be slightly ahead of the industry, if we grew as expected," Malone said. "The pipeline is very full and it looks very promising."

One element helping the company land business is its ISO 9001 certification, he said. That designation is designed to assure buyers of a high-quality production process.

Summit Research projects North America's installed base of kiosks will grow from 201,000 in 2003 to about 325,000 by 2007, while the number of kiosks in Europe will grow from 159,000 to 290,000. That translates to 255,000 units added in four years.

One reason for the sales growth at Kiosk in particular is the use of outside sales offices now established in San Diego, Minnesota, New York and Texas. Also, the inside sales force has grown.

But the company's not just about growth and the quality of its products. Malone, who has been married for 17 years and has two children, said the company culture includes a balancing of career and quality of life.

He thinks he's managed that, despite the company's rapid growth since its humble beginnings. Kiosk started out with less than $100,000 in funding from two investors and an SBA-guaranteed loan for $70,000 through First National Bank of Fort Collins.

It has grown without infusions of outside equity capital, and Malone sees no financial requirement to go public. At some point, Kiosk might consider an acquisition offer, he said, but he thinks there's plenty of opportunity to increase the value of the company before that happens.

"The management team is committed to grow this to its highest valuation," Malone said.

Kiosk company expecting employment, sales growth - 2004-03-08 - The Denver Business Journal

Posted by Craig at March 8, 2004 10:10 PM