July 08, 2004

Signs of Recovery article

High tech kiosks show signs of recovery

07-06-2004 --

By DENISE DEVEAU

After months of false starts and languishing returns, the Canadian self-service kiosk industry seems to be making a comeback.

Following an 18-month slump, the market for high-tech kiosks showed a cautious upswing last year, according to a report from Summit Research Associates Inc., and the numbers are looking good for this year. Some players reported up to a fourfold increase in business in 2003 compared with the previous year, it said, and more than 250,000 kiosks are expected to be installed in North American stores and public areas by 2005.

Digital photography kiosks, airline check-ins and retail self-checkout are among the applications Summit credits with helping to "jump-start the kiosk industry once again." Several Canadian developers and enclosure manufacturers are leading the charge in key areas, according to Summit president Francie Mendelsohn, who says Canadian companies are "pushing the envelope."

"There are absolutely some leaders in Canada, both in terms of innovation and market share," Ms. Mendelsohn said. "The Kiosk Factory's Famous Players [system] is still one of the best there is. TouchPoint saw the need for digital photography [kiosks] early in the game. For sheer drop-dead impressive [interface development], you need look no further than St. Clair Technologies. And bill payment is turning into a very lucrative market for Info Touch."

The success of these companies lies in the ability to find a profitable business case.

Hamed Shahbazi is chairman and chief executive officer of Info Touch Technologies Corp. of Burnaby, B.C., a specialist in financial transaction software and payment services for electronic kiosks. He says in recent months, the company has focused less on new sales and more on maximizing recurring revenue by attacking an overlooked but profitable market: Convenience store chains.

Since reformulating the business plan, Info Touch has landed contracts with Circle K Corp. and Exxon Mobil Corp., as well as Alimentation Couche-Tard Inc. (which purchased Circle K in December, 2003) for deployment of its ZapLink E-Services Program for Mac's Stores in Canada. Info Touch's 2003 revenue was triple its 2002 numbers.

Kiosk Factory in Toronto, a software developer whose $5-million Famous Players project ranks as one of the largest kiosk jobs in Canadian history (not including the rollout of automated banking machines), reports it is showing a dramatic increase in revenue this year. Says company president Julian Brown: "Kiosks were dramatically oversold and estimates were inflated. Designs looked fantastic, but there was no concern for basic ergonomics. A lot forgot to address the fact, is the thing useful? Does it render a business process more efficient?"

He says despite the market saturation, kiosk ticketing has been a solid revenue generator with a strong business case. The Famous Players system, for example, accounts for $500-million a year in revenue at a cost of approximately 2 cents per transaction.

"That's about one-fifth of what it costs to have a teenager in a glass box," Mr. Brown said.

One of the longest-standing Canadian players in the kiosk biz (20 years and counting), interactive application developer St. Clair Interactive Communications Inc. of Toronto, says it recorded its highest gross margin ever in 2003, although it won't go into specifics. President Doug Peter credits the recovery to some major inroads in Europe, as well as moving "further upstream" with remote management and content management applications.

The killer app, he says, is multi-channel software that allows users to have one application driving the kiosk, as well as other customer-facing devices (handheld, display screens, price checks).

"As far as we know there are only two in the world that can do this us and IBM," he said.

Canada is well positioned to capitalize on the improving market for kiosks from the point of view of expertise, market watchers note.

As Ms. Mendelsohn says: "I have long wondered why is there so much talent in Canada that doesn't seem to be here in the U.S. One of the strengths is back-end management and interfaces. Others [outside Canada] are now getting into the same thing but late."
Source: www.globetechnology.com

Posted by Craig at July 8, 2004 02:52 PM