-FROST & SULLIVAN: Interactive multimedia kiosks continue to lead self-service terminal market

* The European Market for Interactive Multimedia Kiosks (Report 3707)

Companies and organisations throughout Europe are constantly investigating new ways to leverage the recent technology advances in order to reduce their costs and increase their customer base.

Interactive Multimedia Kiosks (IMKs), when used with a strong supporting strategy, improve customer service, expand the customer base, reduce labour costs and provide an increase in potential revenues by multiplying the point of contacts. These benefits have largely contributed to the growth of the market in Europe, reports a new study by Frost & Sullivan, the international marketing consulting company.

However, the kiosk market will not reach the boom many vendors have been expecting. The total European IMK market, valued at US$150.8 million in 1998, will enjoy healthy growth throughout the forecast period and eventually find a niche market. IMKs will be used in conjunction with a range of other new distribution channel technologies to provide more efficient levels of customer service. The banalisation of these devices will push revenues to a level of US$726.2 million in 2005.

The overall revenue and unit growth is sustained throughout the period by increasing technology acceptance, penetration of application environments and overall technological improvements. As the average price declines, more potential clients will choose these terminals to expand their brand exposure.

According to Rachel Rowe, Research Analyst at Frost & Sullivan, says: "The main factors driving growth in the IMK market include fiercer competition in the business world, which force companies to increase their distribution channels, find new sources of revenues, lower costs and increase customer satisfaction."

The key trends characterising the IMK market include the increasing number of Internet-based kiosks and the convergence of POI (point-of-information) and POS (point-of-sales) systems, as well as the rising significance of the government market.

The banking and finance sector represents the biggest market for IMK applications and was the first market to implement kiosks as part of their distribution strategy. This sector is expected to experience exponential growth over the forecast period, driven by an increasing need to lower costs and strengthening competitive pressure to maintain and gain customers. The main trend in the market today is the move towards unmanned banking outlets.

Meanwhile, the main drivers affecting the retail IMK market include the socio-economic factors changing consumer attitudes. Retailers are experimenting with new delivery channels in order to reduce their costs and to reach a wider customer base. They are investing heavily in IT to maintain their competitiveness, but IMK is not the only technology being applied in the market. These devices are in competition with online services and Internet appliances.

The potential for large-scale kiosk implementation is huge in government markets and many vendors are focusing on extending their activity in this segment. Frost & Sullivan expects this segment to show the most dynamic growth rates of the market. This growth will be driven by strong government and European initiatives to promote IT development in public sector, as well as continued efforts to streamline public services.

Nearly 80.0 per cent of the IMK revenues are generated by four country zones, namely Germany, Iberia, the UK and France. These are the countries where IMKs are really gaining momentum and where projects are moving from small trial projects to large rollouts.

Germany is driven by its market size, whilst Iberia has shown the fastest uptake in kiosks of the whole of the industry in terms of penetration. This is mostly due to the characteristics of the Iberian self-service industry, such as ATMs, which offered multifunctional services.

There are considerable variations in IT investment and end-user acceptance across the European region. The economic structure also impacts on the potential of the IMK market. Countries where major consolidation has taken place have more potential due to the higher investment capacity of large organisations.

Rachel Rowe concludes: "Overall, the size of the IMK market is too small for the big players to actively market their position. Many top vendors work in partnership with smaller players for the hardware manufacturing or software development. The smaller players need the big vendors for larger rollouts and support and maintenance of the kiosk networks. Large vendors focus on a turnkey solution positioning."

Frost & Sullivan is an international marketing consulting company that monitors a comprehensive spectrum of high-tech markets, including the IT industry for market trends, market measurements and strategies. This ongoing research is utilised to complement a series of research publications - such as the forthcoming study discussing European CRM Markets (3703) - to support industry participants with customised consulting needs. Free executive summaries of all Frost & Sullivan reports are available to the press.

CONTACT: Frost & Sullivan Public Relations Department Tel. +44 (0)171 915 7824 Fax: +44 (0)171 730 3343 e-mail: [email protected]) WWW: http://www.frost.com

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