October 03, 2011

VendScreen Debuts Retrofittable Multifunction Touchscreen Display For Vending Machines

Android based POS add-on with sales assistant for vending machines touted. MDB interface to MEI or Crane. Bolts into existing card reader slot.

VendScreen Debuts Retrofittable Multifunction Touchscreen Display For Vending Machines | Articles | Vending Features | Vending Times Inc.

PORTLAND, OR -- VendScreen Inc., based here and founded by Dr. Paresh Patel, a vending operator, has introduced a touchscreen user interface for new and existing vending machines.

The user interface is also called VendScreen. It's an Android-based smart device that displays user-specific promotions and advertising, real-time product updates, cashless payment options and refunds, and nutrition information to comply with new federal nutrition information disclosure requirements. Retrofitted to an operator's existing machines, it can deliver real-time analytical information and DEX data uploads for third-party dynamic route scheduling and prekitting applications.

The device, coupled with cloud-based service, can bring retail-type promotions to vending, which could add value for users, operators and advertisers simultaneously, according to the manufacturer.

VendScreen offers users an intuitive interface resembling a smartphone's. It presents "Jen," a helpful onscreen avatar who stands ready to assist customers with every step of the purchasing process. Jen aids in product selection to satisfy specific dietary needs, providing nutrition facts prior to purchase and offering special promotions and advertisements geared toward the individual customer's tastes. The novel interface also allows customers to make cashless payments through their credit, loyalty or online accounts, and provides instant problem reporting.

Earlier this year, the federal government had estimated that the vending industry will require about 14 million staff hours annually to label machines and otherwise comply with new rules mandating calorie disclosure. The Portland, OR, company said its VendScreen will let operators comply effortlessly, virtually eliminating the time and expense.

Once installed, VendScreen seamlessly synchronizes with backend databases to maintain up-to-date nutrition facts, which frees drivers, technicians and office employees from the need to keep machine information current. VendScreen automatically keeps track of new products added, updating each machine with the necessary new nutritional information and other product details.

VendScreen can replace several single-purpose devices, eliminating the need for separate card readers or DEX upload devices. It integrates with such vending management software as MEI's Easitrax and Crane's Streamware. Using industry-standard MDB protocol, VendScreen may be installed in virtually any vending machine. It fits into existing card-reader cutouts, using the same bolt pattern and antenna connector, so installation takes only a few minutes.

"These features, in conjunction with its simple, intuitive interface and targeted advertising, give VendScreen the ability to increase the number of transactions per user, frequency of use, and vends per transaction," the manufacturer said.

Every day, 78 million people use approximately five million vending machines in the United States, taking 30 to 45 seconds to make their selection, the company estimates. VendScreen displays advertisements directly on the machine during those few seconds, engaging consumers at the very moment they are ready to purchase a product. By use of a small, motion-sensing camera, VendScreen tracks ad impressions and conversions; it also can deliver coupons as customer incentives.

Because it supports cashless transactions through fees sponsored by advertisers, it is a streamlined advertising medium, the company observed. With VendScreen, ads can be changed and statistics can be viewed in real time, providing quantifiable results by tracking which ads are displayed and the purchase actions they generate, so advertisers know which ads are working and why. VendScreen brings the flexibility of retail advertising programs to the vending industry, the manufacturer noted.

VendScreen Inc.'s founder is a lifelong entrepreneur known for applying breakthrough technologies to established business models. At age 17, he founded Courtesy Vending in Portland, OR, to help pay for college, then led the company through growth to 20 times its original size in five years, making it the largest independent vending operation in the city.

Patel said VendScreen is a game-changing product for advancing vending's position in the retail channel.

VendScreen Debuts Retrofittable Multifunction Touchscreen Display For Vending Machines | Articles | Vending Features | Vending Times Inc.

Posted by staff at 08:22 AM

June 13, 2011

Supermarket Chain Pulls Plug On Wine Venders

HARRISBURG, PA -- Wegmans Food Markets Inc. has terminated an agreement with Pennsylvania's Liquor Control Board to sell wine through automated kiosks at 10 of its stores throughout the state.

Supermarket Chain Pulls Plug On Wine Venders | Articles | Articles | Vending Times Inc.

The Rochester, NY-based supermarket chain cited machine malfunctions, lower-than-expected sales and high volumes of customer complaints. In a May 31 letter to the PLCB, Wegmans requested that the machines be removed within a month. It said in the letter that customers found the choices too limited and wanted more personalized service.

The move leaves 22 of the wine kiosks in operation in supermarkets throughout the Keystone State. Liquor Control Board officials said the agency plans to add other sites, including 24 Walmart locations slated for this summer.

Separately, the PLCB said recently that it plans introduce a pilot program to feature hard liquor in some of the kiosks.

It's been a bumpy road for the wine-vending program since it rolled out in supermarkets last summer. The PLCB suspended the program statewide in December to probe persistent mechanical malfunctions. Simple Brands, the Conshohocken, PA, company that manufactures and operates the machines, identified and corrected the issues and the program resumed early in 2011.

Supermarket Chain Pulls Plug On Wine Venders | Articles | Articles | Vending Times Inc.

Posted by staff at 07:20 AM

Crane, USAT Ink 3-Year Pact For Combined Cashless Vending System

WILLISTON, SC and MALVERN, PA -- Crane Merchandising Systems and USA Technologies Inc. said they entered a three-year agreement to offer a combined cashless vending solution to Crane customers in North America.

Crane, USAT Ink 3-Year Pact For Combined Cashless Vending System | Articles | Vending Features | Vending Times Inc.

Under terms of the accord, USAT will provide card processing, wireless communications and data services under its ePort Connect Service to customers who use the new Crane's Currenza cashless bill validator and card reader. In addition, USAT will furnish appropriate hardware solutions and grant Crane a license for designated USAT patents.

"USA Technologies is delighted to work with Crane," said USAT chairman and chief executive George R. Jensen. "We are combining our best-in-class solutions, exceptional service and innovation, to bring to customers a proven cashless payment solution."

CMS president Brad Ellis explained that "Crane's new Currenza cashless bill validator and card reader, aligned with USAT's leadership in payment processing and telemetry services for vending, will provide a great value option to our customers. With our other offerings, this package further implements our strategy to support open standards for vending."

USA Technologies' ePort Connect is a payment and machine-to-machine telemetry service for vending machines. It is described as the industry's most "open" platform, providing payment and telemetry solutions in cooperation with four device manufacturers, several payment processors and three wireless services providers.

EPort Connect complies with Payment Card Industry (PCI) Level 1 requirements, providing a portfolio of services which enable vending, kiosk, and other self-serve retail machines to accept cashless payments and handle all elements of transaction processing, wireless connectivity and consumer support.

USA Technologies' ePort Connect service synchronizes DEX data remotely with Crane Streamware's VendMax vending management software suite, which provides vending route management, inventory control, prekitting, and dynamic route scheduling to operators.

Crane Merchandising Systems, a Crane Co. company, is one of the world's largest manufacturers of vending machines. It also is leader in payment systems, vending management software and wireless communication technology. It manufactures machines in Williston, SC. USA Technologies provides and supports wireless cashless transactions, associated financial and network services, and energy management. Its self-serve retail payment and telemetry solutions are used in the vending, amusement, commercial laundry, hospitality and digital imaging industries. The Malvern, PA, company, which has been granted 79 patents, has agreements with Verizon, Visa and others.

Crane, USAT Ink 3-Year Pact For Combined Cashless Vending System | Articles | Vending Features | Vending Times Inc.

Posted by staff at 07:18 AM

May 16, 2011

Verizon Wireless And USAT Team Up To Offer Cashless Payment Services

USAT says it has more than 100,000 m2m connections to ePort Connect, used by operators of vending machines, kiosks and digital imaging equipment, among other unattended points of sale. The company also expects to benefit from Verizon Wireless's Machine-to-Machine Management Center.

Verizon Wireless And USAT Team Up To Offer Cashless Payment Services | Articles | Articles | Vending Times Inc.

Tim Sanford
[email protected]
vending, vending machine, vending machine business, automatic retailing, cashless vending, Verizon Wireless, USA Technologies, Stephen P. Herbert, Mario Turco, m2m, Verizon Machine-to-Machine Management Center, nPhase, ePort Connect
PHILADELPHIA -- Verizon Wireless and USA Technologies Inc. announced in April a collaborative effort to accelerate the adoption of wireless small-ticket cashless payment capability and "machine-to-machine" applications through USAT's ePort Connect service. USAT solutions will now include the Verizon Wireless network for connectivity that enables cashless payments at vending machines, using credit and debit cards.

USAT says it has more than 100,000 m2m connections to ePort Connect, used by operators of vending machines, kiosks and digital imaging equipment, among other unattended points of sale. The company also expects to benefit from Verizon Wireless's Machine-to-Machine Management Center. The m2m portal is managed through nPhase, a joint venture between Verizon Wireless and Qualcomm that has played a pioneering role in assisting businesses to speed deployment of m2m applications.

"Our association with Verizon Wireless aligns us with a powerful leading global brand in the wireless communications industry," said USAT president and chief executive Stephen P. Herbert. "In addition to providing our customers with the reputable service that Verizon has built its brand on, we believe that the sales agreement will enable us to increase our sales reach by having our ePort Connect cashless payments service now included in the Verizon sales toolkit."

Mario Turco, regional president of Verizon Wireless in Philadelphia, said that the communications giant will work with USAT to offer a cost-effective and turnkey noncash payment solutions to B2B customers

Verizon offers wireless and wireline products and services that provide networking capabilities to enterprise and government customers. It operates the nation's fastest 4G network and largest 3G network. Verizon Wireless is a joint venture of Verizon Communications and Vodafone.

USA Technologies is a leader in wireless, small-ticket cashless transactions, associated financial-network services and energy management. The company provides networked credit card and other noncash systems to the vending, commercial laundry, hospitality and digital imaging industries.

Verizon Wireless And USAT Team Up To Offer Cashless Payment Services | Articles | Articles | Vending Times Inc.

Posted by staff at 07:49 AM

Pepsi's 'Social Vending' Machine Features 'Gifting' Function

PURCHASE, NY -- New from PepsiCo is the Social Vending System, a networked vending machine with large "full-touch" screen designed to enable consumers to connect with Pepsi brands (and one another) at the point of purchase. It made its debut in prototype at the National Automatic Merchandising Association's 2011 OneShow in Chicago

Pepsi's 'Social Vending' Machine Features 'Gifting' Function | Articles | Articles | Vending Times Inc.

Novel features of the system include provisions for a patron to "gift" a friend by selecting a beverage, then entering the recipient's name, mobile phone number and a personal text message – and, if desired, a short video recorded at the machine. Standard text message rates apply for the "gifting" function.

The gift is delivered with a system code and instructions for redeeming it at any PepsiCo social vender. The recipient may thank the original sender by dispatching a gift in return, or "pay it forward" by presenting a beverage to someone else.

The machines are equipped for remote monitoring, giving operators the ability to manage inventory levels and schedule deliveries remotely. Digital content also can be updated online, allowing easy changing of messages and media content.

"Our vision is to use innovative technology to empower consumers and create new ways for them to engage with our brands, their social networks and each other at the point of purchase," said Mikel Durham, chief innovation officer at PepsiCo Foodservice. "Social vending extends our consumers' social networks beyond the confines of their own devices and transforms a static, transaction-oriented experience into something fun and exciting they'll want to return to, again and again."

Social vending also makes it possible to perform a "Random Act of Refreshment" by purchasing a drink for a stranger through any other Social Vending System. For example, a consumer could send a message of encouragement to someone in a city smitten by challenging weather, or a congratulatory beverage to a student whose college or university has just won a championship.

The Social Vending System was conceived by PepsiCo's newly formed Equipment Innovation group, whose task is to apply emerging technologies to the delivery of relevant brand experiences for consumers through equipment. The design and user interface were created in collaboration with Milwaukee, WI-based DCI Marketing and Protagonist of Venice, CA.

"Our approach to technology innovation is driven by what we know consumers want," explained PepsiCo vice-president of equipment innovation Christine Sisler. "We're working with some of the best minds in the business to develop equipment that provides customization, personalization and choice."

PepsiCo explained that it sees large, prestigious accounts like colleges, universities and malls as offering a good fit for social vending. Further development of the platform is ongoing; a limited consumer test is underway now, and PepsiCo plans to test the concept with key strategic partners later this year.

The company reports that it respects its customers' privacy: email addresses and phone numbers are not stored unless expressly permitted by a user. PepsiCo does not share contact information with any other partners.

Pepsi's 'Social Vending' Machine Features 'Gifting' Function | Articles | Articles | Vending Times Inc.

Posted by staff at 07:43 AM

March 25, 2011

Coinstar Goes Up Against Cash Register In Kiosk War

NCR is now offering vending machines to CD, DVD and video game retailers, Bloomberg reports.

Coinstar Goes Up Against Cash Register In Kiosk War - Forbes.com

CR Corp, which competes with video rental kiosks from Coinstar's Redbox, is now offering vending machines to CD, DVD and video game retailers.

Bloomberg reports that NCR ( NCR - news - people ) declined to say which retailers it might work with.

NCR operates DVD rental machines under the Blockbuster ( BBI - news - people ) Express brand, leased from Blockbuster, which is working on a Chapter 11 reorganization.

Meantime, Blockbuster said in court filings yesterday it plans to cancel leases on 150 U.S. stores, and to simply abandon any property left in the building.

Coinstar Goes Up Against Cash Register In Kiosk War - Forbes.com

Posted by staff at 11:45 AM

February 02, 2011

TouchGo Unveils PC-Based Touchscreen Vender, Targets U.S. Market

A new PC-based vending machine incorporating touchscreen technology is being deployed at locations in England, and the company behind the interactive vender says it's ready to license its system to American manufacturers.

TouchGo Unveils PC-Based Touchscreen Vender, Targets U.S. Market | Articles | Vending Features | Vending Times Inc.

Emily Jed
[email protected]

TouchGo Technology Ltd.'s interactive venders were beta-tested at Visa Europe's London headquarters, and they are now online at MasterCard's headquarters in that city.

Designed at TouchGo headquarters at England's University of Reading Science and Technology Centre here, and manufactured in England, the combination snack and beverage machine is controlled by an embedded networked PC running under Microsoft Windows, with application programs written with Microsoft's .NET 4 platform. It features a 32" front-mounted touchscreen interface.

TouchGo just completed a one-year pilot with a modified N&W Global Vending combination snack and cold drink machine, a type long popular in Western Europe. The vender, retrofitted with TouchGo's PC vending technology, payment and touchscreen interface, was placed at the Visa Europe headquarters.

"The system has run well, and performed above our expectations," said TouchGo managing director Per Hovland. "PayWave contactless sales have increased over the period, and the average transaction value has increased by 25% to 30% over sales through a cash-only based vending machine," he reported. That comparison vender also was installed at the site in January 2009 as part of the test.

The TouchGo executive said his company is now in discussions with Visa to upgrade the test machine to the full production model. TouchGo installed its first production-model machine at Mastercard Europe headquarters last month, under a three-year contract.

The vender's spiral delivery system enables it to merchandise a variety of confections and snacks, as well as cold drinks in cans and bottles, from easily adjusted tray-and-spiral combinations. Its vend mechanisms, refrigeration unit and payment systems are controlled by a PC mainboard running Microsoft Windows. Microsoft's .NET 4 framework gives developers access to an extensive library, and supports a variety of programming languages.

Hovland explained that this is at the heart of the machine's dynamic merchandising capabilities. "The software features a new type of rules engine that allows a rich choice of brand promotions, permits changing selections dynamically, enables multiple pricing and provides several new features related to enhancing the consumer experience while driving up average transaction values via multi-vend capability," Hovland explained.

The onscreen product-selection buttons and screen layout are modeled after the iPhone screen, to make the interface as familiar and user-friendly as possible for younger customers. The patron chooses one or several products by touching brand images on the screen. A message invites users to touch the "i" icon on each product button to view additional information, which is displayed on a virtual three-dimensional "ad cube."

The cube can be "rotated" by a single swipe of the finger on the screen to view each of its four sides. It can display nutritional and brand information as well as product-related video on any face of the cube. The patron can review the contents of his or her "basket," add or remove items, choose the method of payment, and then initiate the vend.

The vender accepts multiple forms of payment, from coins and banknotes to Visa Paywave and Mastercard PayPass contactless cards. The Vivotech contactless reader also supports NFC (near field communications) payment made with suitably programmed mobile phones and tags. All payments are processed by HSBC Merchant Services in the UK, a subsidiary of Global Payments Inc. (Atlanta), which Hovland said will process payments in the U.S. and Canada.

Adding value to the shopping experience is a voucher printer that can dispense promotional coupons, including discounts for multiple product purchases. A two-dimensional scanner reads the coupons and can also scan coupons displayed on mobile phone screens.

This scanner, mounted in the machine's front panel, offers additional possibilities. For example, the company is developing a PayPal payment module for this scanner.

TouchGo software enables the machine to display a wide spectrum of video content, ranging from onscreen live news to Twitter feeds, along with interactive advertising. It can also run a number of unique PC-based vending software applications to offer appealing services onscreen, including mobile phone top-up, flower and gift ordering, remote food ordering from local delis and restaurants, and market research questionnaires.

All content to the machine is managed remotely over the Web by means of a Microsoft SQL database, maintained centrally on TouchGo's cloud-based servers and communicating as needed with the vender.

The machine measures 74" (1,870mm.) high by 37" (940mm.) wide by 33" (850mm.) deep, fits through a 30" door and is mounted on wheels for trouble-free transport.

More information can be had from Per Hovland at (44 0) 628 647443 or (44 0) 7590 423473, or by emailing Hovland at [email protected]

TouchGo Unveils PC-Based Touchscreen Vender, Targets U.S. Market | Articles | Vending Features | Vending Times Inc.

Posted by staff at 07:02 AM

PLCB: failed wine kiosks back online

The wine dispensing vending kiosks are back in service and open to the public after a technical tuneup. Thirty machines in total.

PLCB: failed wine kiosks fixed - News - The Times-Tribune

ter being maligned for how they function and failing to function properly, the Pennsylvania Liquor Control Board's wine kiosks have returned following a technical tuneup, ready to vend bottles of wine at Wegmans stores in Dickson City and Wilkes-Barre Twp.

Tuesday afternoon, the machines went live again after an absence of more than a month. The PLCB, which controls wine and spirits distribution and sales in the state, took the machines offline after repeated technical problems and complaints.

"There were sporadic problems with the machine, and the PLCB made the right decision to shut them down and fix the problem," said Wegmans spokeswoman Jo Natale.

The two local machines are among 30 statewide headed back in service.

The machines gained notoriety not just for the failure but the tedious steps to which customers had to subject themselves to make a purchase, including scanning a driver's license and credit card, blowing into a breath analyzer and being monitored on camera by a state employee in Harrisburg who remotely approves each sale.

Nevertheless, Ms. Natale said customers like the convenience of buying wine where they purchase food.

The maker and operator of the machines, Simple Brands, repaired and tested the machines, called "Pronto Wine Kiosks," said PLCB spokeswoman Stacy Kriedeman. The PLCB also conducted its own testing.

State officials expect to have 100 kiosks when the machines are totally rolled out. Walmart also has applied to host kiosks.

Contact the writer: [email protected]

Read more: http://thetimes-tribune.com/news/plcb-failed-wine-kiosks-fixed-1.1098912#ixzz1Co9GLrYl

PLCB: failed wine kiosks fixed - News - The Times-Tribune

Posted by staff at 06:29 AM

January 16, 2011

State Wine Machine Problem Listing

Comprehensive listing of the problems plaguing the wine bottle dispensing kiosks. Faulty resistors and circuit boards were called out as biggest culprits. That's what they said...

State wine machines reported to be faulty

HARRISBURG — The wine vending machines placed in Pennsylvania grocery stores shut down or failed to dispense bottles hundreds of times before they were taken out of service last month, a paper reported.

More than 700 kiosk problems were reported to the Pennsylvania Liquor Control Board between June 24 and Dec. 20, The (Harrisburg) Patriot-News reported Saturday, citing a review of the agency’s call center log obtained through a Right to Know request.

The kiosks, located in 29 supermarkets across the commonwealth, are aimed at making purchasing wine more convenient for consumers, who otherwise would have to go to a state liquor store. Customers have to pass a blood alcohol breath test to use them.

All of the kiosks were shut down Dec. 21 after bottles failed to dispense in one out of every 150 to 175 transactions.

The paper says more than 150 calls reported that kiosk screens froze, were lagging or did not show any words. More than 100 other reports said the kiosk shut down, showed error messages or the screen went black.

About 130 reports dealt with customers’ ID cards not scanning, getting stuck in the machine or prompting an ID hardware error message, according to the paper’s analysis.

Other problems included kiosk doors not unlocking, plastic shields not rotating to dispense the bottle or staying open after a transaction, Breathalyzer pads requiring multiple attempts and receipts not printing.
Jim Lesser, CEO of Simple Brands, the developer of the Pronto wine kiosks, said many of the reported problems stemmed from faulty resistors and problems with circuit boards. He said the company replaced circuit boards and tens of thousands of resistors, realigned receipt printers and installed faster processors to speed transactions.

Five or six kiosks are to be reopened Tuesday on a trial basis for a week, and the rest will be put back into service if there are no more problems, Lesser said.

“This is a first-generation machine,” he said. “I certainly didn’t anticipate having as many glitches as we had ... (but) these types of things are pretty standard.”

State wine machines reported to be faulty

Posted by keefner at 09:36 AM

December 28, 2010

Pennsylvania Shuts Down Wine Venders To Probe Breakdowns

Failure of machines to dispense wine being investigated. Meanwhile we learn that Liquor Control Board did not have to pay for the machines and the vendor is supposed to get paid back by advertising. That is to say machines they paid nothing for have damaged consumer relations and left customers high and dry.

Pennsylvania Shuts Down Wine Venders To Probe Breakdowns | Articles | Vending Features | Vending Times Inc.

HARRISBURG, PA -- Pennsylvania's Liquor Control Board abruptly shut down the state's wine kiosks last Tuesday, citing persistent mechanical problems -- chief among those problems is the inability to dispense the bottles. A day later, Pennsylvania Auditor General Jack Wagner said he will conduct an audit into the matter.

Wagner said his audit would focus on whether the kiosks, which are located in 30 supermarkets across the Keystone state, are delivering the customer convenience and additional revenue to the commonwealth that the LCB touted when it awarded a contract to Simple Brands LLC of Conshohocken, PA. Simple Brands was reportedly the only company to respond to the LCB's 2008 request for proposals.

"The kiosks' breakdown during the height of the holiday shopping season has left customers high and dry, and we want to know why," Wagner said in a prepared statement.

The LCB launched the kiosk program -- the first of its kind in the nation -- to much fanfare last summer, with a test program in two Harrisburg-area supermarkets. An LCB official said in August that the technology, which requires customers to scan their driver's license and pass a Breathalyzer test, was working well. He also said that sales were running 20% to 30% higher than anticipated, according to Wagner.

The program was expanded to include kiosks stationed in 30 supermarkets throughout the state.

LCB officials said Simple Brands is working to identify and correct the mechanical issues and expressed confidence that the machines would be running again early next year.

Under the contract with Simple Brands, the LCB reportedly does not pay for the machines, but the machine manufacturer earns revenue from digital advertising on the kiosk screen.

Posted by keefner at 08:55 AM

November 29, 2010

Store wine kiosks could be short-lived

HARRISBURG -- If proposals to privatize state liquor stores gain momentum, new self-serve wine kiosks could go away.

Store wine kiosks could be short-lived

The wine-dispensing contraptions first appeared in Pennsylvania grocery stores just five months ago, and already some lawmakers warn they could become obsolete.

"I think those kiosks are coming to an end," said newly elected House Majority Leader Mike Turzai, sponsor of the latest proposal to sell off state Wine and Spirits stores.

Manufactured by Conshohocken-based Simple Brands, the machines have been described as Rube Goldberg machines that incorporate a Breathalyzer, identification card scanner and security cameras monitored in real time to prevent purchase by the intoxicated or the under-aged.

"It's a silly type of an idea that only government bureaucracy could come up with," Mr. Turzai said.

Simple Brands's CEO Jim Lesser, though, said the machines include only the elements required to satisfy state regulators.

While criticism over machine design stings, Mr. Lesser is more focused now on what he'll do if Mr. Turzai's privatization plan becomes law.

"I was always concerned that it could happen, but not as much as I am today. I didn't think privatization had a real chance of occurring," he said.

With a Republican-controlled Legislature and a privatization-minded governor-elect, the idea to sell of the 621 Wine and Spirits stores isn't so far-fetched anymore.

"I do believe that privatization is still a long shot, but it's more of a possibility than it was a few years ago when we proposed the wine kiosks, that's for sure," Mr. Lesser said.

Mr. Turzai said he's convinced it will happen. State senate leaders, too, have promised to consider privatization during the next legislative session.

The last time the idea was under serious consideration was 14 years ago when Tom Ridge was governor. A lot has changed since then, most significantly, the state's finances, Mr. Turzai said.

"Gov. Ridge was in during flush times. We're not in flush times now; we're in belt-tightening times," he said.

Mr. Turzai has a plan to generate $2 billion by auctioning 100 wholesale distribution licenses and 750 retail licenses.

Mr. Lesser said the plan is short-sighted because the $2 billion would disappear quickly and the state would lose out on revenue from the mark-up on wine and spirits.

Mr. Turzai disagrees.

He said the $2 billion could be invested to generate a steady stream of revenue. And, he said, while the state would lose about $90 million annually from sales mark-ups, alcohol tax collections, which approach $400 million annually, would not change.

Mr. Lesser said he hopes policy-makers who want to sell the liquor stores would make provisions for the kiosks to remain.

"We could lose the bulk of our investment in Pennsylvania, so we would hope there would be some consideration for the sums of money we've invested, though certainly there's no obligation for the state to do so," he said.

Simple Brands has placed 35 machines in grocery stores throughout the state and plans to roll out 65 more.

Mr. Turzai said grocery stores and other businesses that may win license auctions could choose to use kiosks, but there's little reason they would want to.

"I don't think there's a place for it in privately owned stores. I can't imagine anyone who would want to do that," he said.

Even Mr. Lesser says that, if given the choice, he would rather buy wine off a shelf than a kiosk. But, he said, the kiosks are convenient and, currently are the only option for grocery stores that want to sell wine.

Pennsylvanians, though, "are loving the kiosks. We're doing a lot better than we initially expected," he said, noting that 90 percent of kiosk users are repeat customers.

"Do the wine connoisseurs of the world like it? No. But it's not really made for them," he said. "It may not be perfect, but it's far better than what Pennsylvania had a year ago. Now you can buy a bottle of wine in the supermarket."

Stacy Kriedeman of the Pennsylvania Liquor Control Board declined to comment on whether the machines would become obsolete if liquor stores were privatized. She said policy issues are a matter for the Legislature, not the LCB.

If the machines disappear, taxpayers won't be out any money, she said. That's because tax dollars didn't pay for them.

Rather, Simple Brands developed them under an exclusive contract that involved no payment from the commonwealth. The company is recouping its investment by selling advertising on the machines' video screens and by charging a $1 transaction fee to consumers.

The contract has a provision that allows for termination if the state privatizes wine sales.

The contract has come under fire because Simple Brands was the only bidder and two of its four investors have close ties to Gov. Ed Rendell and contributed nearly half a million dollars to his political campaigns over the last decade.

Investor Herbert Vederman gave Mr. Rendell $346,276, including a $100,000 lump sum in 2002, campaign finance records show. Mr. Vederman also served as the governor's campaign finance chairman.

His business partner, Ira Lubert, meanwhile, gave Mr. Rendell $140,980 in that time period.

Mr. Vederman said he owns only about 1 percent of Simple Brands and isn't involved enough in its operations to comment on how privatization would affect the wine kiosk business.

Mr. Lubert did not return calls. He owns only a small percentage of the business, according to Mr. Vederman and Mr. Lesser.

The vast majority of Simple Brands, they said, is owned by Philadelphia businessman Warren Weiner, who operates the clothing store chain Deb Shops.

Mr. Weiner, too, is a Rendell contributor, having given a total of $6,000 in 2001 and 2002.

"Everybody who has suggested this is an inside deal because of Herb and Ira's relationship with the governor really has no idea. They are very minor investors," he said.

Rendell spokesman Gary Tuma said the campaign contributions did not influence the awarding of the contract. He said the decision was made by the Liquor Control Board, not Mr. Rendell.

Wine kiosks are Simple Brands' only product and Pennsylvania is the only state that has them, but the company is looking to expand into other states and to develop beer dispensers as well.

"Pennsylvania was never the end-all of what we were trying to accomplish," Mr. Lesser said. "This was an opportunity to prove our model to other jurisdictions that are interested in expanding their distribution model."

Read more: http://www.post-gazette.com/pg/10332/1106422-454.stm#ixzz16gohlE1V

Posted by staff at 09:28 AM

August 18, 2010

H-E-B and Coinstar Chirp Automated Vending Kiosks

H-E-B puts in "Chirp" vending kiosks from Coinstar which compete with ZoomSystems. Note there are 90 ZoomShops in Texas.

Smart little retail shops'
Automated kiosks take vending machines to the next level with a variety of products in malls, stores and airports
By VICKI VAUGHAN San Antonio Express-News
Aug. 17, 2010, 11:43PM
1 2

Kim Christensen : For the Chronicle
H-E-B shoppers pass by a Chirp kiosk, a high-tech vending machine, as they leave the store on Blackhawk.



Houston H-E-B Stores with Chirp kiosk machines:
• 9828 Blackhawk Blvd.
• 28520 Tomball Parkway
• 130 Sawdust Road
• 14498 Bellaire
• 10919 Louetta Road

Source: H-E-B
The term vending machine conjures up images of dropping coins in a slot to buy cola, candy or chips.
That's so 20th century.
Today's newest vending machines are high-tech "automated kiosks" that, with the swipe of a credit card, dispense designer purses, clothing, iPods, digital cameras and beauty products, to name just some of the offerings.
The snazzy machines are winning a following from buyers in airports, grocery stores, malls and even inside department stores.
While traditional vending machines represent a mature industry whose growth is slowing, the high-tech kiosks "are a new strong growth area," said senior analyst Toon van Beeck at IBISWorld, a research firm based in Los Angeles.


"It's all about convenience," he said, which today's consumers demand.

One of the newest automated kiosks, called Chirp, was installed at five H-E-B groceries in Houston in February and at five H-E-Bs in San Antonio a few weeks ago.

At the H-E-B on Blackhawk Boulevard near I-45 South and Beltway 8, the Chirp kiosk machine is positioned by an exit. In the window display Tuesday were five designer bags ranging in price from $44.99 to $139.99. Each bag was made by a different designer: Coach, Juicy Couture, Michael Kors, Kenneth Cole and DKNY.
Customer Fay Bariya spent several minutes in front of the kiosk machine.

"I always look," she said. It has become part of her shopping routine to see what bags are on display before she leaves the store.

She is not sure if she will ever buy a bag, but if she particularly likes one and the price is right, she just might, she said.

Pre-K teacher Gloria Garcia also regularly stops by the kiosk machine after she completes her grocery shopping.

Rest of article

Posted by staff at 07:11 AM

May 13, 2010

Gold dispensing kiosk

New gold dispensing kiosk (put money in and get gold out) showcased at Dubai. Video link

Posted by staff at 02:53 PM

May 12, 2010

Rent a Ride

Bicycles are rented from Bixi Bike kiosks, which look like ATMs with bike racks attached. Renters then swipe a credit/debit card and are given an unlock code, which is used to release a specific bike from the rack. If the bike you are given is too beat-up or defective, you can request to replace it and take out another via the touch screen.

Rent a ride - Lifestyle Features - Boston Phoenix

Last August, the Metropolitan Area Planning Council announced that a public bike-sharing system would be coming to Boston, possibly as soon as this summer. The bikes were to come from Public Bike Systems, the creators of Montreal’s Bixi Bike program.

Details of the agreement are still being ironed out, and funding options for the project are up in the air, but one thing is for sure — it’s coming. Director of Boston Bikes Nicole Freedman says progress is being made on the project, and the MAPC tells the Phoenix that it is still hopeful to launch by the summer. As the city closes libraries and lays off firemen, however, finding the resources to fund the project has been challenging.

“Bixi’s model is that you outright buy it” says Eric Bourassa of the MAPC, “and that was very expensive.” Instead of purchasing the entire system, the city wants Bixi to lease it to them. “Operating costs basically pay for themselves because it’s paid through the advertising and subscriptions,” says Bourassa. The main cost is getting the bikes to Boston, and the city is “literally in negotiations with Bixi over the details.”

Bicycles are rented from Bixi Bike kiosks, which look like ATMs with bike racks attached. Renters then swipe a credit/debit card and are given an unlock code, which is used to release a specific bike from the rack. If the bike you are given is too beat-up or defective, you can request to replace it and take out another via the touch screen.
Once you’ve got your bike, you ride to your destination and drop it back off at the nearest kiosk, again punching in your code.

According to the city’s Request for Proposal forms, dated last year, the network will consist of more than 150 station and 1500 bikes. That’s more than enough bikes for Boston. However, if the system in Montreal is any indication, traveling downtown may be frustrating, as the sheer number of bikers can result in too many full kiosks, leaving you wandering around looking for an open spot. Luckily, the kiosks know when they are full, and punching in your code at a full kiosk earns you a bit more time to find an open spot.

Montreal’s Bixi Bike program has seen little theft, as the bikes are constructed with parts that cannot be used on normal bicycles, making stripping them useless. Also, Bixi bikes are strange looking, and even if you spray paint it gold, it will still look like a Bixi. The biggest deterrent to theft, though, is probably the fact that the company had your credit-card information.

The MAPC says prices are under negotiation, but the basic pay structure goes like this:

Renters must first “subscribe” to the service, which allows them an unlimited amount of rentals for the time specified. In Montreal this ranges from $5 per day, $28 per month, or $78 per year (CAD). This also buys 30 minutes of ride time.

Rides lasting more than a half-hour will cost you, as renters are charged $1.50 for an additional 30 minutes, $3 for the following 30 minutes, and then $6 for each half-hour thereafter. The longer you use the bike, the more the rate climbs, which Bixi says helps increase the availability of bikes, discouraging people from taking long rides.

The MAPC says it is focused on launching Bixi Bike in the urban center of Boston, eventually expanding the program to Brookline, Cambridge and Somerville.

Read more: http://thephoenix.com/Boston/life/102060-rent-a-ride/#ixzz0nkJnzxlK

Posted by staff at 01:42 PM

March 02, 2010

Vigix rolling out ‘first true vending kiosks

Company announces new vending kiosk to be shown at KioskCom in Vegas. Unit vends physical items like mobile phones but also work for DVD apparently. Selling for $7K to $15K.

Vigix rolling out ‘first true vending kiosks’ | KioskMarketplace

Vigix rolling out ‘first true vending kiosks’

Christopher Hall
• 01 Mar 2010

Vigix is expecting big things from its new vending kiosk.

"We’re looking forward to winning the KioskCom Excellence Awards this year," Vigix Inc. vice president of marketing Ross Elkin said, only half-jokingly, in a recent phone interview.

While there are things called kiosks out there vending product, they’re essentially just bigger, more advanced vending machines, Elkin says.

"What we have is the first true vending kiosk," he said.

ZoomSystems, with its automated retail stores or ZoomShops, and redbox, with its DVD-dispensing kiosks, might take umbrage with that description, but Elkin says the new Vigix kiosk does offer distinct advantages over pervious transactional kiosks.

The new Vigix vending kiosk includes a top-mounted video screen for digital signage and features a slim design, giving it a two-square-foot footprint, Elkin says. The kiosk can be plugged into any 110-volt outlet and offers either cellular-based or hardwired Web access, he says.

So customers can not only buy product at the kiosk, they also could potentially log onto the kiosk owner’s online store to shop, and the top-mounted screen can be used for digital signage which can be controlled by a central Web-based software control system that also allows kiosk owners to view real-times sales and inventory information for the kiosk online.

The kiosks are designed to hold and sell a broad array of goods, but its highest-value application is going to be dispensing items with a certain physical profile in a certain dollar range, like mobile phones, Elkin says. The kiosk also can sell peripheral items, like cellular phone chargers, or digital content. A kiosk owner conceivably could set it up to sell e-readers as well as e-books to load onto it, he says.

The kiosk also can be used to rent or sell DVDs, or small but valuable items like watches, Elkin says. It can hold up to 24 cellular phone-sized boxes or up to 144 DVDs, he says.

read rest of article at KioskMarketplace

Posted by staff at 10:20 AM

January 24, 2008

Luxury Vending Machines Cropping Up

Good overview on BusinessWeek on the "Va Va Voom" of the new Vending Machines. Nowadays you can buy perfume or iPod, or in 3rd world country maybe you buy electricity...Slideshow of units from around the world recommended...

The Va Va Vooming of Vending Machines

slide show

The Va Va Vooming of Vending Machines
Aimed at young shoppers and wealthy frequent fliers, luxury vending machines are cropping up with more than Sprite and Skittles. Perfume or an iPod anyone?

by Aili McConnon

Cheetos, M&Ms, pretzels…iPods? Forget the dusty, poorly lit vending machines selling stale peanuts and Rice Krispies squares pumped up with preservatives. The vending machine is going glam. Consumers are using their plastic instead of their spare change to snap up luxury items such as digital cameras, cologne, and even software from automated machines in airports, malls, supermarkets, and other high-traffic areas.

ATMs, flight check-in kiosks, and subway ticket machines have made consumers much more comfortable with using their credits cards at self-serve machines. And, of course, the growth of online retail has resulted in many people shelling out hundreds, if not thousands, of dollars without first touching their purchases or dealing with a live salesperson.

Some shoppers even prefer no-touch to high-touch customer service, which is often a euphemism for pushy sales clerks. "When I go to buy perfume at a department store, I come out of there smelling like everything under the sun," says Madeline Wallace of Long Island City, N.Y. Instead, she prefers the new Coty vending machine that sells Jennifer Lopez and David Beckham fragrances in New York's Queens Center .

Automated shopping takes no-touch service to the next level. "The appeal is similar to an online purchase but with immediate gratification," says Gower Smith, CEO of ZoomSystems, which created the software and machines to sell Apple (AAPL) iPods in airports and Macy's (M) stores. Macy's had such a strong response from flush female shoppers since the company started testing the concept in 2005 that it's now rolling out automated machines in 400 stores.

This past fall, Elizabeth Arden (RDEN), Coty, and Rosetta Stone, a language-learning software maker, signed on with ZoomSystems as well. The machines let these companies hawk their wares in places where they wouldn't set up standalone stores or where existing stores have been shuttered.
A Self-Service Upgrade

Self-serve machines cut labor costs and often remain open long after traditional stores close. That was the appeal of the early 20th century coin-operated "automat" (BusinessWeek.com, 1/17/08). The glass-and-chrome curiosity sold stewed lamb and chicken pot pies to hungry Philadelphians and New Yorkers, including artist Edward Hopper, who in 1927 created his famous Automat painting. In the 1990s, vending machines sprouted up throughout Japan, fueled by rising wages and spiraling real estate costs. The majority sold food and beverages, but some also offered business shirts, umbrellas, flowers,& and pornography.

The new luxury machines in the U.S. use a robotic arm to retrieve the products and are much more slick, high-tech, and interactive than the machines peddling soda and snacks. The gold-and-silver Coty machine in Queens Center, for example, has larger-than-life pictures of J.Lo and Becks plastered all over it. Instead of pushing buttons, shoppers use touchscreens to make their selections and get instructions on how to return purchases. A flat-panel TV continually plays a demonstration video with music.

Certain machines have additional high-tech bells and whistles such as a "virtual beauty consultant" at the Elizabeth Arden kiosk, which suggests the best product for a given skin type. The Coty machine lets customers sample the perfumes by pushing a button that releases a scented puff of air through a quarter-sized hole below a picture of the fragrance.

Rest of storys

Posted by staff at 09:48 AM

December 11, 2007

Another music download machine concept bites the dust?

Article in Manchester Evening News in U.K. lays out scenarios for Andy Egan and Felix now that they are re-evaluating business model and Egan has stepped down.

Has Andy's luck finally run out? - Business - News - Manchester Evening News

Has Andy's luck finally run out?


HE has always lived life to the max, but his dream of creating an international phenomenon with his digital retail kiosk, has come crashing down.

Andy Egan, a former stuntman and promotions king, quit as chief executive of the Felix Group, after differences over strategy emerged between him and chairman, Richard Rose.

Now, the future of the company he founded back in the late 1990s hangs in the balance after a statement to the stock market by Mr Rose he had begun a `detailed review of the viability of the group's business model' sparked a major sell-off of the its shares.

The stock tumbled 80 per cent and shares in the Rostherne-based group were suspended last week. At the same time it was announced Mr Egan was stepping down.

Sources said there had been a `difference in view' between Mr Rose, who had recently taken on an executive role, and Mr Egan over the group's future and viability of its leading product, Max Box.

It is a retail kiosk with cashpoint, digital photo processing, gaming and shopping functions, such as ordering flowers.

Mr Egan believed Max Box was going to be an international hit because, until its launch, consumers had access to digital services such a photo processing and mobile-phone top-ups `but nobody had put it all in one box' and it offered retailers a `100,000 sq ft megastore from one square metre'. He even had his sights on cracking the North American market through licensing deals.

It was a concept the City and investors bought into - Mr Egan managed to secure private equity investment before Felix reversed into Chestn ut, a shell set up by serial AIM entrepreneur Michael Edelson. It floated in 2004 at 20p per share with a market value of £24.7m. Shares rocketed to more than 70p, but later nose-dived to around 4p. Mr Egan has said the major fall, which wiped £50m of the company in one day, came when it announced that a working partnership with Alliance & Leicester had lapsed, which he claims was misinterpreted by the institutional investors as collapsed.


The stock recovered slightly - buoyed by announcements that retailers were trialling the Max Box.

In June of this year, it announced Odeon Cinemas was trialling it in 19 venues, with a view to rolling out nationally.

In October, it issued an upbeat statement announcing a deal with T-Mobile to trial Max Box in 18 stores, while Mr Egan's dream of breaking into the US market seemed closer when it secured a licensing agreement with US group Kiosk Information Systems. The granted it the right to install Felix software on its own kiosks worldwide. The group also signed a licensing deal with ABK Group, which provides leased laptops to university students and staff. A PC version of the Max Box was to be incorporated into 1,600 laptops.

At the time, the group acknowledged the deployment of kiosks into shops had been slower that anticipated, 120 had been installed by October 2007, but after raising £4.15m in funding, it had started to generate more income. In the year to May 31, turnover was only £81,000 with pre-tax losses of £5.4m.

However Mr Rose seemingly does not share Mr Egan's faith in the long term viability of Max Box and said: "We have been placing trial kiosks with various high street multiples in order that both parties may evaluate the commercial returns.

"We have also been enhancing and adding applications to the portfolio of Max Boxes already established with the objective of achieving a near-term break-even position.

"The results of these initiatives have been disappointing, particularly when the cost and time of providing central support and marketing is taken into account."

Mr Rose has asked KPMG to carry out a review of the business model, and it is hoped it will be completed this week.

Mr Egan began his career as a stuntman after being persuaded by a BBC camera crew to ditch his canoe and go down a white water river on a lilo

During the 1980s, he worked on the Noel Edmonds Late Late Breakfast Show. When he lost part of his hand in a firework accident, he decided to move into promotions and set up Sky High Promotions. The business was behind a number of high-profile initiatives including the BT and BP share launches.However, in 1999 he came up with a plan to cash in on the new premium phoneline phenomenon and developed a game called Everyone's a Winner.

It was a simple concept where callers paid £4.50 for a 90-second phone call but were guaranteed to win a prize worth double the cost of the call. Andy then went to games maker Sega and asked them to design a kiosk version of Everyone's a Winner. The kiosk was launched in partnership with the Laurel Pub Company, operator of the Hogshead brand, in June 2004, and a year later the group expanded its products to include digital photo printing and mobile top-ups, and the Max Box was launched. But Max Box has so far failed to set the world alight, users says it is too slow, while others believe the concept was flawed, asking why would people want to take a trip to a cinema or into town to order flowers or download ringtones when they can do it over the web from their homes

Some now believe the Max Box itself will be scrapped and the company will focus on its selling its software through licensing deals.

However others were more scathing. Nigel Mills, director at WH Ireland, says the best outcome the group can hope for it is that someone uses it as a shell to reverse into.

He says: "However, there are plenty of shell companies knocking around that are clean as opposed to inheriting people's rubbish. Felix is the Latin word for lucky - but it looks like its luck has run finally run out."

Posted by staff at 07:51 AM

July 30, 2005

Parking kiosks - cash or credit card?

The pay-station kiosks, which spit out timed tickets to attach to windshields, accept either coins or cards -- but about 50 percent of the city's users now pay with plastic.

Source: Seattlepi.com

Drivers upset as parking kiosks reject plastic


Some frustrated downtown drivers were scrounging for coins yesterday because of a computer glitch in Seattle's new parking pay stations.

They pulled up to pay, but found their plastic was worthless.

Tracy Krawczyk, parking policy and planning manager for the Seattle Transportation Department, said the intermittent disruption in credit-card processing occurred between 8 and 11 a.m. yesterday. "We had between 40 to 50 calls. Some callers were frustrated. Some were calling to report the problem."

The pay-station kiosks, which spit out timed tickets to attach to windshields, accept either coins or cards -- but about 50 percent of the city's users now pay with plastic.

The Seattle system averages more than 8,000 credit- and debit-card transactions a day.

The city began putting in pay stations in April 2004, with the goal of installing up to 1,600 kiosks covering up to 12,000 paid parking spaces over a three-year period.

Posted by keefner at 03:34 PM

September 14, 2004

DVD Machines

New DVD, video game rental game kiosks debut

The machines, new to the HUB-Robeson Center and Findlay Commons this fall, could pop up elsewhere on campus if they prove popular.

By Christiana Varda email
Collegian Staff Writer

There's a new service invading campus and town for people who want an easier and more direct way to rent movies: DVD rental machines.

There are two machines in the HUB-Robeson Center, on the ground and first floors, and one in Findlay Commons.

"We have a one-year agreement to see their popularity. We tried to hit areas with high student concentration," said Stan Latta, director of union and student activities.

Another DVD rental machine, operated by Box Office Express, can also be found at McLanahan's Student Store, 414 E. College Ave.

Machines on campus charge $2 for the first 24 hours and $1 each additional day for DVD rentals. Video-game rentals cost $5.75 for 120 hours, or five days.

Movie rentals at the McLanahan's machine cost $1.99 for 24 hours; a sign on the machine does not indicate any late-fee charges. Video-game rentals at the store are $3.99 for 72 hours.

"They've just had that up and running since school started," McLanahan's general manager Ron Agostinelli said. "It's not owned by McLanahan's; we only get a percentage of the sales."

The rental machines have a series of new and old DVDs and video games available for rental. They can only be rented using a credit card and must returned to the same rental machine, using the same credit card, said Ron Eccles, president of DVD Express, the company that owns the campus machines.

"The two machines in the HUB hold [up to] a little over 700 DVDs, and the one at Findlay Commons holds [up to] 1,100," Eccles said. "We have close to 200 DVDs in each machine. They're going to add up pretty fast."

The McLanahan's DVD machine has a 600-to 700-movie capacity and is currently stocked with about 100 DVDs and video games, Argostinelli said.

"It seemed like a good idea. About six years ago we used to rent videos, and it actually did well, but it was really hard to control because we didn't just do that," Argostinelli said.

But the new system cuts down on costs.

"You actually eliminate the employees. It's just the customer and the machine," he said.

Adam Savit, manager of Mike's Video, 210 E.Calder Way, said there hasn't been a noticeable change in business, but the machines will probably affect rental stores.

"I don't like the idea of it. I think it's impersonal..." he said. "It definitely will affect us a little bit, but we have a greater selection of lesser-known films," he said.

The campus rental machines started out with a variety of past movies and now have some more recent movies, Eccles said.

"They're going to add up pretty fast since we add about 10 DVDs a week," he said.

There is more availability for the new DVDs, with each title having from two to four copies available.

Eccles said there is a service number and a Web site for feedback.

Campus rental machines have been operating for about a week, and Eccles said there have been about 100 DVD rentals.

"The price definitely makes it more attractive," he said.

The idea for the DVD rental machines was generated from a student survey that took place in April, Latta said. "One of the top things students indicated was they wanted was a DVD rental operation," he said.

The Association of Residence Hall Students was also interested in setting up DVD rental machines in commons areas, so a proposal was submitted and a vendor was selected to provide the service based on price, selection and variety, Latta said. It was unclear which other commons areas would get machines.

Other universities were also contacted to get feedback on different DVD companies, said Meg Harpster, strategic purchasing manager at the university.

"There appears to be interest. A lot of universities are interested in providing it. It's a new thing," Harpster said.

New DVD, video game rental game kiosks debut

Posted by Craig at 02:37 PM

July 15, 2004

Lottery Systems

The Two Titans of the Lottery Industry

Posted: April 15, 2004 at 4:58am

We often hear that the $40 billion spent on video games worldwide dwarfs the amount spent on the motion picture industry. But another form of mass entertainment dwarfs them both: the lottery business. According to a Morgan Stanley study, sales of lottery tickets around the world will top $160 billion in 2004.

You should be thankful for the lottery business this week as you write a check for your tax bill. That's because you'd probably owe a lot more if not for your fellow citizens' crazed desire to get rich quick.

Forty states and the District of Columbia currently sponsor lotteries to raise money for everything from old-age homes and kindergartens to veterans' services and state parks. Six more states that have resisted so far are edging closer to entering the game.

Related Stories
Drawing error leads lottery officials to pay on two numbers Jul. 7, 2004
GTECH's 1Q earnings up 31 percent Jun. 23, 2004
Experts advise to take cash option May. 20, 2004
Scientific Games Reports First Quarter 2004 Results Apr. 22, 2004
GTech Profit Up as Lottery Sales Rise Apr. 16, 2004
Experts expect that by the end of this decade, just two states will not have a lottery: Nevada, where the casino lobby will block it until Doomsday; and Utah, where the anti-gambling Mormon church holds sway.

For investors, the curious thing about the lottery business is that once you peel back the glossy governmental layer, it's virtually a duopoly. Practically all of the games in this country are managed directly or indirectly by just two companies: Rhode Island-based GTech Holdings and New York-based Scientific Games.

And it's even more curious that these two mid-cap companies, while not extraordinarily cheap at the moment, aren't really expensive either. Each sports a forward price-to-earnings multiple of around 20. For GTech, the larger of the two, that's only about half again as big a multiple as its estimated 12% to 15% growth rate. For Scientific, it's considerably less than its estimated growth of 20% to 35%.

An Industry You Can Bank On

It doesn't take the hyperactive imagination of a weekly Lotto punter to figure out that an investment in either of these two companies is a lot smarter than playing the numbers. If you believe the growth estimates, which might actually be a little low, you should be able to earn 20% to 25% annually on Scientific Games over the next few years.

Compare that to the 1.4% you'd earn investing the same amount of money in the U.S. government with a one-year Treasury bill, or the 8% annual return you can probably expect from the roulette wheel known as the S&P 500, and the idea becomes more compelling. The nice thing is that you don't have to make any bet on economic growth to get at these numbers, because states tend to boost the number of games during downturns to make up for a shortfall in payroll taxes. In better times, lottery growth may slow, but historically it has never declined.

The industry's strength is most impressive when you compare it to the reliability of just about any other. No one can say for sure whether the wireless Internet will be around for more than another couple of years. And who knows whether fuel cells, nanotech or gourmet coffee will be viewed as curios or commonplace by our kids?

But if there is one thing you can count on lasting until the end of time, it's governments' desire to separate citizens from their money without taxing them. Morgan Stanley reports that 200 jurisdictions around the globe have authorized lotteries; Oklahoma is probably next in line in the U.S. to add one, and it could be followed thereafter over the next few years by Mississippi, North Carolina, Alaska, Alabama and Arkansas. Overseas, lottery fever is reportedly flaring up in Russia, China and Thailand.

Lotteries aren't new, of course. Historians say the Great Wall of China was partly funded by a form of lottery, as were Harvard and Yale in the 18th century. A type of lottery funded much of the Revolutionary War.

Lotteries funded a variety of U.S. state functions in the 19th century, but corruption and scandals led to a congressional prohibition on interstate lotteries until the 1960s, when New Hampshire set up a lottery that it coyly called a "sweepstakes." New York and New Jersey timidly followed in 1967 and 1970, and soon industry and state lobbyists managed to get federal law changed to permit the rapid expansion of games elsewhere.

Limiting the Players

Two key types of games are run today: "Instant ticket," in which players scratch a rubbery coating from a printed ticket to determine whether it's a winner; and "online," in which a player picks five to seven numbers at random and learns whether he's a winner in a weekly televised drawing.

GTech and Scientific Games make most of their money by skimming a percentage off all revenue of the games that they create -- typically $6 to $12 per 1,000 tickets. So they have incentive to try to create increasingly fun contests in dizzying variety with names like "10 Times Lucky" and "Payday Tripler," which draw in new players and encourage regular players to bet more.

The companies also take hardware and software development, licensing and maintenance fees, and they're moving into the more comprehensive role of running entire lotteries on an outsourced basis in place of an entire state bureaucracy. Most of the growth is in instant-ticket sales -- about 15% in 2002 and 10% in 2003 -- because they feed gamblers' quest for a quick adrenaline rush. In May, the Iowa lottery will debut a game by Scientific Games that resembles the dynamics of a slot machine. A push is on to ramp up distribution by creating self-service kiosks, and partnerships with IBM (IBM:NYSE - commentary - research) and NCR Corp. (NCR:NYSE - commentary - research) have led to cash registers that can print lottery tickets.

Investors always need to focus on business' barriers to entry because competition drives down prices and profit margins. This is where GTech and Scientific Games sparkle. Several factors have limited the number of players, but the most important seem to be:

The need to prove the security of the ticket-printing process.
The difficulty in managing the regulatory process and the need for proprietary software.
Hardware terminals that interoperate across state boundaries with 99.999% reliability.
Every lottery director fears the week he might need to put out a press release that says the week's drawing is canceled because of a software glitch. Contracts are awarded for three to five years and typically renewed automatically. Historically, once a company has won a state's business, it rarely loses it.

The Smarter Bet

Which one is the better bet? GTech is no slouch, but the nod now probably has to go to Scientific Games. It's the pioneer in instant-ticket games, the fastest-growing segment of the business, and recently bought an online unit from industry titan International Game Technology to bolster its ability to expand in that area.

New contracts include an instant-ticket win in Wisconsin worth about $3.5 million per year. Analysts believe the company will win a comprehensive lottery-services contract in Virginia at the end of April that would start at $4.6 million per year. It's on track to win the California instant-ticket business. The company's efforts in Europe are paying off with an Italian instant-ticket contract, and contracts in Germany and Spain also loom.

Plus, Scientific Games has leveraged its know-how in secure printing into the creation of a large prepaid-phone-card business. And you can't leave out its growing business in horse racing, where its "totaliser" systems provide the hardware and software required by tracks to take wagers, figure odds and payouts and manage the entire parimutuel betting process.

Scientific Games has guided analysts to expect earnings of 76 cents to 83 cents per share in 2004, but given the gaming that goes on with such guidance, so to speak, you can probably expect it to come in at more like 85 cents to 90 cents. A company growing at 30% that sports a forward P/E multiple of around 20 is not much of a gamble. Because there is some earnings risk in the first quarter due in part to the lack of big Powerball jackpots, you might wait until after it reports next Thursday and try to pick it up under $18.

Stick the IRS in the eye by investing some of your tax refund here. In a couple of years, maybe you'll win back all of your 2003 taxes.

Lottery Post: The Two Titans of the Lottery Industry

Posted by Craig at 03:01 PM

May 03, 2004

Movie Rentals

Rental Kiosk Provides Movies To Students Around The Clock

CCSU Vending Machine 1 Of 6 On East Coast Campuses

May 3, 2004

NEW BRITAIN -- Last year, a small island in a college parking lot sprouted a vending machine that dispenses candy for the eyes - movies.

It's the business idea of Yoni Hornik, who is betting that the simple machine that transformed the snack food industry can do the same for movie rentals.

His MovieBox kiosk in the Willard-Diloreto parking lot of Central Connecticut State University is one of a half-dozen that Hornik has at East Coast colleges, including Cornell and Rutgers universities.

Hornik, who owns New York-based Movies Around the Clock, says his vending machines carry dozens of DVDs and VHS videotapes of newly released films and older movies.

He said the rental costs compare with those in chain movie rental stores. His machines require credit or debit cards - no cash.

Rentals are for 24 hours. The user's credit or debit card must be swiped both to get a film and return it. The card is charged for the rental when the movie is returned.

Ashley Rake, a CCSU freshman, used the stand to rent the movie "Legally Blonde 2" in November.

"There's a pretty good movie selection," Rake said, "The prices are around the same as movie stores such as Blockbuster."

Frank Resnick, chief CCSU financial officer, whose department negotiated the lease agreement with Hornik, said the machine offers a service to students.

"I'm very pleased with its implementation and how it looks," Resnick said.

The CCSU kiosk is on a little island in the center of the parking lot between the Carroll and Barrow residence halls and the Willard and Diloreto academic buildings.

Mandi Scala, resident director of Carroll Hall, said she has seen many students using the kiosk, even over winter break, when most students are home.

"I used it because it was convenient," said Samantha Ware, a CCSU student who lives on campus and has rented at least five VHS tapes from the machine.

Hornik said there is no way that credit card numbers could be stolen from the machine.

"Pure steel, no one can go into the machine," he said.

Credit card numbers are "firewalled" - protected by a computer security system - and not stored in the machine. Transaction records are taken from the machine every day, he said.

Students are not the only ones at Central using the kiosk.

"I have used the kiosk once when a movie I wanted to watch was checked out at all the area video stores, even the local public libraries," said Loucindy Raymond, who works at the CCSU library.

The Rutgers kiosk has been up and running for eight months and is popular with students, school officials say.

"I think they liked it, because the student government requested more of them," said George Hefelle, associate director of the Student Center. Hefelle said the Rutgers machine averages 50 to 100 rentals a week and has functioned perfectly.

Cornell has two kiosks, one for each of its community centers.

The students have embraced them and use them every day, said John Riva, Cornell's special contracts manager. "Generally, I'd say the machines are acceptable."

For the moment, Hornik is keeping Movies Around the Clock in New York, New Jersey and Connecticut, but he doesn't rule out expansion.

"We believe in this business," he said. "There's a huge niche for this."


Posted by Craig at 02:18 PM

April 22, 2004

Non-traditional Vending

For those in a hurry, Staples offers vending machines

By Keith Reed, Globe Staff | April 22, 2004

Soft drinks, candy bars, ice cream sandwiches -- and ballpoint pens?

Staples Inc. has installed vending machines at Logan International Airport and a handful of college campuses, hoping to learn whether captive consumers in need of emergency office supplies will pay a premium for computer mice, pens, headphones, batteries, or travel-size Monopoly games.

While no one actually used the two red vending machines sitting across from US Airways's ticket counters in Terminal B one afternoon this week, plenty of passers-by stopped to get a closer look at what was inside. Many of them said they welcomed the convenience, even if it often comes at a higher price.

''I would say that it's a darn good thing," said Chris Root of Woods Hole, who passed the Staples machines while on a layover at Logan.

''Most of it looks reasonably priced and it all looks like stuff you could come up short on."

Louise Sawyer, a Boston nonprofit consultant en route to New York, discovered the machines while wandering Terminal B looking for a candy machine.

''I came over here because I was hungry," Sawyer said. ''They've got me right where they need me. It shows that the company is thinking about business travelers."

Staples is just one of many retailers now experimenting with so-called nontraditional vending to sell products at higher prices with lower overhead, said Michael Kasavana, a hospitality business professor at Michigan State University, where Staples has two vending machines.

The ability of vending machines to accept credit cards is driving the trend, as is the appeal of being able to reach consumers at times when traditional retail stores aren't open, he said.

''Cashless payment systems allow you to get a lot more for products," he said. ''People aren't going to necessarily have $50 in their pocket, but they'll use a credit card."

Vision Inc. of Bethesda, Md., has developed machines for companies like McDonald's, which experimented with huge so-called mini convenience store machines in their parking lots, and Playtex Products Inc., which wants to sell its Banana Boat brand of suntan products in vending machines.

''We're trying to bring new brands to the automated retail space. One way to do that is through branded vending machines," said Joe Preston, Vision's president.

Staples's machines look and act just like others where you might buy candy or a bag of chips, with a few added twists -- and some familiar glitches. Products -- from a $60 SanDisk compact flash memory card, a $45 Targus USB optical scroller mini mouse, or a $3 box of Crayola crayons -- are lined up in slots that are identified by a combination of a number and letter.

Slide your cash or swipe your credit card into the appropriate slot on the machine, punch in the location of the item you want, and wait for the metal coils to rotate, dropping your merchandise down behind a door where you can reach in and pick it up.

It's a pretty simple transaction when it works. A reporter using a credit card was able to buy the optical mouse, a $6 pack of Duracell AAA batteries, and the flash memory card with no problem.

Buying a $25 Cross brand ink pen, though, was a no-go. The machine initially rejected two credit card swipes before finally accepting the card and spitting out the pen. But as it fell, the pen's box fell apart, with only the empty box top landing behind the pick-up door and the pen itself on a shelf beyond the reporter's reach.

When told of the glitch, Staples spokeswoman Deborah Hohler said it was the first complaint the company has gotten about its vending machines, which have been in operation for about six months. She noted that a toll-free customer service number is posted on the front of the machines for such problems.

''Obviously, that shouldn't have happened, but if you call that number, they'll completely rectify the situation," she said.

Hohler would not say how many vending machines Staples was testing or their locations, citing company policy against detailing experimental efforts. But vending machines are not Staples's first foray into alternative retail channels. The company once had a handful of retail stores in airports, including Logan, but has since shuttered them.

A clue of the potential scope of the vending-machine experiment is a similar test the company did in 2000, when it put kiosks linked to its website in 20 of its then 1,200 stores. The chain now has 1,600 stores.

Staples would not disclose the cost of the machines, but an interview with airport officials revealed that the company likely subleased either its machines or the space they occupy from All Seasons Services Inc., a Canton company that leases space for 16 Terminal B vending machines from the Massachusetts Port Authority.

All Seasons pays $1,575 a month to Massport, plus the greater of 20 percent of annual vending machine sales of less than $100,000, or 25 percent if sales exceed that amount.

Phil Nay, a district manager for All Seasons, said Staples products have generated moderate sales since they were installed. Office supplies are the most unusual item his company has yet sold in vending machines, Nay said.

Not every consumer was instantly sold on the idea, though.

Elizabeth Malakie, a student from Allston, and her sister, Julie Malakie, of Phoenix, said they'd have no use for the machines under most circumstances.

''If they were in the right place, I'd use it," Elizabeth Malakie said. ''But neither of us use business supplies much."

Keith Reed can be reached at [email protected]

Boston.com / Business / Office supplies, snacks on the side

Posted by Craig at 04:24 PM

April 13, 2004

Vending Machines

And the low-carb craze continues: To vending machines we go.

rom the April 9, 2004 print edition of the Washington Business Journal
From the print edition
Retail & Restaurants
Bethesda firm pulls low-carb lever in vending market
Eleni Kretikos

And the low-carb craze continues: To vending machines we go.

A Bethesda company is taking products to the work place. Low Carb Vending either will sell you a new branded machine packed with low-carb items or adapt the ones you already have to be able to handle the items. If you don't want to buy a new machine but still want workers to know the machine has healthier options, Low Carb Vending also sells decals to promote well-known brands.

"There are 6 million vending machines in the U.S., and there's so many older machines -- and some vending operators who don't want to buy new equipment," says Joe Preston, co-founder of Low Carb Vending.

Its first three Low Carb Vending-branded machines have been placed at Shady Grove Adventist Hospital in Rockville, NBC News' Washington bureau on Nebraska Avenue NW and the Marriott Corp. headquarters in Bethesda.

"The whole purpose is to test prime locations," Preston says. "Our market research indicates that branded or dedicated Low Carb Vending machines are the most effective method to cater to the 30 to 50 million Americans that are either carb conscious or on low-carb diets."

Low Carb Vending (www.lowcarbvending.com) is partnering with Beltsville's Monumental Vending (www.monumentalvending.com), one of the largest independent vending operators in the region.

Within the next month, the company will roll out 50 to 100 machines in New York, California and Arizona. Preston says the goal is to have low-carb products in 6,000 machines by year-end.

An initial strategy: Buh-bye Snickers and barbecue-flavored potato chips.

The machines are stocked with the shakes, chips, bars and vitamins of the moment: Atkins, Slimfast, EAS, Carb Solutions, CarbWise and others. The machines will sell up to 30 products.

Low Carb Vending is targeting the machines in office buildings, hospitals, hotels, health clubs, golf courses, resorts and vacation spots and amusement parks.

Industries & Communities - bizjournals.com

Posted by Craig at 05:31 PM

Vending Machines

Vending Machines Are Being Stocked With More Than Snacks

Convenience, No Store
Vending Machines Are Being Stocked With More Than Snacks

By Margaret Webb Pressler
Washington Post Staff Writer
Saturday, April 10, 2004; Page D12

Imagine waking up in a hotel in the middle of the night with a splitting headache and discovering you don't have any Tylenol. Or rushing through the airport on your way to an important business meeting and realizing you forgot your laptop's power cord. Or jumping into the rental car at that vacation resort and remembering the suntan lotion is at home on the bathroom shelf.

New high-tech vending machines may be the answer.

Target, Staples, Kodak, Banana Boat and Avis are among the brand names being emblazoned on a new generation of vending machines anchored in high-traffic areas such as universities, airports, theme parks and hotels.

All over south Florida, for example, machines are popping up that dispense Banana Boat sunscreen to travelers and outdoor enthusiasts where they need it the most. Thirty machines are set up in "points of sun" such as Miami International Airport, an Avis rental car center, Boomers water park in Dania Beach, Fla., and the Doral Golf Resort and Spa in Miami.

Test runs are being considered by cosmetics manufacturers, drug companies and other consumer-product makers.

Marketers are hoping the United States will finally get over its hang-up about vending machines, long the domain of snacks and sodas, and join countries that have embraced the machines as the easiest and most convenient form of retailing, even for more expensive items.

The focus of the U.S. market on small items costing less than a dollar keeps estimates of annual vending sales in the $20 billion to $25 billion range. That's half the size of the vending market in Japan, where technically advanced -- and reliable -- machines allow consumers to buy products including blue jeans and expensive lunches. By contrast, many Americans associate vending with having to kick a machine to dislodge a candy bar.

"That's probably the biggest hurdle we have to overcome, the historical negative impression that vending has had," said John Roughneen, vice president of strategic development for USA Technologies Inc. of Malvern, Pa., which has produced vending machines in joint ventures with film giant Eastman Kodak Co. and office-products retailer Staples Inc. "It's my feeling that it's natural to take well-known, brand-name items and dispense them closer to the point of use," Roughneen said.

USA Technologies has developed credit card processing systems that work in the new generation of machines -- a critical technology for development of the business because people are more likely to buy higher-priced merchandise if they can just swipe their cards.

Other developments that make higher-end vending machines possible include online monitoring of inventory and delivery guarantee systems -- aimed at eliminating the menace of stuck candy bars.

Consumers have to believe that if the item doesn't come out for some reason, the consumer's credit card won't be charged. Vending experts say reliability is perhaps the single most important feature that the new machines have to offer potential buyers.

Despite the hurdles, there are increasing signs vending machines are moving into new markets.

"The brands themselves want to clearly differentiate themselves from their competition, and they want to create more consumer touch points," said Joseph Preston, president of Bethesda-based marketing company Vision Corp., which is working with Banana Boat. "The whole goal is to reach out to the consumer."

Preston's company is also in negotiations with other major brands interested in similar machines to sell makeup in airports, over-the-counter medicines on college campuses and licensed toys in movie theaters, he said.

Staples has been successful with a recent test of several machines selling traditional office supplies and technology products, such as universal cell-phone chargers, laptop cords and headphones, according to Roughneen of USA Technologies, Staples's partner in the venture. The machines are in place at universities and in airports, including Boston's Logan International Airport near Staples headquarters, as the company tries to figure out the best markets and product assortments.

Some retailers are using vending machines to give their businesses 24-hour convenience. San Francisco-based Zoom Systems, a well-funded start-up pursuing the high-end vending machine market, has installed a machine outside the Virgin Records megastore in San Francisco, selling CDs and DVDs even when the store is closed.

"It's the more innovative first movers who are experimenting and testing it right now," said company President Gower Smith.

Zoom Systems also has installed about 50 hotel gift shop vending machines, in just about every major hotel chain, selling personal-care items, as well as cell phones, cameras, pantyhose and even neckties.

Hotels like the machines because they save them the cost of running a gift shop and give guests 24-hour access to Tylenol, Smith said, but the profitability of the machines can vary widely depending on where they're placed. The company has also created the Avis Travel Store vending machine in several rental car locations on the West Coast and in Newark, N.J. There travelers can pick up maps, food, games for kids, prepaid cell phones or a laptop adapter.

Zoom is trying to find a formula for a profitable multi-item machine, which McDonald's Corp. couldn't do with its Redbox automated convenience stores, which were shut down last year.

There have been other failures too. Chain retailer Target Corp. recently removed its vending machine from the student union at Arizona State University in Tempe, before its year-long test was up. Target did not return phone calls seeking comment, so the fate of its other vending machines could not be determined.

Kodak, too, is ending its recent vending program selling film and one-time-use cameras because the company is focusing on digital photography. Its several hundred machines did well, Roughneen said, especially at zoos, theme parks, aquariums and maternity wards in hospitals, so other companies may step into that void.

Every disappointment makes it harder for vending companies to persuade other major brands to test the concept. But they still expect the business to take off.

Consultant Bruce Yuen, of Global Vending Partners in Ridgefield, Conn., is brimming with ideas for items to vend if he can find the brands willing to try: foot-care products at state parks, golf balls at country clubs, towels at water parks, personal-care items in hotels and offices.

"The only issue," he said, "is making it available."

washingtonpost.com: Convenience, No Store

Posted by Craig at 04:55 PM

March 31, 2004

DVD Rental

FlickStation Media's DVD Rental Machine

FlickStation Media's DVD Rental Machine to be Deployed in EarthLink Corporate Offices
< back

ATLANTA, March 30 /PRNewswire/ -- FlickStation Media, Inc. announced today
that it is deploying its DVD Rental Machines in the Atlanta and Pasadena,
Calif. corporate offices of EarthLink, Inc., a leading Internet Service
Provider (ISP). The FlickStation employs robotic technology and an
intelligent suite of software to rent a DVD in mere seconds. The FlickStation
is about the size of a soft drink machine, as easy to use as an ATM, can hold
over 2,100 DVDs and uses an intelligent suite of software with cutting-edge
robotics to rent and return DVDs in seconds.
"Being part of the FlickStation community means no more extra trips to the
movie store and no more waiting for the mail to arrive with your DVD," said
Dean Gebert, President and CEO of FlickStation Media. "We are thrilled to
include the EarthLink employees in the FlickStation community."
"EarthLink seeks to foster a focused, responsive and enjoyable work
environment," said Stacie Hagan, director of employee communications for
EarthLink. "Providing our employees with the convenience of renting DVDs at
the office is an excellent way to bring an element of fun to the workplace."
EarthLink's Atlanta office will receive a FlickStation in April and the
Pasadena office is scheduled to receive a FlickStation later in the second
quarter of this year.
The community of FlickStation users is able to avoid the headaches
associated with a mega-video store chain or Internet movie rental service by
renting DVDs instantly at their place of work. All a FlickStation user needs
is a valid credit or debit card to ... Rent, Return and Repeat!

About FlickStation Media
FlickStation Media, Inc., a privately-held, technology and entertainment
company based in Atlanta, GA, makes it easier for their community of users to
rent DVDs by placing FlickStations in locations with high consumer traffic.
The FlickStation is a DVD Rental Machine that is about the size of a soft
drink machine, as easy to use as an ATM, holds up to 2,100 DVDs and uses an
intelligent suite of software with cutting-edge robotics to rent and return
DVDs. The FlickStation offers a convenient alternative to renting DVDs from
an online movie rental service or mega-video chain. By satisfying a
consumer's sense of instant gratification, the FlickStation provides the
ultimate convenience in renting and returning movies on a regular basis. For
more information, visit http://www.flickstation.com .

Silicon Valley Biz Ink :: The voice of the valley economy

Posted by Craig at 11:41 PM

December 16, 2003

Software on Demand

Microsoft will offer some applications in the SoftwareToGo kiosks, developed by Protocall Technologies Inc. And CompUSA will roll out the kiosks to all its stores starting next year.

story link

Software Kiosks Expand
Deals signed with Microsoft, CompUSA

By Richard J. Dalton Jr

December 16, 2003

A Commack company whose kiosks offer software on demand has reached agreements with two big-name companies in the technology industry: Microsoft and CompUSA.

Microsoft will offer some applications in the SoftwareToGo kiosks, developed by Protocall Technologies Inc. And CompUSA will roll out the kiosks to all its stores starting next year.

"The key advantage is that the product will never be out of stock because it's held in an electronic inventory and produced on demand," said Bruce Newman, president and chief executive of Protocall.

Software-on-demand could become an important part of Microsoft's product distribution, Steve Schiro, vice president of retail sales and marketing for the software giant, said in a statement.

CompUSA has already installed Protocall Technologies' SoftwareToGo in 25 stores and will install it in all 228 stores from January through April, said Dewey Thoes, senior buyer for Dallas-based CompUSA.

While many people can download software on-line and burn it onto CDs, kiosks are still useful because some applications can be as large 600 megabytes and some publishers worry that downloading directly to the computer user would make it easier to illegally copy the software.

The kiosks prevent piracy by including holograms in the innermost ring and by adding copy-protection technology, Newman said.

About 230 publishers offer software via SoftwareToGo, including Microsoft and Symantec, Newman said.

Protocall licenses the application from the software company and marks it up for sale at CompUSA. Newman wouldn't disclose further details on financial terms.

Posted by Craig at 10:32 PM

November 12, 2003

Redbox Shut Down

After a year-long experiment, the fast-food giant is pulling the plug on all four Redbox automated convenience stores in the Washington area

link: http://www.washingtonpost.com/wp-dyn/articles/A28278-2003Nov11.html

Lid Is Closed On Automated Redbox 'Stores'

By Michael Barbaro
Washington Post Staff Writer
Wednesday, November 12, 2003; Page A01

Turns out McDonald's was thinking a little too far outside the box.

After a year-long experiment, the fast-food giant is pulling the plug on all four Redbox automated convenience stores in the Washington area, dashing the hopes of vending industry executives who predicted that time-strapped U.S. consumers were ready for a 24-hour glass box that dispensed products as varied as portobello-and-goat-cheese sandwiches and toilet paper.

The 18-foot-wide, 130-item Redbox machines -- in Adams Morgan, Bethesda and Baltimore-Washington International Airport -- remain in place for now, their contents removed. A cardboard sign inside the Adams Morgan Redbox thanked loyal customers for their support.

The decision highlights the challenges companies face in trying to sell American consumers -- long infatuated with quality control and customer service -- on the idea of buying groceries from faceless machines.

McDonald's would not comment on the performance of the four coin-, cash- and credit-card-operated machines, the largest experiment of its kind in the United States. "We are focused on bringing more customers to our 30,000 restaurants around the world," said spokeswoman Lisa Howard. "Unfortunately, the Redbox automated convenience store did not fit into our long-term growth strategy."

She said, however, that the 12 McDonald's-owned vending machines in the Washington-Baltimore region that dispense DVDs draw customers into stores and thus will continue to operate.

In Japan, a country that has eagerly embraced automated shopping, consumers can buy beer and even ties from street-side vending machines. But in the United States, where vending industry sales now total $24.3 billion a year, according to the 2002 report of Automatic Merchandiser magazine, the technology is tucked away in office hallways, where machines dispense such mundane products as bags of Doritos and bottles of Diet Pepsi.

"People still want to touch an item in a convenience store or supermarket," said Michael L. Kasavana, a Michigan State University professor who teaches a course on vending.

McDonald's believed it could overcome that barrier with the kiosks designed by Belgium-based New Distribution Systems NV, which operates automated convenience stores in Europe.

McDonald's billed the 24-hour automated systems as the future of convenience stores, which are plagued by low profit margins, high property costs and relatively expensive labor. In 2002, per-store profits fell by 27.9 percent to $20,400, the lowest level in a decade, according to the National Association of Convenience Stores.

The Redbox machines carried a wide variety of goods -- milk, eggs, bread, laundry detergent, shaving cream, paper towels, Band-Aids, tampons. Items sat behind a large glass wall. The machine was designed to cool its contents at precisely 40 degrees. It took credit cards. And if anything went wrong -- if, for example, the coin dispenser ran low or Advil sold out -- the machine sent an e-mail and page to McDonald's support staff operating out of a Bethesda branch.

Richard Geerdes, president of the National Automatic Merchandising Association, said vending machines can be surprisingly expensive to operate. Fresh foods, for instance, must be replaced daily. Profit margins hover around 5 percent, Geerdes said.

"The technology to vend a gallon of milk is not cost-effective right now," he said.

After the Redboxes were installed, they attracted crowds mesmerized by their high-tech gadgetry, even if the gawkers often did not place much money into the machines.

Last night a group of college-age women, walking by the red steel box on the corner of 18th and California streets in Adams Morgan, stopped when they saw the machine was shut down. Then they had their picture taken in front of it.

"Oh, that's so sad," said 32-year-old Arlington resident Sibel Kulaksiz, who also strolled by last night. "I always saw this as the future supermarket."

Posted by Craig at 08:42 PM

September 26, 2003

New Focus for Kodak

Kodak slashes dividend, targets digital markets

ROCHESTER, N.Y. (AP) - Eastman Kodak Co. slashed its generous $1.80 annual dividend to 50 cents a share -- the first cut in over a century -- as it struggles to accelerate growth in digital photography to offset sliding film and camera sales.

The move, announced Thursday, is aimed at reducing spending and boosting investment in digital markets by as much as $3 billion over the next three years. Kodak wants to drive up sales from $12.8 billion last year to $16 billion in 2006 and $20 billion by 2010.

Investors didn't like what they heard, sending Kodak's stock price down $3.47 or 13 percent to $23.52 in early trading on the New York Stock Exchange.

The world's biggest photography company is trying to quickly widen its range of digital products in the consumer, commercial and health imaging fields as it shifts away from investing in the chemical-photography businesses that turned it into a 20th-century icon.

``This is probably the biggest turning point in our recent history, certainly a major turning point for a 120-year-old-plus company,'' chief executive Dan Carp told investors at a meeting in New York.

``The decline that became evident for sure in the second quarter of this year to the historic film-based businesses can be managed,'' Carp said. ``It requires hard work, a different model ... heavily driven on cost reduction and then selected investments for growth.''

Kodak said in July that it was eliminating up to 6,000 jobs this year -- shrinking its global payroll to around 62,000 from a peak of 136,500 in 1983. It blames the three-year slump in film sales on a sluggish economy and the rapid rise of filmless digital picture-taking.

By the end of the year, industry analysts expect digital cameras to begin outselling film cameras for the first time in the United States.

Cutting the dividend by 70 percent will give Kodak extra financial flexibility, said Robert Brust, Kodak's chief financial officer.

``This reallocation of cash will help us achieve our revenue targets while carrying an amount of debt that's appropriate for the goals we intend to pursue,'' he said.

Kodak's dividend yield -- which was 6.67 percent based on its closing stock price Wednesday -- was the highest among the 30 stocks in the Dow Jones industrial average. Its payout reduction is the first since Kodak introduced a dividend in 1902, spokesman Gerard Meuchner said.

In July, Kodak said it expected to end up with $500 million of free cash this year after dividend payments and debt reduction. But its $500 million buyout that month of PracticeWorks, an Atlanta-based company that provides information technology systems for dental offices, would leave Kodak with no free cash, analysts said.

The company expects to winnow down its debt from $3 billion at the end of June to between $2.1 billion and $2.4 billion at the end of this year.

As the switch by consumers to digital photography comes on faster than expected, cutting deeply into the film, paper and photofinishing businesses that anchor Kodak's profits and image, the company has chopped jobs, consolidated its divisions and made large-scale changes in top management.

It hired Hewlett-Packard veterans Antonio Perez in April and James Langley in August to help guide its development of digital businesses.

The consumer and professional photography businesses, which account for about 60 percent of Kodak's annual sales, were combined this summer in an effort to pool resources.


Posted by Craig at 02:49 PM