Under the Radar
Netkey Transforms Kiosks Into `E-Salespeople'
By Stephanie Miles WSJ.com
The Wall Street Journal
(Copyright (c) 2001, Dow Jones & Company, Inc.)
NETKEY Inc. wants to make it easier for shoppers to find product
online rather than waiting in line to talk to a salesperson.
The closely held Branford, Conn., firm has developed a software
allows companies to display a modified version of their Web site on
Internet kiosks in stores and retail outlets.
The kiosks display not only Web-based information, but also product and
inventory databases traditionally available only to sales and
Netkey's technology allows companies to install kiosks with services
from basic Internet connections to touch-screen displays and credit-card
scanners. The interface is designed to appeal to Web novices, and the
prevents customers from restarting the system, surfing to inappropriate
erasing the hard drive.
Borders Group Inc., Ann Arbor, Mich., uses Netkey kiosks to allow
look up titles and order out-of-stock books, while Fidelity Investments
can set up new accounts and make automatic deposits through Netkey
kiosks in the
Boston company's retail outlets.
Alex Richardson, Netkey's chief executive officer and founder, says the
benefit for store owners is cost reduction: An Internet kiosk "runs 365
year without a coffee break," he notes. The kiosks also provide the
to showcase current inventory and sell additional products, he adds.
Analysts say the kiosk market is poised for huge growth. Frost &
Sullivan, a San
Jose, Calif., market-research firm, predicts there will be 446,000
kiosks world-wide by 2006, up from 151,000 units this year. Jupiter
Metrix, New York, projects that sales associated with kiosks will soar
billion by 2006, compared with $200 million this year.
NCR Corp. and International Business Machines Corp. also have developed
products, according to Rufus Connell, a Frost & Sullivan industry
manager, but have tended to "specialize" while Netkey has pursued a
strategy. In fact, NCR in January said it would begin selling Netkey
part of its Web-kiosk product line. Netkey "has been one of the
leaders in terms of market share and technology," Mr. Connell says,
cautioning that it is too early to know for sure who the winners will
market's still pretty small -- one or two major projects could make a
Indeed, Netkey's biggest obstacle at this point is "ignorance," says Mr.
Richardson, 44 years old. Most retailers have been too busy building out
e-commerce operations, dealing with year-2000 compliance and "putting
fires" to consider installing Internet kiosks, he says.
Still, Netkey has signed a string of high-profile clients. All 340
& Music retail stores have Internet-connected kiosks and computers that
TitleSleuth -- a search application developed by Borders that was
available only to salespeople -- and Netkey, which keeps customers out
applications and Web sites.
Borders is testing new features with Netkey, including online buying and
self-service checkout, says Kate Harding, senior manager of consumer
Borders. Although Borders hasn't decided if or when it will roll out all
these features, she says, "We consider Netkey part of overall
Microsoft Corp. has used Netkey's technology in its trade-show booths,
Yahoo! Inc. has a few Netkey-based kiosks that offer e-mail and Web
through the Yahoo portal. Jiffy Lube, a unit of Pennzoil-Quaker State
introduced Netkey at a few of its franchises, offering customers Web
e-mail access while they wait for their oil change.
Netkey originated as a product of Lexitech, a professional-services
developed simplified mainframe-computer-system interfaces for
telecommunications companies and the government.
About five years ago, some of Lexitech's clients were abandoning
migrating to Web-based computing. So in 1997, Lexitech developed and
software application that allowed companies to display a controlled
their Web site on a personal computer.
Although the software wasn't part of Lexitech's core-product offerings,
sales quickly eclipsed the company's professional-services revenue. So
imploded the old company," says Mr. Richardson, who started Lexitech in
early 1980s with $50,000 in private-investor seed cash while attending
School of Management.
In 1999, Lexitech was relaunched to focus solely on the kiosk software.
24, 2000, the company announced it had officially changed its name to
Since the relaunch, Netkey has grown to about 80 employees in
Francisco and New York. (Lexitech had about 20 employees in its New
Netkey raised $5 million in February 2000 from investors including Zero
Capital, Cambridge, Mass., and Cyberstarts DC, Atlanta. Netkey used the
attract new managers, including Rajeev Singh, a former Oracle Corp.
who joined Netkey as chief product officer.
Last winter, Netkey decided its software needed an overhaul to offer
advanced multimedia features -- streaming video and audio, for example
well as a refined interface. To fund the upgrade, Netkey raised an
$10 million in February from Hudson Ventures Partners, New York; Fleet
Development Ventures, Boston, a unit of Fleet Boston Financial Corp.;
Connecticut Innovations, Rocky Hill, Conn.; and Christian & Timbers,
Mr. Richardson projects that Netkey's sales, which come from software
as well as design consulting and project management, will triple in 2001