Vdc 2010 kiosk report excerpts

Kiosks
2010 Retail Automation Equipment Planning Service
Track 1, Volume 6

AutoID & Transaction Automation Practice
Ned Daubney, Senior Analyst
Tom Wimmer, Director
Chris Rezendes, Executive Vice President

Retail Self-Service Kiosks Defined
Self-services addresses the need to provide targeted campaigns and information to in-store customers

VDC defines a self-service kiosk for the retail (including hospitality) market as a freestanding,
interactive, multimedia system used to provide information, or enable a transaction.
Self-service is defined as the capacity for consumers to fully serve themselves
without assistance, or interaction from the retail staff.
Photo
VDC’s self-service kiosks are customer-facing and exclude ATMs, photo, Kiosks
self-ticketing, HR, self-checkout, basic price checkers, and gas pump
kiosks, each of which offer their own market dynamics.
ATMs
Self-Checkout
Basic
Price
Checkers Multifunctional
Self-Ticketing Price Checkers
Petroleum
HR Payment
Applications Station
E-Commerce Bill-Payment Product
Food
Vending
Ordering
(e.g.DVDs)

Customer Endless
Loyalty Aisle Guided Gift Registry
Selling

Retail Self-Service Kiosks

1– 2010 VDC Research Group, Inc.

Executive Summary – Market Size & Growth
What 2009 took, 2010 gave back – postponed 2009 projects revived in 2010

• Retail and hospitality self-service kiosk suppliers realized nearly $474.6 million during calendar
year 2009, with the average supplier signaling a dramatic market (nearly 20%) decline from 2008.
• The market is expected to grow at 9.3% CAGR over the next five years to $740.4 million in 2014.
• In 2010, most vendors are seeing significant return to normal or better as dead 2009 projects
sprang back to life, with increased retailer conviction for kiosks.
• The few major vendors that did see revenue growth in 2009 characterized this growth as
projects just too far along to cancel.
• But the big story for self-service kiosks is future expectations.
 Accelerated global adoption of retail self-service kiosk solutions is expected for the coming years.
 A stream of new applications mature involving mobility, iPad / tablets, product vending, motion sensors,
biometrics and analytics.
 As kiosk technologies continue to converge, integration with other in-store technologies will be critical.

• The value propositions associated with self-service kiosk solutions, coupled with the rapidly
changing cultural demand for self-service by global consumers, will appropriately position these
solutions as a center of convergence for a retailer’s customer service, transaction
automation, and branding over the next five years.


Executive Summary – Trends – New Technologies
Kiosk vendors face a barrage of new technologies – but are they friend or foe?

Trends – New Technologies
• Disruptive Opportunities:
 Potentially disruptive technologies including: interactive digital signage, mobile applications and iPads
are generally not mentioned as threats by kiosk suppliers. Instead, these retail automation technologies
are seen as complementary and integrate-able tools that can be deployed to meet application specific
requirements. However, clearly there are risks associated with each new development.

• Strong Interest in Mobile Applications, but not yet any large scale demand:
 The highly anticipated demand for mobile applications has come much slower than expected. For
many, this market is still in the “buzz phase”, with no large-scale roll-outs. Technology challenges
remain, but we expect to hear about many mobile solutions sometime within the next year or two,
as mobile standards evolve.

• The iPad is Making its Mark:
 Strong retailer interest in, but conflicting supplier opinions on iPad kiosk solutions – a large number
of national pilot programs currently underway suggest a potentially large market impact, despite
the tool’s fragility and novelty state.

• Interactive Digital Signage blurring with kiosks:
 Digital signage, and most notably interactive digital signage, is growing fast globally and often blurs
with interactive kiosks. The big question going forward is how kiosks will integrate or otherwise
co-exist with digital signs.


Executive Summary – Trends – New Applications
Product vending kiosks, green solutions gaining steam; While loyalty making a comeback

Trends – New Applications
• Product Vending converging with traditional self-service kiosk solutions. Redbox’s DVD
kiosk success replicable and being tested for multiple other wide-ranging applications.
 Sleeker, pedestal-form vending kiosks will soon (within 2 years) noticeably alter the image of product vending.
 DVD rental kiosk business likely to transform into digital download kiosks – and into sleeker kiosk form factors.
 Product vending kiosks seek to bridge the gap between traditional stores and online shopping
 Other parts of the world are less hesitant. In Europe and Asia, consumers buy anything from underwear to
prescription drugs from kiosks. Japan has one vending machine for about every 23 people, according to one
source. The country’s fascination with technology have made it a vending paradise.
 Also contributing to the proliferation of this “automated retailing” is the new capacity to remotely monitor and
service the machines. Remote device management technology actually provides both technical support
and marketing data.

• Loyalty Programs make a comeback
 Suppliers characterize this comeback in part due to higher-end retailers, who needed to cut prices during the
recession, pushing loyalty programs to satisfy long-time loyal customers, as they reel-back their price-cuts
and raise them back to normal levels.

• Green Movement growing
 Some leading kiosk suppliers actively tapping into the growing global interest for cleaner solutions – which
to them spells an opportunity for new applications, and a competitive differentiator.

• Biometrics & Motion Sensors
 Hearing a lot of buzz about, and some small rollouts with, these, but little demand on any significant scale.


Primary Segmentation Parameters
This study covers demand for a number of technologies in a range of retail and hospitality segments worldwide

Retail & Hospitality Vertical Markets

Regional
Markets

APAC
Retail Automation Solutions

EMEA
ALL Infrastructure: Hardware, Software and Services

Americas
TRADITIONAL DELIVERY PLATFORMS
POS Terminals / Workstations
Technical POS Receipt Printers
Payment / Transaction Terminals
Dimensions
Emerging Delivery Platforms
Imaging Solutions
Self-Checkout Solutions
Kiosks
Personal Shopping Systems
Electronic Shelf Labels
Interactive Displays & Digital Signage


Deployers versus Developers
Why kiosk deployers (e.g.Coinstar’s Redbox, Kodak and Blockbuster) are not included in this study

• We count revenues earned from the manufacturing and sales of self-service kiosks.
 These revenues pertain only to shipments from kiosk manufactures and do not include companies such as Redbox,
Kodak or Blockbuster. In addition, these values reflect solely the movement of product from the point of manufacture
to the first point of distribution and do not include any channel markup.

• A deployer installs kiosks as their own; earning revenues from transactions, not from the sales,
or lease of the kiosk (e.g. Redbox, Blockbuster)
 As Redbox does not sell kiosks, nor does it produce any revenues from the actual design, or construction of kiosks,
they are not included in the study – Their revenues more simply come from DVD rentals.

• A developer is a firm that, on an OEM basis, designs and / or produces partial or complete kiosks.
 Some firms such as Flextronics builds kiosk for other kiosk developers (IBM) or deployers (Redbox).
Flextronics is thus a critical part of the kiosk production supply chain – their revenues come from building kiosks, and so their
kiosk revenues are included in this study, while RedBox’s are not.

Type Supplier Examples

Deployer – installs kiosks to earn transaction revenue Coinstar / Redbox, Kodak, Blockbuster
We highlight this
distinction to make
clear just who is making
Branded Developer – Sells part / complete kiosks with its name on the kiosk NCR, IBM, Fujitsu, Vigix, Wincor Nixdorf
money from the building
and selling of kiosks.
Unbranded Developer – Sells part / complete kiosks as OEM / PLP Flextronics, Oleo

Hybrid Developer – Sells both direct and to branded developers Meridian, KIS, Frank Mayer


Kiosk Market Boundaries Blurring
Self-service kiosk market continues to mix with other retail automation technologies

Is the kiosk market
expanding, or are modified It may all be semantics as even
comparable solutions Digital the leading suppliers admit
encroaching kiosk territory? Signage this “blur” is indefinable.

Interactive Digital
Signage

Multi- Product
Price functional KIOSK Product
Vending Vending
Price
Scanner Scanners MARKET Kiosks Machines

Tablet
Kiosks

Tablet
PCs


Self-Service Kiosk Market Commercial Value Chain

• The commercial value chain for Kiosks is
Self-Service Kiosk Supplier comprised of a number of direct and indirect
selling relationships.
• Direct-to-end-user and OEM / private label
partnerships are the most common distribution
routes.

VAD • Tier 1 retail organizations most often seek a
direct relationship with the self-service kiosk
OEM supplier, who assumes project management
ISV responsibilities.
• For these accounts, VARs and system integrators
often play a key supporting role, ensuring that
Sys. local post sale commitments are met.
Int.
VAR • VDC expects partnerships with ISVs (independent
software vendors) to increase as hardware
suppliers look to provide their customers with
best-of-breed customizable kiosk software
solutions aiding in seamless integration with
digital signage, mobile applications, POS and
End-User other in-store technologies.


Self-Service Kiosk Market Regional Shipment Models
Slow and steady growth will be fueled by pent-up demand for self-service solutions and new applications

Regional Demand for
Self-Service Kiosk Solutions • In 2009, the global retail market for self-service
2009 = $474.6 Million reached $474.6 million with unit shipments
surpassing $203 million, down roughly 20%
from 2008. VDC anticipates that revenue shipments

(Millions of Dollars)
700.0
for Self-Service kiosk will grow at a CAGR of
600.0 9.3%, approaching $740 billion by 2014.
500.0 • Sales in the Americas region continue to be driven
400.0 by Tier 1 retailers, although large-scale kiosk
rollouts appear few and far between. Retailers in
300.0
2009 were extremely cautious with spending, but
200.0 have clearly spiked up demand for self-service kiosk
100.0 applications.
0.0 • The Asia-Pacific market is expected to be the fastest
2014 growing region over the next 5 years as retail
2013 in China and India continues to scale. This demand
2012
2011 will be fueled by: Multinational corporations
2010 expanding their foot print in the region; and Tier 1-2
2009
2008 retailers continuing to make initial investments
in kiosks.


Self-Service Kiosk Average Factory Selling Price
AFSPs vary widely depending upon the application, form factor, component makeup and quality

• The AFSP (price from the factory to the first point
Global AFSP for of distribution) varies with the system components
Self-Service Kiosk
2009 = $2321.8
integrated.
2,500 • The AFSP in each region will continue to fall as

(Dollars)
2,400 display prices decline, cheaper I / O components
enter the market, and smaller form factors win favor.
2,300

2,200 • Another major downward pricing influence will
be the movement of the larger, global suppliers to
2,100
provide more standardized solutions for large-scale
2,000 deployments of the most popular kiosk applications.
1,900
• The upfront capital investment required has been
1,800 a barrier to adoption for many retailers, particularly
in the current environment. Some suppliers have
responded with managed services and SaaS models
that enable retailers to invest for less.

Americas EMEA Asia-Pacific

10 – 2010 VDC Research Group, Inc.

Competitive Landscape
Niche marketplace has changed little, but that may change

• The kiosk market ecosystem consists of hundreds of relatively small and several large companies providing
various parts of the complete kiosk solution.
 IBM, NCR, Frank Mayer, Fujitsu and Kiosk Information Systems (KIS) continue to be the market leaders regarding self-service kiosk solutions
within North America. KIS’s position within the North American market is a direct result of extensive product portfolio and their advanced level
of customization and engineering regarding application / vertical market solutions.

 IBM and NCR continue to leverage their easily customizable product portfolio and strategic partnerships to secure their market-leading
positions across several vertical markets.

• The global market for self-service kiosk solutions remains highly fragmented. Characterized by distribution
channels that lend themselves to an increased level rebranding due to the multiple OEM and supplier
organizations that interact via strategic and short-term partnering agreements, the kiosk market continues
to be extremely convoluted.
• Kiosks still lack that killer application that warrants multiple Tier 1 retailers to order large-scale kiosk rollouts.
While several applications currently enjoy widespread adoption, most orders are of the size that niche vendors
can fulfill. Regional top vendors such as KIS and Meridian thrive in this market.
• In the projected market environment, VDC expects certain market consolidation as larger, global suppliers seek
to standardize products and compete more successfully on price and global support.
• VDC projects strong near-future demand for more standardized, off-the shelf solutions for these most popular
applications, enabling the global solutions providers (IBM, NCR, Fujitsu, Motorola) to more capably build in their
economies of scale. The world doesn’t need 500 variations of a product guide kiosk. Standardization, for popular
kiosk applications, will likely rearrange the industry structure soon.
 Under this scenario, global vendors will dominate large-scale Tier 1 rollouts, high-end niche vendors will remain the industry
thought leaders and dominate the lucrative, customized kiosk demand, while low-middle-end kiosk developers
will serve lower-tier retailers, while needing to tighten their market niches to grow.

Competitive Positioning
Established leaders, many niche players, little vertical integration

High-end customizers – flourishing
in current market.

Kiosk Info Systems
Meridian
Olea
Global giants –
Frank Mayer Flextronics poised to see
AdFlow Networks NCR economies of
scale provide
Kiosk ZoomSystems IBM price/support
Sophistication Wincor
advantages.
friendlyway Motorola
PFU
NeoProducts
Fujitsu
LiveWire Ultimedia
Partech
SeePoint
Hashkiosk Radiant

Low-middle market
players need to
consolidate or find tight Regional Global Capabilities
niches to compete Supplier & Presence
with global leaders.


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Retail Automation Planning Service, Track 1, Volume 6: Kiosks."
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2010 VDC Research Group, Inc.

The entire contents of VDC’s 2010 Retail Automation Planning Service, Track 1, Volume 6:
Kiosks are proprietary to VDC Research Group, Inc. (VDC), and may not be distributed in
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