Article

Experts disagree on state of European kiosk market

Frost & Sullivan has issued a report that's critical of European kiosk vendors, but not everyone agrees.

April 23, 2003 by

LONDON--Frost & Sullivan has issued a report critical of European kiosk vendors in general, saying that many of the regional players are struggling because they offer little value over a "PC in a box." But self-service technology consultant John Purcell, managing partner of Purcell & Associates in Cork, Ireland, called the report "out of touch," and cautioned that it is not representative of the kiosk industry overseas.

Andrew Tanner-Smith, Frost & Sullivan senior analyst and author of the report, said many of the kiosk vendors he has interviewed in France, Germany, Italy and the United Kingdom don't offer kiosk services that add product value. "In fact, they aren't particularly interested in knowing their customers' needs at all," he said. The kiosk products they push out are simply Internet-access tools.

Purcell said he thinks researchers need to look more closely at the successes of the smaller players to truly judge the category.

"There are about 75 good vendors in Germany alone that might not be big enough to be on the horizon of a research study," said Purcell.

Tanner-Smith's report said that, overall, kiosk vendors are not living up to the high expectations promised in the late `90s. He pegged the market for kiosks in the four countries at $130 million Euros ($142.5 million U.S. dollars) in 2002, up slightly from $129.7 million Euros in 2001. "The growth is negligible," he said. Tanner-Smith said that if the European kiosk market is to become robust, it will have to change dramatically. He predicted the market to grow from about 28,060 unit shipments in 2002 to 34,633 by 2005.

"There will be an obvious shakeout among mid- and lower-tier vendors," he said. "I expect to see around five or six major players in the next few years."

He said that many of the kiosk vendors in Europe are good at meeting customer deadlines, procuring inexpensive production materials and putting together boxes.

"But they are not geared up to offer business advice, such as explaining how kiosks can help a business and comparing kiosks with competing technologies."

Said Purcell, "I have to agree with what [Frost and Sullivan] is saying about the value-added services that need to be provided for kiosk deployers/purchasers, but I do not agree with the side swipe at the European kiosk industry at large."

Tanner-Smith said that kiosk vendors that are living up to customer promises include IBM, IERin France,NCR, Neo Products and Wincor.

What's in a word?

Tanner-Smith said making improvements in the market will mean more than just changing marketing materials. "NCR talks about self-service terminals. They downplay the word `kiosk' because of the limited perception. But you really have to offer self-service applications, like NCR does, to be able to use the term `self service.' You can't just change your label."

He said that limited perception among customers is, indeed, a problem. "The PC-in-a-box model that these vendors have used for so long is what the outside world thinks of the market."

Mark Carten, director of Carten Technologies, agreed. Carten Technologies is a U.S. kiosk-software vendor that has announced several overseas deals, including a pending contract for deploying kiosks for online gambling in thousands of pubs in the United Kingdom.

"This is a market-driven business. If you don't give customers what they want, you'll turn them away," said Carten.

He said the reason many kiosk have limited functions is simple: it's expensive to add value. "The engineering and software costs to add functions and to make sure all those functions work together is not cheap or easy." Carten Technologies has spent more than two years developing a line of kiosks that offer most of the functions the user would have in an office, including browsing, e-mailing, video conferencing, video e-mailing, printing, faxing, copying, phoning, re-charging phones, wired laptop connections and WiFi, or wireless capabilities.

"The complexity of the software to accommodate these features, most of which can be used at the same time, is beyond what most kiosk companies want to or can handle," said Carten.

Does Tanner-Smith think gaps in the European market mean there are more opportunities for U.S. vendors like Carten?

"Not necessarily. Apart from IBM, there is limited crossover. The penetration of U.S. vendors is patchy at best," said Tanner-Smith.

Sparking change

Tanner-Smith was careful to offer suggestions for change along with his critique of European vendors. One thing he noted was that kiosk vendors should work hard to capture repeat business.

"Repeat customers are the barometer of a healthy market," he said. "It's cheaper to keep an existing customer than to find a new one." So kiosk vendors should start working more closely with the customers they have; learn about their business needs and develop useful applications.

He also stressed how kiosk vendors need to build relationships with their customers and become true business partners.

To inquire about the Frost & Sullivan report on European kiosk vendors, contact Kristina Menzefricke, kristina.menzefricke@frost.co,+44 (0)20 7343 8376.