Article
Internet kiosk market appealing in developing nations
Companies see potential in Internet kiosk markets in the second world. But finding ROI remains a challenge.
December 6, 2006
The business case for Internet kiosks in the developing world is a tricky one. The general lack of home computers creates a greater demand for public Internet services, like Web browsing and VoIP phones that can call overseas at a fraction of a normal rate. But the same low incomes that create the need also restrict users' ability to pay for public Internet access. That makes deploying a $7,000 kiosk in a country like Mexico, where the average worker makes $6 daily, a daunting proposition.
Global Software Applications vice president Ron Koning knows this paradigm well. His company has deployed SurferQuest Internet kiosks in Jamaica and the US, among other countries.
"If you talk about profitability, and the cost of the system and the ROI, you can charge far less over there," Koning said. "Here in America, Internet cafes charge about 10 cents per minute. And at hotels, which are our market, we charge a quarter to almost a dollar per minute and (customers) pay it, even though they have computers and laptops as well. When you can only charge 2 or 3 cents per minute, it takes a long time to gain your money back. So the time (developing world customers) spent will be more, but you can charge far less."
Ken Richard owned Latin Channels, a forum for tech companies to find Latin American business connections, before he began developing Latin American outlets for Xerox. He said there is a huge demand for public access Internet in the region, which rivals what he once observed there in the early days of ATM deployments.
"There are all kinds of Internet cafes, and they're always mobbed, all over Latin America," Richard said. "LAN Houses in Brazil are these massive facilities, stores, that have rows and rows of PCs for kids to get on and pay by the hour to play games."
To date, few kiosks have been deployed to meet that demand. BCC research analyst Francis Duffy noted that in Brazil, in 2002, the postal service deployed 4,176 Internet kiosks called CorreiosNet Access Terminals.
"Here's the really interesting part," Duffy said. "Results from a prolonged pilot showed the terminals were used 81 percent of the time. Each machine averaged 3,091 accesses per day. Last I checked, this was pretty much the only such project on the continent."
Hotspot International chief executive Louie Miller, who sells Internet hotspots to Latin American hotels, agreed that demand exists for Internet kiosks in the developing world, but noted that price isn't the only obstacle for companies entering the market. He pointed to security concerns and government monopolies as potential pitfalls for deployers.
"All of the fiber in Mexico, the wireless, the microwave, all of it belongs to Telmex," Miller said. "There is an alternative, a satellite alternative is becoming popular, but it's not legal yet in Mexico and it's unreliable. The speed isn't there that can be delivered by a DSL line. Other markets, I would think there may be an opportunity for kiosks, possibly Brazil or Argentina. I look at the IT rating at various countries to see what the potential for new technologies is. All of Latin America represents about 5 percent of the IT market of the United States."
Hard facts about the kiosk market in Latin America hit home for some native developers. Ingrid Perscky founded AMIGO, a Panamanian start-up company focused on deploying public access Internet kiosks. She's excitedly eyeing opportunities that lie north of the border, where Americans often need Internet access but are blocked at work, are hampered by small-screen portable devices and are willing to shell out better money for Internet access.
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