Article
Plans shrink for U.S. MAX BOX
U.K. developer is on the block after its CEO resigns, restructuring.
December 20, 2007
When it comes to irony, seldom does it come more obvious: the tagline on themaxbox.com reads "The Future of Digital Retailing," even while much of the splash page outlines terms of its developer's collapse.
The MAX BOX—a brand of kiosks predicated on multi-functionality—failed to take root in the U.K., and after a company review that culminated in the resignation of CEO Andy Egan earlier this month, administrators announced developer Felix Group was up for purchase. Plans for a U.S. rollout have been scrapped, and its U.S. partner, KIOSK Information Systems, is abandoning the relationship.
MAX BOX applications included many traditional self-service applications, such as cash-dispensing, mobile top-ups, and digital media downloads. But others were less conventional. At some units, users could order flowers, print photos of athletes, even play Sudoku.
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But even as the Felix Group brought a kiosk to the KioskCom Self Service Expo in New York City in October, things were unraveling at home.
Felix Group and board chairman Richard Rose announced in late November plans to review the company's business model. They said the notion of doing a review came after results of the company's initiatives had been disappointing, particularly when the cost and time of providing central support and marketing were taken into account.
That announcement was followed by the Dec. 3 resignation of CEO and founder Andy Egan. (Attempts to reach Egan were unsuccessful.)
A week after Egan's resignation, the company announced its trading subsidiary Felix Corp. Ltd. had taken over administration control. David Costley-Wood and Brian Green from KPMG, a provider of professional services including audit, tax, financial and risk advisory, have been appointed joint administrators.
According to a news release, the company concluded that its business model was no longer viable. Felix's board said it became apparent that the business would not generate profit or positive cash flow for the foreseeable future, and not without considerable additional funding.
"At this stage, we are actively seeking a purchaser for the business," said Katy Broomhead, KPMG's PR manager. "However, we can't really say much more than that at this stage as it depends on whether anybody comes forward and, if so, how subsequent negotiations with any interested parties go."
For the last year, Felix, along with U.S. partner KIOSK Information Systems, has taken a prototype MAX BOX to trade shows worldwide in an effort to gather support and business for the kiosk. KIOSK had plans to both manufacture MAX BOX parts and use Felix's software for their own kiosk solutions. Now that relationship is in doubt.
Felix Group announced on Oct. 26, 2007, it had signed a licensing agreement with KIOSK granting the company the right to install Felix software onto its new and existing kiosks in North America. Toward the end of November, the Board was advised by KIOSK that it no longer wished to pursue the license opportunity.
KIOSK's vice president of sales and marketing Tom Weaver explained his company's relationship with Felix.
"Our relationship with them was like that of an OEM manufacturer," Weaver said. "They place an order and we fulfill it."
KIOSK has yet to deploy any of the MAX BOX kiosks in the United States, and Weaver said it was too soon to tell if there would ever be any deployments. KIOSK did not return phone calls asking for further comment.
The wrong road taken?
At April's Self-Service Expo, in Las Vegas, Egan touted the MAX BOX as something the U.S. market was ready for and that he expected it to debut in the United States in the summer. Even as late as the October show, Felix continued to plug the U.S. launch even though it had been further delayed.
"It's a revenue opportunity for the retailer, and there really is no risk," Egan said in April. "The retailer gets about 50 percent of the profit from the transactions, and the MAX BOX gives them a chance to offer services they wouldn't otherwise provide, like digital photo printing."
At that time, Egan said he expected to launch a full MAX BOX line of products in U.S. gas stations, convenience stores and pubs — locations he said had been successful in the United Kingdom.
At the end of October, Felix continued to eye expansion, even as Felix Group announced pre-tax losses of £5.4m (about $10.9 million) for the year on sales of £81,000 (about $164,000).
While acknowledging that the deployment of kiosks into U.K. shops had been slower than anticipated, Egan told the Manchester Evening News in October that Felix was still well placed to grasp opportunities and had improved its product offering and service to customers. Around 120 MAX BOXs are operating in U.K. pubs and retailers.
However, just a month later, Rose announced the business review and Egan resigned.
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