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KIOSKmarketplace.com editor John Harrell looks at what the kiosk industry will be facing, good and bad, in 2002.

February 21, 2002

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What defines the phrase "on the brink"?

In John Feinstein's book "A Season on the Brink," Indiana University basketball coach Bobby Knight comes off as a brooding, tense presence; a volcano ready to explode, spew his lava, and then diminish into a hibernating giant.

In the kiosk industry, a phrase like "on the brink" can mean a lot of things, good and bad. As the U.S. economy struggles to right itself, a still-maturing industry like the kiosk sector is vulnerable to the dark side of the brink - extinction.

At the same time, the brink can be a positive. Think of the brink in terms of explosive growth, of developing clarity in one's goals and objectives, of simply getting it right.

It can also be very mundane, as in "we're on the brink of signing a new deal." The new deal could save a company, or it could simply be the next piece in a continuous puzzle that unfolds with the halting progression of a Rubik's Cube.

But for the purposes of this column, being on the brink is either good or bad, not mundane. Either the kiosk industry will succeed in gaining a sense of ubiquity, or it will remain a technological curiosity.

KIOSKmarketplace.com editor John Harrell

Think personal digital assistants - just bigger and a few years behind in terms of maturity.

So what will it be in 2002, strong growth or sluggish disappointment? The answer could have significant long-term implications for the industry.

The plus side

A positive for the industry is that, in the natural process of maturing, more deployers are getting a handle on what works and what does not.

One application that appears to work quite well is airline self-service check-in kiosks. American Airlines (NYSE:AMR) recently reached the seven-figure mark in self-service check-ins (See story: American Airlines kiosks reach seven-digit mark). And with overseas carriers such as Cathay Pacific and Qantas adding kiosks to the menu (See stories: Cathay Pacific launches check-in kiosk line, Qantas "fair dinkum" about kiosk plans) it is clear the kiosk industry has reached ubiquity in the travel sector.

The tragic circumstances surrounding the terrorist attacks of Sept. 11 have not slowed down growth, either. Instead, the industry displayed the flexibility to discuss security issues, including the addition of biometrics technology.

Retail deployments ties to Web sites are tricky challenges based on as many external forces (the economy, the company's infrastructure, consumer tastes) as anything involving the kiosk itself.

But the bottom line for any kiosk is how the application is tailored to meet customer needs. Some retailers find that transferring their Web sites to the kiosk work well. Others seek a fresh look. Some, like Target Corp. (NYSE:TGT), use their kiosks in different ways, eschewing the direct retail format for specialized uses, such as gift registries, that still create sales opportunities.

There are other areas that are blossoming as kiosk applications. Rewards programs, the Pavlov's Dog approach of rewarding customers for their continued business, are critical to the marketing programs at any major casino. Horse racing tracks are adopting the practice as well, as are other specialty industries (think TravelCenters of America's Road King Club truck driver's program).

Kiosks can add value in that segment, giving customers a place to sign up, check their points, and cash in their rewards. Whether it is a truck-stop shower or a room upgrade at a major casino, kiosks can enhance these programs.

Over in Europe, telecommunications providers such as British Telecom (NYSE:BTY) are banking on the ability of kiosks to provide phone, e-mail, and Internet services (See story: British Telecom rings up Marconi for deal).

The minus side

Umm, well for one thing the economy really stinks at the moment. That may sound flip (and, of course, that was rather flippant) but sometimes a snarky attitude is the only way to ride out the storm when the boat really starts rocking.

And it is no exaggeration to think of Federal Reserve Board chairman Alan Greenspan as Leslie Nielsen, playing the role of the ship's captain in The Poseidon Adventure. Here comes the tidal wave, everyone hang on. The Fed's decision to cut interest rates 11 times during 2001 in order to lessen the impact of recession has left the board - at a 1.75 percent lending rate - with precious little wiggle room in 2002.

With the global economy still tottering, companies are trimming back or eliminating new endeavors, including kiosks. Other companies are reevaluating their kiosk strategies. And for some sectors, the kiosk is an application that either did not work or may not get the chance.

Many in the kiosk industry will want to forget about the concept of public-access shopping mall kiosks. That sector fell victim to a business plan - free Web content built around advertising revenue - that failed in a lot of cases. Online advertising revenue began drying up in the spring of 2000, killing many Web sites and leading to the now infamous dot bomb crash. Kiosks were not immune, as companies such as BigFatWow!, which went from having kiosks in more than 100 shopping malls to being out of business in the space of less than a year.

In Europe, the gaming industry has become a potent player, with more than 200,000 interactive gaming machines deployed in 2000 alone. Earlier this month, European correspondent Stephan Herron outlined the potential convergence between the kiosk and gaming industries (See story: Europe's kiosk gamble).

The Internet is necessary for the gaming industry, as a regular flow of online content keeps games fresh. The kiosk industry is in a position to tap into the Internet and create synergies with the gaming industry. The question is whether the current economy will allow that to happen.

As one can see, the kiosk industry is on the brink. If the economy regains its health and the kiosk industry continues finding dynamic applications, then the future is bright. But if the economy continues to struggle, what is beyond the brink could be very dark indeed.