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Pay now or pay again later

July 21, 2005

Most companies ask the same question when it's time to buy new equipment: Should we buy the most cost-effective solution or the one that will likely last longer?

As more retailers buy kiosks in larger numbers, the life expectancy of the machines becomes an even greater concern.

"There are really two courts of opinion," said David Mastrandrea, president of consulting firm Delphi International Inc., which works with companies deploying kiosks. "One, of course, is to find the lowest priced machine. The other is to make your money go further."

Buying built-to-last

"Retailers are cost-conscious, that's not exactly a news flash," said Bruce Rasa, marketing manager for IBM. "But many of them want to focus on serving customers, not replacing equipment."

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Retail kiosks have to withstand the rigors of high use and the fact that consumers and even some employees do not treat them as well as they would their own personal computers, Rasa said.

"Because of that, retailers demand and expect machines that are more reliable and last longer."

In the past, a standard laptop has been at the core of most kiosks. Recently, a handful of companies have begun selling kiosks powered by systems that double the typical lifespan of those laptops, which usually have to be replaced every two to three years.

"Our Anyplace kiosk has the same DNA as our POS systems and is designed to last five to seven years," Rasa said, pointing out that IBM has deployed more than 2 million POS systems in the past 30 years.

"We put our systems through a series of tests to replicate the retail environment and those are the kinds of things general-purpose PC makers don't think of when they are making their equipment."

Of course, buying a longer-lasting kiosk means spending more money up front.

"The decision is really driven by your corporate policy," Mastrandrea said. "As a retailer, are you going to spend $800 or $1,000 or are you going to spend a couple thousand dollars? Of course, if you buy something like the IBM kiosk, you can amortize the investment over five to seven years, so there is a lot to think about for retailers."

Rasa

If you are buying a kiosk as a capital asset, you should seriously consider something that is going to last. -- David Mastrandrea, president, Delphi International

acknowledges that an IBM kiosk has a higher upfront cost, but he contends that it will result in cost savings in the long run.

"It is a little bit higher acquisition investment," he said. "But the way we look at it, the machine lasts so long that you avoid having to deploy the kiosk twice."

Rasa said that since IBM launched its Anyplace kiosk in January it has gotten strong response from retailers, especially those looking to deploy guided-selling, music-listening and healthcare information kiosks.

"We have had multiple retailers that have rolled out the kiosk in the thousands," he said.

Mastrandrea, who judges kiosks at trade shows, said he hopes the industry continues to move toward making longer-lasting machines.

"If you are buying a kiosk as a capital asset, you should seriously consider something that is going to last," he said.