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Spain's kiosk armada

Kiosks will eventually be a major player in Spanish technology circles, according to kiosk executives in the country. But the industry has to deal with a variety of issues in order to achieve its potential.

April 18, 2002

Contraction and expansion have opposite meanings, but both words have settled cozily into the world of touchscreen monitors in recent years.

Contraction came first. A year ago the industry, which once had more than a dozen major manufacturers, was reduced to two when 3M Co. (NYSE:MMM) bought out Micro Touch Systems, leaving 3M Touch Systems and Tyco International Ltd. (NYSE:TYC)-owned Elo TouchSystems to dominate the touchscreen market.

Touchscreen executives predict the industry will expand from a $1 billion to $4 billion industry by the end of 2004, so more and more companies are eager to exploit the potential for revenue and grab hold of market share that may simply slip underneath the radar screens of the major companies.

"The consolidation of the market leaders by Tyco and 3M leaves a lot of room for a supplier and manufacturer that has skills and can meet space in the market that they're not meeting," said Michael Woolstrum, chief executive officer of touchscreen supplier Touch International Inc., which spun off another touchscreen-related company, TouchSystems Corp., in March.

"In the kiosk market you have a diversity of customers and fragmented projects," he added. "That being said, someone who's in a large corporation with a heavy infrastructure or overhead could have problems meeting the needs of this tier. Those customers need supplies and they need experience."

The market is out there, insist executives at touchscreen companies, and the atmosphere is conducive for competition.

"Given the fact that you have two large players opens the door," said Grieg Spidle, president of TouchSystems, who has remained in the industry as a supplier of all-in-one PCs with integrated monitors. "People who have not been satisfied with customer service and other issues will find other companies who can come in and fill their need for touchscreens."

But Frank Shen, marketing manager for Elo TouchSystems, believes the cache inherent in powerful brand names like Tyco and 3M will offset any customer service or competitive concerns.

"I don't think the new players will become serious players to 3M or Elo Touch," Shen said. "There is historic reliability and product supply access and we've been proven in the marketplace for years."

Usually more companies in any manufacturing sector means more innovation, more competition, and lower prices. The company that can bring a quality product to market with reasonable price points gains an advantage in the battle for market share. But Elo TouchSystems Europe Market Manager Mike Sigona said competitive pricing and technological advances can occur without having more companies in the mix.

"I do not think it has a big impact on pricing as the market is extremely competitive between the two major suppliers already," Sigona said. "While big companies have more overhead, they do have advantages of volume production and automation. And with few exceptions, we have not seen any technological breakthroughs from these small companies. The big ones certainly have larger R&D departments and patent portfolios."

Why touchscreens?

The pervasiveness of touchscreens in the market is built around two factors, according to Woolstrum and Touch International marketing manager Michelle Sims: convenience and safety. They believe that touchscreens meet the needs of customers and retailers alike, while offering a suitable level of hygienic protection.

"Touch is the most intuitive, simple interface; it's easy as that," Woolstrum said. "We are an information-based, information-starved society. And a kiosk that provides information also lowers a marketer's overhead. Look at bridal registries. It helps on both sides of the table. It helps them sell more products and it gets them in touch with what the bride and groom wants. It solves both an information need and an overhead cost need. People are more willing to have touchscreen than not have service."

Woolstrum, whose recent travel schedule took him to Atlanta, Raleigh, N.C. and South Carolina on three consecutive days, added that the convenience of touchscreens impacts his travel planning.

"I live on the road and am in the air a lot," he said. "I literally walk up to the American Airlines self-service check-in kiosk, get my boarding pass, and I'm on my way. I'd rather do that than stand in a three-mile long line for the check-in counter."

Sims added that the convenience level gives touchscreens an edge over other communicative methods.

"If you're choosing between touchscreens and keyboards you're going to have the same bacterial potential and the touchscreens are just more intuitive and easier to navigate," Sims said.

The growth of competition

Touchscreen manufacturers believe in their products and are certain the industry is growing. That is reflected in the expansion of companies into the market. New players are entering the touchscreen market at a faster rate than actors are failing to replace Nathan Lane in the lead role of "The Producers" on Broadway.

To wit:

So much activity and so many new companies in the marketplace, but at least one major touchscreen executive is happy to see a bustling market.

Elo TouchSystems Europe Market Manager Mike Sigona believes competition and price points are already adequately served by Elo and main rival 3M Touch Systems.

"I think competition is always good when consumers are buying products and manufacturers are selling products," said Larry Loerch, global business manager, monitors for 3M Touch Systems.

And Loerch said the logical fallout from increased competition is products getting better and cheaper.

"Consumers will see price become more competitive and they'll see technological innovations," he said. "That's one of the reasons I like 3M as a parent company. The company lives by the credo of innovation. I like working for a company that looks to the future.

"It's going to be a healthy environment," he added. "We'll see some companies prosper and some fail, but that's the nature of the environment."

Curves in the road

One area where Woolstrum believes Touch International can compete and survive in the market is in CRT touchscreens, a resistive five-wire system whose curved design adds a sense of perspective to the touchscreen experience.

Touch International plans to sell a 15-inch replacement kit for about $150, with a 17-inch kit coming in under $200.

"There are two very key customers," Woolstrum said. "The first is the existing North American customer with CRT-based kiosks and appliances. I think that represents the largest part of the market. The second market segment is the international market where there are tariffs for LCD screens but not for CRT. You're talking some major markets, Brazil, India, China."

But Loerch said price points are not as great an issue in the CRT divisions as in other parts of the touchscreen market.

"From a CRT standpoint it's already pretty low. There's good value for the consumer today," he said. "There might actually be some increase, though, in LCD prices because of the demand comparable to the supply."

Any further lowering of prices in the CRT sector could actually create problems for touchscreen manufacturers, Loerch added.

"You want to try to avoid pricing erosion extremes," he said, "because the goal at the end of the day is making money."

The touch that grows on you

Companies are entering the touchscreen market on the belief that the current market is healthy. But they are also gambling on the future being equally bright.

"The sector's continuing to grow," Woolstrum said. "We see that by the number of applications; mobile applications, cell phones, PDAs, or at a kiosk in a store, or the pervasive use of touchscreens at a POS."

Added Spidle: "A few years ago we weren't seeing touchscreens go into a house, but now we're integrating 15-inch (touchscreen) in the house. And look at PDAs. A few years ago we had the Apple Newton; now look where that has gone. Those are the angles you look at. A certain level of acceptance has come to pass and there's a real drive for customers to have a simple interface."

There may be a drive out there for simple interfaces, but choosing a touchscreen manufacturer or supplier these days is far from as simple as a year ago.