Do You Want A Piece Of The Billion-Dollar Kiosk Market?

Kiosks, described as the "vending machines of the information age," have become too large a market for point of sale (POS) VARs to ignore. According to a report from the research firm of Frost & Sullivan, in 1996, the kiosk market reached $369.7 million. By the year 2003, the kiosk market is expected to swell to $2.94 billion, according to the same report.

As a POS VAR are you in the kiosk market? One California POS VAR thinks you should be. Jim Stewart, president of KDS Pixel Touch expects his gross sales to increase by $4 million this year. He attributes this growth to the increased number of applications for kiosks. "The uses for kiosks are limited only by imagination," says Stewart. "The popularity of kiosks is not restricted to one market," says Stewart. For example, you can find kiosks in retail stores, hotels, truck stops, and airports, among other places.

Stewart founded KDS Pixel Touch in 1990 to provide interactive touch-screen kiosk solutions. He provides two types of kiosks: point of sale (POS) kiosks, for selling goods and services, and point of information (POI) kiosks, for accessing data. Today, the company has 15 employees with offices in Ontario, CA, and Toronto. KDS Pixel Touch is hoping to gain a larger share of the kiosk market through the development of its Surf Touch control software.

Decreasing Software Prices Help Drive Kiosk Applications
What's driving the kiosk market? In the past two years, application software has become less expensive to produce and sell, Stewart explains. In addition to less expensive software, Stewart says POS hardware prices are decreasing, due to increased competition in the market. This includes the cost of display technology, including touch screens, as well as monitors. "A few years ago, a 14" monitor cost $600. Today, you can buy a larger 19" monitor for the same price," says Stewart.

Many jobs today can be done using a computer, increasing the demand for automated systems. "Almost any repetitive task can be computerized and made interactive," claims Stewart. Human resource departments, especially of large corporations with scattered sites, can benefit from kiosk technology. Training new employees, for example, can be done using an interactive kiosk that runs video. Using a kiosk eliminates the need for highly-paid training staff. "Employees can access insurance benefit information, for example, using a kiosk. Employees can also make address changes and update dependent information for insurance without going to the human resource department or making a phone call," says Stewart.

Providing Public Access To The Internet
Common uses for kiosks in retail include gift registries and custom-designed greeting card stations. Kiosk ATMs can be found at banks, as well as in grocery and retail stores and restaurants. "The biggest emerging market for kiosks is public Internet access," says Stewart. Basically, these terminals allow for the general public to pay a fee and access the Internet. This type of kiosk could be found in an airport, for example. "Travelers can pay for access time using a credit card. They can then check their e-mail and do research on the Internet between flights," says Stewart. Public Internet access terminals are ideal for use in "high traffic areas", such as malls, movie theaters, train stations, college libraries and grocery stores.

Can You Profit From Kiosks?
One way VARs can profit from the kiosk market is by integrating the kiosk components (PC, touch screen monitor, magnetic stripe reader, application software, etc.) into a turnkey solution and selling it to specific markets. In addition to configuring the system and loading the software, Stewart also integrates the touch screens and the monitors.

VARs can also profit by owning one or more kiosks. Similar to owning a candy vending machine, you profit from every sale. Instead of candy, for example, you are selling access time on the Internet. Profit sharing is common between the owner of the kiosk and the owner of the kiosk location. Additional revenue comes from selling on-screen advertising.

A VAR, for example, may own a kiosk in a shopping mall. Revenue is generated from advertisers, such as stores within the mall, and from access fees paid by kiosk users. Expenses, in addition to equipment, include Internet service provider (ISP) fees and any maintenance fees and space rental fees. The profits are divided between the VAR and the owner of the kiosk's location.

Stewart is developing an application with a company in Texas that governs how profits generated from a kiosk are divided among all the parties involved in its operations. Stewart explains that this multi-point distributor will oversee payments to the telephone company, VAR, and a payment verification company profiting from one kiosk, for example. Stewart predicts that as more "players" become involved in Internet communication, such as phone companies, working with multi-point distributors will become increasingly important.

New Markets For Kiosks
Stewart admits he "lives and breathes" kiosk technology. He's constantly amazed, however, by new applications for it. He is currently working on an interactive kiosk that allows people to play chess, checkers or backgammon against themselves or other players, either in person or online. The touch screen lies flat, embedded in a tabletop. Starbucks Coffee has expressed interest in the kiosk, according to Stewart. "In the future, you could conceivably go down the street for a coffee and play chess over the Internet with someone in England," he says. Stewart expects this type of kiosk to appeal to those who have "free time and money to spend."

Stewart is also applying kiosk technology to chiropractic medicine. One of Stewart's customers, a chiropractor, is using a kiosk to select video exercises on-screen and preparing prescription videos for his patients. The doctor, using the touch screen, selects from a menu of exercises, each of which is demonstrated on a video clip to the patient. The selected exercise clips are compiled onto a VHS tape. The doctor then reviews the selected exercise clips with the patient in the office. All of this is done using the kiosk. "Patients pay about $35 to take home a customized video tape of only the exercises appropriate for their particular condition," explains Stewart. He says its one more example how imagination and kiosk technology combine to create selling opportunities for VARs.