|| The Perspective
Monday, 27 March 2006
When Bryan Harris asked me to write a piece for SelfService.org he provided the following summary of the topic: “The evolution of kiosk enclosures, as form and function are beginning to converge.”
Since I am known for designing ultra-custom kiosks this may seem like an odd response, but the first word that jumped in to my head was “commodity.” My gut told me design convergence probably makes sense for the kiosk industry, even if it doesn’t make sense for my company. Related products like ATMs have become commodities, so why shouldn’t kiosks follow the same path? Just where is the kiosk industry on the road from bleeding edge to commodity? More to the point: If kiosks are all going to end up looking the same, should I be out looking for a new job? I set out to compare our industry to its common ancestors such as the vending machines, Automats (http://www.theautomat.net/) and the ATM, hoping to shed some light on where we are headed.
I called up a contact to explore self-service the way it was before touch screens and the Internet. During a late summer blizzard I visited the warehouse and showroom of a national distributor of traditional vending machines. The reason I originally contacted the owner was simple: I noticed the products they shipped every day looked like kiosks, so would they be interested in selling and supporting some of our higher-volume products? He wasn’t. Standing among the forklifts and cluttered workbenches a second time, the similarities to the kiosk industry again struck me. The design issues, manufacturing methods, distribution infrastructure and maintenance processes were almost identical. Many of the components are similar. The biggest physical difference between kiosks and vending machines is the extensive use of complex electro-mechanical devices in vending equipment. As I looked at the tangle of wiring in a giant pop machine I thought to myself: “these are really complicated! It would be easy for these folks to build kiosks.” So why hadn’t they been interested?
I was told the modern form of the vending machine was developed and deployed widely before WW II and therefore the economics are almost perfectly understood today. Industrial consolidation and product convergence happened to vending in the 50’s. What impressed me most about the meeting? It was how well he understood his business. He knew a good location from a bad one, a good machine from a bad one and a good customer from a bad one. He knew who had been successful, why, where and when. In the showroom there were vending machines from many different companies and he knew every one like an old friend.
Vending machine builders have factories, engineers, sales channels and infrastructure that most kiosk makers can only dream about. Vending machine builders could have been in the forefront of the kiosk industry, yet few vending machine builders attend kiosk trade shows. Interestingly the company president expressed dismay at the fact that his suppliers missed out on the kiosk business. He felt he didn’t understand the business of kiosks well enough to succeed. He depended on the suppliers to spend the money to create the products he sells. I wondered if the vending machine industry missed out on the kiosk boom, or ignored it on purpose. I mentioned that I thought a technological convergence happening with vending machines and kiosks; I have seen vending machines equipped with attract monitors, touch screen interfaces and internet enabled remote monitoring devices. Then it occurred to me: By adopting new technology, the vending industry was actually “de-converging.” I concluded that as a mature industry with low margins, the vending industry has been waiting out the kiosk storm, waiting for the “bleeding edge” phase to end. They think of themselves as a commodity business; so they behave like one.
To better understand what is happening to kiosks it is worth looking at the evolution of a closer relative: The ATM. To the users of ATMs design convergence has meant a reduction in the number of different machines, reduced learning curves and decreasing user confusion. Today there are only a few ATM configurations in common use, adoption is almost complete and the technology is no longer considered leading edge, or even noteworthy. Remarkably, no single design of the user interface has become the standard, so there is still a learning curve involved in using some ATMs. Convergence of the ATM has resulted in competition for fees from every corner grocery store able to afford one. Incidentally the history of ATMs exposes the downside: convergence is bad for manufacturers because it eliminates unique selling propositions, reduces margins, lowers the bar and allows low quality producers in to the marketplace. The marketplace drove ATM profitability resulting in a profusion of low-cost, poorly-maintained free market ATMs and a corresponding reduction in security and service quality. Vendors commonly use 30 or more types of ATM and there are probably plenty more. Why hasn’t convergence reduced this to half a dozen models?
Many of the same effects described above are apparent in the kiosk industry. The public acceptance of ATMs and increasing availability of applicable technology led to an explosion of self-serve technology in sectors like retail. We know early entrants into the kiosk market included dysfunctional public internet access terminals, awkward photo finishing kiosks and ticket machines that didn’t provide a ticket. Costs soared, results dwindled and some customers moved on. Some buyers felt that the answer to low ROI lay in reducing the cost of the kiosk itself and price pressure inevitably delivered low-end stock kiosks to the market. In my opinion these units generally suffer from the jack-of-all-trades, master-of-none problem and the lack of design differentiation fails to provide owners with differentiation for their product. As the industry matures and develops the capability of delivering well-conceived and well-built self-serve technology, returns grow dramatically. The self-checkout stations now found in places like Home Depot cost a bundle, but the units satisfy the customers and save the owners money, so they have a future. Kiosk designed for specific roles can now be found in almost every sector, from air travel to education and health care.
So are we close to the point where kiosks are a “commodity” with a common form factor, common components and common interfaces? Are we seeing an unstoppable process that will lead to kiosks becoming standardized commodities just like ATMs and vending machines? As we have seen this hasn’t happened to vending machines and ATMs, so it is even less likely to happen to kiosks, which must handle a wider variety of roles.
Bright future for designers
Jack of all trades, master of none applies to the kiosk industry as much as it applies to handymen. To respond to the range of applications and price/value relationships in the market, vending machines and ATMs are still made by dozens of companies in many models and many countries. The rules are no different for kiosks. The vast range of situations in which self-serve technology can serve a useful purpose requires an equally vast range of original self-serve solutions since each kiosk application has such specific criteria that stock kiosks running stock software are unlikely to suit any job really well. Our answer at The Kiosk Factory has been to produce custom kiosks for certain applications and modular kiosks for all the others. Do we expect to find a large market for a stock model? No. We think the answer to the problem of effectiveness is not to abandon differentiation, but rather to embrace diversity. We don’t want to end up like the vending machine companies, finding find ourselves struggling to adapt.
Monday, 20 March 2006
I’m pleased to report that membership is at an all-time high of 193. This total is comprised of 172 vendors, three deployers, and 18 individuals. What’s apparent is that our association has appealed to those who provide self-service solutions (vendors). In the coming months, we plan to explore the value proposition for those purchasing and implementing self-service (deployers). To do this, we will be talking to as many deployers as possible to determine the benefits sought and gained by membership in our organization.
For our vendors, there are a few simple, but compelling reasons to join and remain a member. These reasons include:
- Listing in the membership directory (searchable alphabetically and by product category)
- Access to Requests for Proposal (RFP) submitted through our site
- Substantial discounts on trade shows, advertising, research reports and more
- Ability to be profiled for a case study or feature
- Press release postings in our news section
I have to wonder, though, are you taking full advantage of these benefits? Are you responding to the RFPs that come your way? Does your company have a mechanism in place for handling RFPs as they come in? Did you know that you have the ability to use the SSKA logo on your Web site or in print?
As I mentioned in my last letter, there are three distinct ways you can get the most of out of your membership right now:
- Contact our editor, Bryan Harris, at . Introduce yourself if you haven’t already and talk to him about getting your company in the news, features or case studies sections of our website.
- Contact Advisory Board Member Alex Richardson at with information about your company’s involvement with a well-known brand for inclusion in our promotional campaign, “The Best Service is Self-Service.”
- Contact me at to learn how you can get involved in one of our committees. This is your opportunity to impact the industry in a positive way.
I want to add to that another action item – review your company’s listing in our member directory.
- Do we have the right representatives from your company in our database? In addition to your primary delegate, you can list up to four other delegates.
- Do we have the right contact information, including mailing address, telephone, fax and e-mail?
If you have any changes to your listing, please contact Diana Sexson at and she will update it immediately.
Remember, with membership organizations, you get out of it what you put into it. Make sure you are maximizing the benefits from your organization.
Saturday, 11 March 2006
When J.C. Penney decided to reinvigorate its brand, it harnessed kiosk technology and a trendy marketing strategy to do it. The company is renting 1 Times Square, the historic former New York Times building and perennial site of New York’s New Year’s bash, and installed a “pop-up” store that opened on March 3 and will close on March 26.
The store inhabits 15,000 square feet on the three lower floors and employs two 18-foot tall ads on the side of the building. Inside, there are 22 kiosks, 18 digital signs and 96 mannequins. USA Today described entering the store as like walking into a commercial.
It’s a new jingle for a company that, after losing $928 million in 2003, seemed to be singing its swan song.
Individual pieces of merchandise are displayed as if in a museum. Gone are the classic clothing racks of yore. To make a purchase, a customer uses a kiosk and the goods are shipped from off-site to his or her home.
J.C. Penney’s pop-up store sits just a couple blocks away from the Virgin Megastore, another landmark self-service deployment, with 150 self-service listening stations.
It’s no coincidence that enormous companies are deploying kiosks to create next-generation customer experiences in a crossroads of American commerce. Likewise, it’s no coincidence that enormous companies are banking on self-service products. At the recent National Retail Federation’s “Big Show” in New York City, NCR’s Nelson Gomez, vice president of self-service solutions for North America, said self-service will be NCR’s double digit growth vehicle for 2006.
Gomez’ estimation isn’t solitary. Analysts predict nine percent growth in the self-service industry this year. System developers expect a boom year. Microsoft, Symbol, IBM, Wincor Nixdorf and other large cap multinationals are deploying more and more self-service equipment and software than ever.
And it’s all because of retailers like J.C. Penney cutting costs, enhancing their brand and improving customer service through self-service.
Monday, 06 March 2006
As with spring each year comes a time of new beginnings. I am thrilled to be serving as the new executive director of the Self-Service & Kiosk Association. My first day on the job found me in Orlando at The Self-Service & Kiosk Show. What a great way to start! I was able to dive right in, meet people and begin to get my arms around this intriguing industry.
If you missed Orlando, you have another opportunity to put your finger on the pulse of the industry in a couple of weeks at KioskCom 2006 in Las Vegas, April 10-12 and in the fall when The Self-Service & Kiosk Show travels to San Antonio, Texas, September 28-29.
Though I’ve only been with the organization for three weeks, I have many exciting things to share with you. First, there is the completely revamped website. Like a welcoming gift, the new site was finished upon my arrival. From its clean, fresh look, to its ease of navigation and depth of content, you will find it a site to revisit often. One only has to look at the dates of the news items to appreciate the up-to-date reporting found on the new site.
The man who will be behind writing the features and gathering case studies is Bryan Harris, our new, dedicated editor. If you were in Orlando, there was a good chance you met Bryan. He was out there in the trenches meeting people and scoping out the good stories. Bryan brings a much-welcomed energy and enthusiasm to the website and newsletters. If you have any suggestions, comments or leads for articles, please contact Bryan at .
The next big item on the list is the marketing campaign, headed up by Marketing Chair and Advisory Board Member Alex Richardson. Dubbed “The Best Service is Self-Service,” the promotion focuses on successful, brand-recognized deployments. The goal is to highlight the impact and various ways self service helps organizations – from all market segments – to improve service and increase sales and customer satisfaction. Over the next 12-18 months, we will collect and create these “snapshots” and post a library of them on our website. Be on the lookout for these promotions in print, email and on the web. If you have a project you think would make an excellent candidate for the campaign, please contact Alex at .
Why are the new website and marketing campaign so important? Our goal is to build more traffic, which in turn raises industry awareness and credibility, leading to interest in members and ultimately quality leads and requests for proposals.
The recent elections for the Advisory Board have concluded and we have both incumbents and newcomers appointed to serve the association during the next year. As you read their personal biographies, you will see that we have a qualified group of people steering the ship. While we are sure to chart both familiar and unfamiliar waters, we will always act in a manner that is in the best interest of the membership at large and will ultimately move our industry forward.
If you would like to get more involved, we have several committees in place now and I anticipate more being created in the near future. The current list of committees includes Best Practices, Membership and Marketing, Research and Statistics, and Standards. Please contact me at to learn more about how you can get plugged in.
Another major initiative of our organization is to develop strategic alliances and partnerships with other associations, trade shows and media that will further advance the awareness of the SSKA. I am compiling a list of all the related entities out there. While I will be reporting on the progress of these efforts in future columns, I welcome any suggestions or insight you have in this area.
In closing, I would like to thank Dick Good and Alan Fryrear for giving me this opportunity and for their wise counsel. I also appreciate Greg Swistak, whom I met in Orlando and who served before me in this role. His willingness to support me is much appreciated. It’s been great getting to know the other Advisory Board members and staff. Together I know we can achieve great things in the weeks and months to come.