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  • 1. Kiosks2010 Retail Automation Equipment Planning ServiceTrack 1, Volume 6AutoID & Transaction Automation PracticeNed Daubney, Senior AnalystTom Wimmer, DirectorChris Rezendes, Executive Vice President
  • 2. Retail Self-Service Kiosks Defined Self-services addresses the need to provide targeted campaigns and information to in-store customers VDC defines a self-service kiosk for the retail (including hospitality) market as a freestanding, interactive, multimedia system used to provide information, or enable a transaction. Self-service is defined as the capacity for consumers to fully serve themselves without assistance, or interaction from the retail staff. Photo VDC’s self-service kiosks are customer-facing and exclude ATMs, photo, Kiosks self-ticketing, HR, self-checkout, basic price checkers, and gas pump kiosks, each of which offer their own market dynamics. ATMs Self-Checkout Basic Price Checkers Multifunctional Self-Ticketing Price Checkers Petroleum HR PaymentApplications Station E-Commerce Bill-Payment Product Food Vending Ordering (e.g.DVDs) Customer Endless Loyalty Aisle Guided Gift Registry Selling Retail Self-Service Kiosks 1– 2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice
  • 3. Executive Summary – Market Size & GrowthWhat 2009 took, 2010 gave back – postponed 2009 projects revived in 2010• Retail and hospitality self-service kiosk suppliers realized nearly $474.6 million during calendar year 2009, with the average supplier signaling a dramatic market (nearly 20%) decline from 2008.• The market is expected to grow at 9.3% CAGR over the next five years to $740.4 million in 2014.• In 2010, most vendors are seeing significant return to normal or better as dead 2009 projects sprang back to life, with increased retailer conviction for kiosks.• The few major vendors that did see revenue growth in 2009 characterized this growth as projects just too far along to cancel.• But the big story for self-service kiosks is future expectations.  Accelerated global adoption of retail self-service kiosk solutions is expected for the coming years.  A stream of new applications mature involving mobility, iPad / tablets, product vending, motion sensors, biometrics and analytics.  As kiosk technologies continue to converge, integration with other in-store technologies will be critical.• The value propositions associated with self-service kiosk solutions, coupled with the rapidly changing cultural demand for self-service by global consumers, will appropriately position these solutions as a center of convergence for a retailer’s customer service, transaction automation, and branding over the next five years. 2– 2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice
  • 4. Executive Summary – Trends – New TechnologiesKiosk vendors face a barrage of new technologies – but are they friend or foe?Trends – New Technologies• Disruptive Opportunities:  Potentially disruptive technologies including: interactive digital signage, mobile applications and iPads are generally not mentioned as threats by kiosk suppliers. Instead, these retail automation technologies are seen as complementary and integrate-able tools that can be deployed to meet application specific requirements. However, clearly there are risks associated with each new development.• Strong Interest in Mobile Applications, but not yet any large scale demand:  The highly anticipated demand for mobile applications has come much slower than expected. For many, this market is still in the “buzz phase”, with no large-scale roll-outs. Technology challenges remain, but we expect to hear about many mobile solutions sometime within the next year or two, as mobile standards evolve.• The iPad is Making its Mark:  Strong retailer interest in, but conflicting supplier opinions on iPad kiosk solutions – a large number of national pilot programs currently underway suggest a potentially large market impact, despite the tool’s fragility and novelty state.• Interactive Digital Signage blurring with kiosks:  Digital signage, and most notably interactive digital signage, is growing fast globally and often blurs with interactive kiosks. The big question going forward is how kiosks will integrate or otherwise co-exist with digital signs. 3– 2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice
  • 5. Executive Summary – Trends – New ApplicationsProduct vending kiosks, green solutions gaining steam; While loyalty making a comebackTrends – New Applications• Product Vending converging with traditional self-service kiosk solutions. Redbox’s DVD kiosk success replicable and being tested for multiple other wide-ranging applications.  Sleeker, pedestal-form vending kiosks will soon (within 2 years) noticeably alter the image of product vending.  DVD rental kiosk business likely to transform into digital download kiosks – and into sleeker kiosk form factors.  Product vending kiosks seek to bridge the gap between traditional stores and online shopping  Other parts of the world are less hesitant. In Europe and Asia, consumers buy anything from underwear to prescription drugs from kiosks. Japan has one vending machine for about every 23 people, according to one source. The country’s fascination with technology have made it a vending paradise.  Also contributing to the proliferation of this “automated retailing” is the new capacity to remotely monitor and service the machines. Remote device management technology actually provides both technical support and marketing data.• Loyalty Programs make a comeback  Suppliers characterize this comeback in part due to higher-end retailers, who needed to cut prices during the recession, pushing loyalty programs to satisfy long-time loyal customers, as they reel-back their price-cuts and raise them back to normal levels.• Green Movement growing  Some leading kiosk suppliers actively tapping into the growing global interest for cleaner solutions – which to them spells an opportunity for new applications, and a competitive differentiator.• Biometrics & Motion Sensors  Hearing a lot of buzz about, and some small rollouts with, these, but little demand on any significant scale. 4– 2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice
  • 6. Primary Segmentation ParametersThis study covers demand for a number of technologies in a range of retail and hospitality segments worldwide Retail & Hospitality Vertical Markets Regional Markets APAC Retail Automation Solutions EMEA ALL Infrastructure: Hardware, Software and Services Americas TRADITIONAL DELIVERY PLATFORMS POS Terminals / Workstations Technical POS Receipt Printers Payment / Transaction Terminals Dimensions Emerging Delivery Platforms Imaging Solutions Self-Checkout Solutions Kiosks Personal Shopping Systems Electronic Shelf Labels Interactive Displays & Digital Signage 5– 2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice
  • 7. Deployers versus DevelopersWhy kiosk deployers (e.g.Coinstar’s Redbox, Kodak and Blockbuster) are not included in this study• We count revenues earned from the manufacturing and sales of self-service kiosks.  These revenues pertain only to shipments from kiosk manufactures and do not include companies such as Redbox, Kodak or Blockbuster. In addition, these values reflect solely the movement of product from the point of manufacture to the first point of distribution and do not include any channel markup.• A deployer installs kiosks as their own; earning revenues from transactions, not from the sales, or lease of the kiosk (e.g. Redbox, Blockbuster)  As Redbox does not sell kiosks, nor does it produce any revenues from the actual design, or construction of kiosks, they are not included in the study – Their revenues more simply come from DVD rentals.• A developer is a firm that, on an OEM basis, designs and / or produces partial or complete kiosks.  Some firms such as Flextronics builds kiosk for other kiosk developers (IBM) or deployers (Redbox). Flextronics is thus a critical part of the kiosk production supply chain – their revenues come from building kiosks, and so their kiosk revenues are included in this study, while RedBox’s are not. Type Supplier Examples Deployer – installs kiosks to earn transaction revenue Coinstar / Redbox, Kodak, Blockbuster We highlight this distinction to make clear just who is making Branded Developer – Sells part / complete kiosks with its name on the kiosk NCR, IBM, Fujitsu, Vigix, Wincor Nixdorf money from the building and selling of kiosks. Unbranded Developer – Sells part / complete kiosks as OEM / PLP Flextronics, Oleo Hybrid Developer – Sells both direct and to branded developers Meridian, KIS, Frank Mayer 6– 2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice
  • 8. Kiosk Market Boundaries Blurring Self-service kiosk market continues to mix with other retail automation technologies Is the kiosk marketexpanding, or are modified It may all be semantics as even comparable solutions Digital the leading suppliers admitencroaching kiosk territory? Signage this “blur” is indefinable. Interactive Digital Signage Multi- Product Price functional KIOSK Product Vending Vending Price Scanner Scanners MARKET Kiosks Machines Tablet Kiosks Tablet PCs 7– 2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice
  • 9. Self-Service Kiosk Market Commercial Value Chain • The commercial value chain for Kiosks is Self-Service Kiosk Supplier comprised of a number of direct and indirect selling relationships. • Direct-to-end-user and OEM / private label partnerships are the most common distribution routes. VAD • Tier 1 retail organizations most often seek a direct relationship with the self-service kiosk OEM supplier, who assumes project management ISV responsibilities. • For these accounts, VARs and system integrators often play a key supporting role, ensuring that Sys. local post sale commitments are met. Int. VAR • VDC expects partnerships with ISVs (independent software vendors) to increase as hardware suppliers look to provide their customers with best-of-breed customizable kiosk software solutions aiding in seamless integration with digital signage, mobile applications, POS and End-User other in-store technologies.8– 2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice
  • 10. Self-Service Kiosk Market Regional Shipment ModelsSlow and steady growth will be fueled by pent-up demand for self-service solutions and new applications Regional Demand for Self-Service Kiosk Solutions • In 2009, the global retail market for self-service 2009 = $474.6 Million reached $474.6 million with unit shipments surpassing $203 million, down roughly 20% from 2008. VDC anticipates that revenue shipments (Millions of Dollars) 700.0 for Self-Service kiosk will grow at a CAGR of 600.0 9.3%, approaching $740 billion by 2014. 500.0 • Sales in the Americas region continue to be driven 400.0 by Tier 1 retailers, although large-scale kiosk rollouts appear few and far between. Retailers in 300.0 2009 were extremely cautious with spending, but 200.0 have clearly spiked up demand for self-service kiosk 100.0 applications. 0.0 • The Asia-Pacific market is expected to be the fastest 2014 growing region over the next 5 years as retail 2013 in China and India continues to scale. This demand 2012 2011 will be fueled by: Multinational corporations 2010 expanding their foot print in the region; and Tier 1-2 2009 2008 retailers continuing to make initial investments in kiosks.9– 2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice
  • 11. Self-Service Kiosk Average Factory Selling PriceAFSPs vary widely depending upon the application, form factor, component makeup and quality • The AFSP (price from the factory to the first point Global AFSP for of distribution) varies with the system components Self-Service Kiosk 2009 = $2321.8 integrated. 2,500 • The AFSP in each region will continue to fall as (Dollars) 2,400 display prices decline, cheaper I / O components enter the market, and smaller form factors win favor. 2,300 2,200 • Another major downward pricing influence will be the movement of the larger, global suppliers to 2,100 provide more standardized solutions for large-scale 2,000 deployments of the most popular kiosk applications. 1,900 • The upfront capital investment required has been 1,800 a barrier to adoption for many retailers, particularly in the current environment. Some suppliers have responded with managed services and SaaS models that enable retailers to invest for less. Americas EMEA Asia-Pacific10 – 2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice
  • 12. Competitive LandscapeNiche marketplace has changed little, but that may change• The kiosk market ecosystem consists of hundreds of relatively small and several large companies providing various parts of the complete kiosk solution.  IBM, NCR, Frank Mayer, Fujitsu and Kiosk Information Systems (KIS) continue to be the market leaders regarding self-service kiosk solutions within North America. KIS’s position within the North American market is a direct result of extensive product portfolio and their advanced level of customization and engineering regarding application / vertical market solutions.  IBM and NCR continue to leverage their easily customizable product portfolio and strategic partnerships to secure their market-leading positions across several vertical markets.• The global market for self-service kiosk solutions remains highly fragmented. Characterized by distribution channels that lend themselves to an increased level rebranding due to the multiple OEM and supplier organizations that interact via strategic and short-term partnering agreements, the kiosk market continues to be extremely convoluted.• Kiosks still lack that killer application that warrants multiple Tier 1 retailers to order large-scale kiosk rollouts. While several applications currently enjoy widespread adoption, most orders are of the size that niche vendors can fulfill. Regional top vendors such as KIS and Meridian thrive in this market.• In the projected market environment, VDC expects certain market consolidation as larger, global suppliers seek to standardize products and compete more successfully on price and global support.• VDC projects strong near-future demand for more standardized, off-the shelf solutions for these most popular applications, enabling the global solutions providers (IBM, NCR, Fujitsu, Motorola) to more capably build in their economies of scale. The world doesn’t need 500 variations of a product guide kiosk. Standardization, for popular kiosk applications, will likely rearrange the industry structure soon.  Under this scenario, global vendors will dominate large-scale Tier 1 rollouts, high-end niche vendors will remain the industry thought leaders and dominate the lucrative, customized kiosk demand, while low-middle-end kiosk developers will serve lower-tier retailers, while needing to tighten their market niches to grow. 11 – 2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice
  • 13. Competitive PositioningEstablished leaders, many niche players, little vertical integration High-end customizers – flourishing in current market. Kiosk Info Systems Meridian Olea Global giants – Frank Mayer Flextronics poised to see AdFlow Networks NCR economies of scale provide Kiosk ZoomSystems IBM price/support Sophistication Wincor advantages. friendlyway Motorola PFU NeoProducts Fujitsu LiveWire Ultimedia Partech SeePoint Hashkiosk Radiant Low-middle market players need toconsolidate or find tight Regional Global Capabilities niches to compete Supplier & Presence with global leaders. 12 – 2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice
  • 14. About VDC Research GroupVDC Research Group (VDC) provides exceptionally detailed direct-contact primary market research and consultingservices to many of the worlds largest technology suppliers, innovative start-ups and leading investors. The firm isorganized around six practices, each with its own focused area of coverage. Our clients rely on us for highly segmentedresearch and analysis which is derived from our unwavering commitment to the idea that all markets are collections ofsmaller market segments and that winning companies must develop and execute strategies that are segment-specific.Please visit our website at www.vdcresearch.com to learn more, or call: 508.653.9000 13 – 2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice
  • 15. Ways to Work With UsThis report is one of many ways VDC Research Group can help you better navigate your market and grow your business.In addition to published research, VDC Research Group offers a range of services designed to meet your specific tacticaland strategic decision-support needs.Retained Services – VDC Retained Services provide clients with ongoing access to our research staff for a predeterminedfee. By entering into a Retained Services Agreement, VDC will commit resources to you and your team each month, butthe specific research, analyses and advisory work we undertake for you can be decided by you on an as-you-go basis.Clients in particularly dynamic markets derive significant benefits from the ability to obtain up-to-the minute insights andguidance from our research and consulting teams.Custom Research & Consulting Service – VDC’s Custom Research and Consulting Services provide clients with theinsights and guidance they need to make significant business decisions with confidence in the midst of an uncertain futureand complex markets. To date, more than a thousand clients have benefited from our research-driven guidance andexceptionally close client collaboration. Our unique approach ensures that all of our assistance and recommendations arebased upon rigorous analysis of information gathered by VDC directly from the marketplace. By engaging VDC when facedwith important market strategy decisions, clients maximize the likelihood of achieving their specific goals, including growingrevenue, increasing margin, successfully expanding into new markets, or improving the performance of the channel.VDC is prepared to assist your organization with any of the strategic and tactical initiatives described below:  Market Expansion – Into new verticals, applications, account sizes, or geography.  Feature Set Definition – For product upgrades, new product lines, product line extensions.  Technology Strategy – Including standards adoption, open-source strategy, Service Oriented Architecture (SOA) business model migration.  Distribution Strategy – New channel development, channel strategy, channel performance audit.  Customer Satisfaction & Loyalty – Existing customers, defections, sales loss analysis.  Strategic Acquisition – Of a peer, new entrant, intellectual property. 14 – 2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice
  • 16. Ways to Work With Us – ContinuedOn-Site Meeting Participation – When making significant decisions, VDC’s analysts and consultants can be extremelyvaluable participants in your internal process. Our participation in team meetings allows you to add the unique insights ofa full-time market expert to your process, ensuring that you are acting on objective third-party market intelligence insteadof the potentially biased perspectives and groupthink that exist in most organizations. When meeting to plan newproducts, to plan your entrance into new markets, to build a business case for your board, to address challenges withyour existing market strategy, and for a wide variety of other market-related issue sets, we encourage you to considerthe participation of a VDC analyst or consultant.Speeches & Presentation – Important events such as reseller conferences, partner conferences, product launchesand related teleconferences and Webinars gain credibility from the participation of one of our analysts or consultingprofessionals. Our speakers enhance your event by providing your attendees with unique market insights andintelligence that will leave them better informed about your markets, and better prepared to support your businessobjectives. Our professionals can also provide additional credibility to your strategy by presenting to your audiencefact-based research that supports your planning.Executive On-Boarding Briefings – If you or someone on your team is new to their position, the company or theindustry, VDC can radically accelerate their pace of learning so that they can deliver results much more quickly than theycould otherwise. VDC is an expert at providing senior leaders with high-impact industry history briefings, market statusbriefings, competitive positioning briefings, and much more. Our professionals can help new leaders make the novice-to-expert transition in record time. 15 – 2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice
  • 17. Team Licensing Terms & ConditionsUse of this product is governed by a VDC Team License. A Team License allows acquired research to be sharedby a limited number of employees (including individual consultants or contracted employees) (“Employees”)within the organization. The specific privileges afforded by the VDC Team License are as follows:1. The right for a limited number of individuals (typically not more than five), who are generally known to each other and are within the same company or business unit, to use and share the acquired report(s), database(s), spreadsheet(s), or extracts thereof (the “Product”).2. The right to extract data, charts, graphs, tables or other portions of the Product for use in internal company presentations provided VDC is identified as the source of the extracted information using the following language: “© Copyright 2010 VDC Research Group, Inc. Source: Retail Automation Planning Service, Track 1, Volume 6: Kiosks."3. The right to save copies of the Product on individual PCs or on a server that is accessible only to a limited number of colleagues who are generally known to each other.Please note that the VDC Team License specifically excludes the right to:1. Post or store an electronic copy of the Product on a corporate Intranet server, portal or other location that is accessible to the majority, or entirety of the organization. Note: This right can be acquired by upgrading to an Enterprise License.2. Store a physical copy of the Product in a corporate library that is accessible to the majority or entirety of the organization. Note: This right can be acquired by upgrading to an Enterprise License.3. Distribute or make accessible any portion of the Product to any individual who is not an Employee of the client’s organization, including i) investors, ii) employees of partially or wholly owned subsidiaries, divisions or business units owned by the client, iii) employees of other subsidiaries, divisions or business units owned by any parent company or holding company that is the majority owner of the client, iv) employees of any parent company or holding company that is the majority owner of the client and v) vendors and other firms that provide products and/or services to the client’s organization.4. Use some or all of the Product in meetings or presentations where the primary audience is composed of individuals who are not Employees of the client’s company or business unit without the express written permission of an authorized VDC representative. When authorized, VDC must be identified as the source of the extracted information using the following language: “© Copyright 2010 VDC Research Group, Inc. Source: Retail Automation Planning Service, Track 1, Volume 6: Kiosks."5. Please note that the products and services provided to you under a Team License remain the exclusive property of VDC. 16 – 2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice
  • 18. Enterprise Licensing Terms & ConditionsUse of this product is governed by a VDC Enterprise License. An Enterprise Licensing allows acquired researchto be shared by all employees (including individual consultants or contracted employees) (“Employees”) of theorganization. The specific privileges afforded by the VDC Enterprise License are as follows:1. The right to post or store an electronic copy of the acquired report(s), database(s), spreadsheet(s), or extracts thereof (the “Product”) on a secure corporate Intranet server, portal or other location that is accessible to significant portions of or the entirety of the organization.2. The right to store a physical copy of the Product in a corporate library that is accessible to significant portions of or the entirety of the organization.3. The right to distribute the Product, either in parts or in its entirety, via email, fax or hard copy, to other individuals who are current Employees of the organization.4. The right to extract data, charts, graphs, tables or other portions of the Product for use in internal company presentations provided VDC is identified as the source of the extracted information using the following language: “© Copyright 2010 VDC Research Group, Inc. Source: Retail Automation Planning Service, Track 1, Volume 6: Kiosks.”Please note that the VDC Enterprise License specifically excludes the right to:1. Distribute or make accessible any portion of the Product to any individual who is not an Employee of the client’s organization, including investors, Employees of partially or wholly owned subsidiaries, vendors and other firms that provide products and/or services to the client’s organization.2. Use the Product or portions thereof in meetings, presentations, documents, or other media or settings where the primary audience is composed of individuals who are not Employees of the client’s company without the express written permission of an authorized representative of VDC. When authorized, VDC must be identified as the source of the extracted information using the following language: “© Copyright 2010 VDC Research Group, Inc. Source: Retail Automation Planning Service, Track 1, Volume 6: Kiosks.”3. Please also note that the products and services provided to you under an Enterprise License remain the exclusive property of VDC. 17 – 2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice
  • 19. Notice of Copyright 2010 VDC Research Group, Inc.The entire contents of VDC’s 2010 Retail Automation Planning Service, Track 1, Volume 6:Kiosks are proprietary to VDC Research Group, Inc. (VDC), and may not be distributed ineither original or reproduced form to anyone outside the client’s internal organization withinfive (5) years of the report date without prior written permission of VDC.VDC has devoted its best efforts to obtain for and provide to its clients as accurate data asis possible. Nevertheless, we cannot be held responsible for incorrect information providedto us by vendors, users, or others that we interview. Nor can we be held responsible forforecasts of the future evolution of an industry, which, in retrospect, proves inaccurate.Our goal is to provide the best possible analysis of an industry, utilizing data obtainedthrough a time-proven and rigorous research methodology, for our clients to employ indeveloping strategies to compete in an uncertain and ever-changing business environment.TRADEMARK ACKNOWLEDGEMENT: Many names ofcompanies, associations, technologies, products and product types, etc. mentioned in thisreport comprise Trademarks, either registered or non-registered, owned by various entities.Theseare too numerous to mention individually. VDC acknowledges that ownership ofthese Trademarks exist, and requests that readers acknowledge this as well.18 – 2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice

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