Executive Summary

1 Executive Summary Th e

European

Kiosk

Market

Must

and

Will

Change

Too Many Vendors-Not Enough Value Against the backdrop of falling revenues, delayed decision-making and failing pilot schemes, some of the leading multimedia kiosk vendors in Europe are looking at how they can shed the 'PC-in-a-box' image that threatens to undermine what they maintain is real value-add. However, with only a handful of strong references and a tide of low value kiosk vendors maintaining a small but serviceable market for kiosks which are nothing but a 'PC-in-a-box', the task is huge. In describing the current and future trading environments for kiosk vendors, this paper highlights some of these vendors' strategies and argues that the market is set for a strong round of consolidation that will sweep away a large number of small players that add little value over and above a basic PC-in-a-box solution. It suggests that although other labels such as 'selfservice' help in distinguishing high value kiosks from lower value PC-in-a-box type solutions, in reality the basis for any kiosk implementation must be to address a clear and present business need. Definitions We define a kiosk as a freestanding computer based device that allows the public or a specified group of users access to device-based or on-line information and/or services. We include within this definition devices that allow public access to the Internet and specific web sites, self service devices such as that allow users to transact with their stores loyalty scheme, print digital photos, buy theatre tickets, check-in to air flights, check out of hotels, order and pay for meals at fast food outlets and so forth. We do not include within this definition Automatic Teller Machines (ATMs), lottery equipment and gaming devices.

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© 2003 Frost & Sullivan

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March 2003

1-1

Another way of looking at our definition of a kiosk is to compare its form with its function. ATMs do not qualify as part of our definition of a kiosk market because they need to incorporate specific features (forms) such as secure, alarmed enclosures combined with a specific purpose (function)—dispensing cash. Similarly lottery equipment and gaming machines whilst often labelled self-service, are highly specific in both their forms and their functions. We include self-service terminals that allow airline check-in, hotel check-out and digital photo development where they are based on standardised kiosk elements. Thus the form of the machines is non-specific even if the function is highly specific. Chart 1.1 graphically demonstrates our definition. Chart 1.1 Total Kiosk Market: Kiosk Definition (Europe), 2003

Highly specific

Airline Check-in Kiosks Hotel Check-out Kiosks

Form

In-store loyalty kiosks

Digital photo printing kiosks

Lottery equipment

Gaming machines

ATM Public information points

Public access web kiosks PCs Non specific

Highly specific Function

Source: Frost & Sullivan

This study is concerned with the markets addressed by complete and turnkey kiosk vendors. These vendors produce finished kiosk products for end users. In some cases they may provide the content but in many cases the content may be provided by the client or indeed a third party. Chart 1.2 shows the kiosk value chain and highlights the focus of this study. This report focuses on the markets for Kiosks in France, Germany, UK and Italy. The majority of Kiosk vendors are based in these regions. We are aware of significant markets in Spain, Portugal and in Scandinavia. Please enquire with regard to analysis of these markets.

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1-2

Chart 1.2 Total Kiosk Market: Value Chain Analysis (Europe), 2003

Integrators Content Providers

Component Enclosure Input Systems

Complete/Turnkey Kiosk Providers

Software Developers

Retailers Financial Local/Central Government Transport & Tourism

Customers Resellers/ Distributors

ISPs

Display Report Focus Coin/Card Acceptors Printer Others—Power Supplies/Connectivity/Specialist


To Get a Different Result—Do Things Differently Some kiosk vendors are struggling because they offer little value over and above a PC-in-abox product. They offer few services and are focused on low margin and, currently, on low unit volume projects. These vendors will not survive through the medium and even the short term. The rest of the market is suffering because these vendors project a low value image of a kiosk. Smarter vendors realise that they can increase their profits in this market by selling back to existing customers. The reason customers come back is because previous kiosk implementations have been successful. Successful implementations are a function of the customer having a strong business case for employing kiosks, guidance in how to deploy kiosks, right from how to understand and encourage users through to where to site the kiosks to their best advantage. Th e Ki o s k M ar k e t o f t h e F u t u r e We believe that in order for the market to flourish and to live up to the high expectations placed on it in the late 1990s it will need to change radically. Vendors need to drive up the perceived value of kiosks by considering how they add value to their customers operations; how they fit into their strategy as a whole and where perhaps kiosks are less suitable than other technologies.

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1-3

Chart 1.3 shows how the value perception of a kiosk changes as its function becomes more specific to a particular business issue. This implies a higher degree of customisation over and above standardised products as well as a higher proportion of sales and fulfilment time spent on directly matching the solution to the clients business need. Chart 1.3 Total Kiosk Market: Value Perception (Europe), 2003

Value Perception

Self-Service Kiosks

Point of Information

Public Internet Access Kiosks

Degree of customisation for Job


This means a change in mind-set for the kiosk vendors that really want to be around in 5 years time or the development of an exit strategy for those that believe they can continue to survive by pumping out PC-in-a-box products. Chart 1.4 lists some of the ways in which the market will change. On the positive side many of the leading vendors in the market are thinking about these issues now. However a considerable number of vendors are nowhere near being able to compete in a services-based market in which as well as competing with traditional kiosk vendors they will also be competing with (as well as working with) companies like Accenture, EDS and IBM Global Services. This report gives a comprehensive view of the European market as it is now and what it may be like in the near future. It details how vendors within that market are shaping up to form this future market and which vendors are best placed to grow as the market place changes.

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Chart 1.4 Total Kiosk Market: Now Vs the Future (Europe), 2003

Competition

Product

Customers

Sales Approach

Now A few large vendors, many small vendors

Future A few large vendors, a few smaller vendors

Competition mostly confined by geography

Competition within vertical markets

Low margin

Higher margin services based

Output capacity and price are key differentiators

Complete kiosk-related services key differentiator

Customers searching for a strong kiosk business case

Customers building strategies around self- service

Customers mostly confined by geography

Customers defined by vertical markets

Kiosk sales 'transactional'

Kiosks 'sales relationship-based'

Repeat business marginal

Repeat business dominant


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