GoKiosk Kiosk Self-Service

Luxury Vending Machines Cropping Up

Good overview on BusinessWeek on the "Va Va Voom" of the new Vending Machines. Nowadays you can buy perfume or iPod, or in 3rd world country maybe you buy electricity...Slideshow of units from around the world recommended...

The Va Va Vooming of Vending Machines

slide show

The Va Va Vooming of Vending Machines
Aimed at young shoppers and wealthy frequent fliers, luxury vending machines are cropping up with more than Sprite and Skittles. Perfume or an iPod anyone?

by Aili McConnon

Cheetos, M&Ms, pretzels…iPods? Forget the dusty, poorly lit vending machines selling stale peanuts and Rice Krispies squares pumped up with preservatives. The vending machine is going glam. Consumers are using their plastic instead of their spare change to snap up luxury items such as digital cameras, cologne, and even software from automated machines in airports, malls, supermarkets, and other high-traffic areas.

ATMs, flight check-in kiosks, and subway ticket machines have made consumers much more comfortable with using their credits cards at self-serve machines. And, of course, the growth of online retail has resulted in many people shelling out hundreds, if not thousands, of dollars without first touching their purchases or dealing with a live salesperson.

Some shoppers even prefer no-touch to high-touch customer service, which is often a euphemism for pushy sales clerks. "When I go to buy perfume at a department store, I come out of there smelling like everything under the sun," says Madeline Wallace of Long Island City, N.Y. Instead, she prefers the new Coty vending machine that sells Jennifer Lopez and David Beckham fragrances in New York's Queens Center .

Automated shopping takes no-touch service to the next level. "The appeal is similar to an online purchase but with immediate gratification," says Gower Smith, CEO of ZoomSystems, which created the software and machines to sell Apple (AAPL) iPods in airports and Macy's (M) stores. Macy's had such a strong response from flush female shoppers since the company started testing the concept in 2005 that it's now rolling out automated machines in 400 stores.

This past fall, Elizabeth Arden (RDEN), Coty, and Rosetta Stone, a language-learning software maker, signed on with ZoomSystems as well. The machines let these companies hawk their wares in places where they wouldn't set up standalone stores or where existing stores have been shuttered.
A Self-Service Upgrade

Self-serve machines cut labor costs and often remain open long after traditional stores close. That was the appeal of the early 20th century coin-operated "automat" (BusinessWeek.com, 1/17/08). The glass-and-chrome curiosity sold stewed lamb and chicken pot pies to hungry Philadelphians and New Yorkers, including artist Edward Hopper, who in 1927 created his famous Automat painting. In the 1990s, vending machines sprouted up throughout Japan, fueled by rising wages and spiraling real estate costs. The majority sold food and beverages, but some also offered business shirts, umbrellas, flowers,& and pornography.

The new luxury machines in the U.S. use a robotic arm to retrieve the products and are much more slick, high-tech, and interactive than the machines peddling soda and snacks. The gold-and-silver Coty machine in Queens Center, for example, has larger-than-life pictures of J.Lo and Becks plastered all over it. Instead of pushing buttons, shoppers use touchscreens to make their selections and get instructions on how to return purchases. A flat-panel TV continually plays a demonstration video with music.

Certain machines have additional high-tech bells and whistles such as a "virtual beauty consultant" at the Elizabeth Arden kiosk, which suggests the best product for a given skin type. The Coty machine lets customers sample the perfumes by pushing a button that releases a scented puff of air through a quarter-sized hole below a picture of the fragrance.

Rest of storys

Another music download machine concept bites the dust?

Article in Manchester Evening News in U.K. lays out scenarios for Andy Egan and Felix now that they are re-evaluating business model and Egan has stepped down.

Has Andy's luck finally run out? - Business - News - Manchester Evening News

Has Andy's luck finally run out?

10/12/2007

HE has always lived life to the max, but his dream of creating an international phenomenon with his digital retail kiosk, has come crashing down.

Andy Egan, a former stuntman and promotions king, quit as chief executive of the Felix Group, after differences over strategy emerged between him and chairman, Richard Rose.

Now, the future of the company he founded back in the late 1990s hangs in the balance after a statement to the stock market by Mr Rose he had begun a `detailed review of the viability of the group's business model' sparked a major sell-off of the its shares.

The stock tumbled 80 per cent and shares in the Rostherne-based group were suspended last week. At the same time it was announced Mr Egan was stepping down.

Sources said there had been a `difference in view' between Mr Rose, who had recently taken on an executive role, and Mr Egan over the group's future and viability of its leading product, Max Box.

It is a retail kiosk with cashpoint, digital photo processing, gaming and shopping functions, such as ordering flowers.

Mr Egan believed Max Box was going to be an international hit because, until its launch, consumers had access to digital services such a photo processing and mobile-phone top-ups `but nobody had put it all in one box' and it offered retailers a `100,000 sq ft megastore from one square metre'. He even had his sights on cracking the North American market through licensing deals.

It was a concept the City and investors bought into - Mr Egan managed to secure private equity investment before Felix reversed into Chestn ut, a shell set up by serial AIM entrepreneur Michael Edelson. It floated in 2004 at 20p per share with a market value of £24.7m. Shares rocketed to more than 70p, but later nose-dived to around 4p. Mr Egan has said the major fall, which wiped £50m of the company in one day, came when it announced that a working partnership with Alliance & Leicester had lapsed, which he claims was misinterpreted by the institutional investors as collapsed.

Bouyed

The stock recovered slightly - buoyed by announcements that retailers were trialling the Max Box.

In June of this year, it announced Odeon Cinemas was trialling it in 19 venues, with a view to rolling out nationally.

In October, it issued an upbeat statement announcing a deal with T-Mobile to trial Max Box in 18 stores, while Mr Egan's dream of breaking into the US market seemed closer when it secured a licensing agreement with US group Kiosk Information Systems. The granted it the right to install Felix software on its own kiosks worldwide. The group also signed a licensing deal with ABK Group, which provides leased laptops to university students and staff. A PC version of the Max Box was to be incorporated into 1,600 laptops.

At the time, the group acknowledged the deployment of kiosks into shops had been slower that anticipated, 120 had been installed by October 2007, but after raising £4.15m in funding, it had started to generate more income. In the year to May 31, turnover was only £81,000 with pre-tax losses of £5.4m.

However Mr Rose seemingly does not share Mr Egan's faith in the long term viability of Max Box and said: "We have been placing trial kiosks with various high street multiples in order that both parties may evaluate the commercial returns.

"We have also been enhancing and adding applications to the portfolio of Max Boxes already established with the objective of achieving a near-term break-even position.

"The results of these initiatives have been disappointing, particularly when the cost and time of providing central support and marketing is taken into account."

Mr Rose has asked KPMG to carry out a review of the business model, and it is hoped it will be completed this week.

Mr Egan began his career as a stuntman after being persuaded by a BBC camera crew to ditch his canoe and go down a white water river on a lilo

During the 1980s, he worked on the Noel Edmonds Late Late Breakfast Show. When he lost part of his hand in a firework accident, he decided to move into promotions and set up Sky High Promotions. The business was behind a number of high-profile initiatives including the BT and BP share launches.However, in 1999 he came up with a plan to cash in on the new premium phoneline phenomenon and developed a game called Everyone's a Winner.

It was a simple concept where callers paid £4.50 for a 90-second phone call but were guaranteed to win a prize worth double the cost of the call. Andy then went to games maker Sega and asked them to design a kiosk version of Everyone's a Winner. The kiosk was launched in partnership with the Laurel Pub Company, operator of the Hogshead brand, in June 2004, and a year later the group expanded its products to include digital photo printing and mobile top-ups, and the Max Box was launched. But Max Box has so far failed to set the world alight, users says it is too slow, while others believe the concept was flawed, asking why would people want to take a trip to a cinema or into town to order flowers or download ringtones when they can do it over the web from their homes

Some now believe the Max Box itself will be scrapped and the company will focus on its selling its software through licensing deals.

However others were more scathing. Nigel Mills, director at WH Ireland, says the best outcome the group can hope for it is that someone uses it as a shell to reverse into.

He says: "However, there are plenty of shell companies knocking around that are clean as opposed to inheriting people's rubbish. Felix is the Latin word for lucky - but it looks like its luck has run finally run out."

Parking kiosks - cash or credit card?

The pay-station kiosks, which spit out timed tickets to attach to windshields, accept either coins or cards -- but about 50 percent of the city's users now pay with plastic.

Source: Seattlepi.com

Drivers upset as parking kiosks reject plastic

SEATTLE POST-INTELLIGENCER STAFF

Some frustrated downtown drivers were scrounging for coins yesterday because of a computer glitch in Seattle's new parking pay stations.

They pulled up to pay, but found their plastic was worthless.

Tracy Krawczyk, parking policy and planning manager for the Seattle Transportation Department, said the intermittent disruption in credit-card processing occurred between 8 and 11 a.m. yesterday. "We had between 40 to 50 calls. Some callers were frustrated. Some were calling to report the problem."

The pay-station kiosks, which spit out timed tickets to attach to windshields, accept either coins or cards -- but about 50 percent of the city's users now pay with plastic.

The Seattle system averages more than 8,000 credit- and debit-card transactions a day.

The city began putting in pay stations in April 2004, with the goal of installing up to 1,600 kiosks covering up to 12,000 paid parking spaces over a three-year period.

DVD Machines

New DVD, video game rental game kiosks debut

The machines, new to the HUB-Robeson Center and Findlay Commons this fall, could pop up elsewhere on campus if they prove popular.

By Christiana Varda email
Collegian Staff Writer

There's a new service invading campus and town for people who want an easier and more direct way to rent movies: DVD rental machines.

There are two machines in the HUB-Robeson Center, on the ground and first floors, and one in Findlay Commons.

"We have a one-year agreement to see their popularity. We tried to hit areas with high student concentration," said Stan Latta, director of union and student activities.

Another DVD rental machine, operated by Box Office Express, can also be found at McLanahan's Student Store, 414 E. College Ave.

Machines on campus charge $2 for the first 24 hours and $1 each additional day for DVD rentals. Video-game rentals cost $5.75 for 120 hours, or five days.

Movie rentals at the McLanahan's machine cost $1.99 for 24 hours; a sign on the machine does not indicate any late-fee charges. Video-game rentals at the store are $3.99 for 72 hours.

"They've just had that up and running since school started," McLanahan's general manager Ron Agostinelli said. "It's not owned by McLanahan's; we only get a percentage of the sales."

The rental machines have a series of new and old DVDs and video games available for rental. They can only be rented using a credit card and must returned to the same rental machine, using the same credit card, said Ron Eccles, president of DVD Express, the company that owns the campus machines.

"The two machines in the HUB hold [up to] a little over 700 DVDs, and the one at Findlay Commons holds [up to] 1,100," Eccles said. "We have close to 200 DVDs in each machine. They're going to add up pretty fast."

The McLanahan's DVD machine has a 600-to 700-movie capacity and is currently stocked with about 100 DVDs and video games, Argostinelli said.

"It seemed like a good idea. About six years ago we used to rent videos, and it actually did well, but it was really hard to control because we didn't just do that," Argostinelli said.

But the new system cuts down on costs.

"You actually eliminate the employees. It's just the customer and the machine," he said.

Adam Savit, manager of Mike's Video, 210 E.Calder Way, said there hasn't been a noticeable change in business, but the machines will probably affect rental stores.

"I don't like the idea of it. I think it's impersonal..." he said. "It definitely will affect us a little bit, but we have a greater selection of lesser-known films," he said.

The campus rental machines started out with a variety of past movies and now have some more recent movies, Eccles said.

"They're going to add up pretty fast since we add about 10 DVDs a week," he said.

There is more availability for the new DVDs, with each title having from two to four copies available.

Eccles said there is a service number and a Web site for feedback.

Campus rental machines have been operating for about a week, and Eccles said there have been about 100 DVD rentals.

"The price definitely makes it more attractive," he said.

The idea for the DVD rental machines was generated from a student survey that took place in April, Latta said. "One of the top things students indicated was they wanted was a DVD rental operation," he said.

The Association of Residence Hall Students was also interested in setting up DVD rental machines in commons areas, so a proposal was submitted and a vendor was selected to provide the service based on price, selection and variety, Latta said. It was unclear which other commons areas would get machines.

Other universities were also contacted to get feedback on different DVD companies, said Meg Harpster, strategic purchasing manager at the university.

"There appears to be interest. A lot of universities are interested in providing it. It's a new thing," Harpster said.

New DVD, video game rental game kiosks debut

Lottery Systems

The Two Titans of the Lottery Industry

Posted: April 15, 2004 at 4:58am

We often hear that the $40 billion spent on video games worldwide dwarfs the amount spent on the motion picture industry. But another form of mass entertainment dwarfs them both: the lottery business. According to a Morgan Stanley study, sales of lottery tickets around the world will top $160 billion in 2004.

You should be thankful for the lottery business this week as you write a check for your tax bill. That's because you'd probably owe a lot more if not for your fellow citizens' crazed desire to get rich quick.

Forty states and the District of Columbia currently sponsor lotteries to raise money for everything from old-age homes and kindergartens to veterans' services and state parks. Six more states that have resisted so far are edging closer to entering the game.

Related Stories
Drawing error leads lottery officials to pay on two numbers Jul. 7, 2004
GTECH's 1Q earnings up 31 percent Jun. 23, 2004
Experts advise to take cash option May. 20, 2004
Scientific Games Reports First Quarter 2004 Results Apr. 22, 2004
GTech Profit Up as Lottery Sales Rise Apr. 16, 2004
Experts expect that by the end of this decade, just two states will not have a lottery: Nevada, where the casino lobby will block it until Doomsday; and Utah, where the anti-gambling Mormon church holds sway.

For investors, the curious thing about the lottery business is that once you peel back the glossy governmental layer, it's virtually a duopoly. Practically all of the games in this country are managed directly or indirectly by just two companies: Rhode Island-based GTech Holdings and New York-based Scientific Games.

And it's even more curious that these two mid-cap companies, while not extraordinarily cheap at the moment, aren't really expensive either. Each sports a forward price-to-earnings multiple of around 20. For GTech, the larger of the two, that's only about half again as big a multiple as its estimated 12% to 15% growth rate. For Scientific, it's considerably less than its estimated growth of 20% to 35%.

An Industry You Can Bank On

It doesn't take the hyperactive imagination of a weekly Lotto punter to figure out that an investment in either of these two companies is a lot smarter than playing the numbers. If you believe the growth estimates, which might actually be a little low, you should be able to earn 20% to 25% annually on Scientific Games over the next few years.

Compare that to the 1.4% you'd earn investing the same amount of money in the U.S. government with a one-year Treasury bill, or the 8% annual return you can probably expect from the roulette wheel known as the S&P 500, and the idea becomes more compelling. The nice thing is that you don't have to make any bet on economic growth to get at these numbers, because states tend to boost the number of games during downturns to make up for a shortfall in payroll taxes. In better times, lottery growth may slow, but historically it has never declined.

The industry's strength is most impressive when you compare it to the reliability of just about any other. No one can say for sure whether the wireless Internet will be around for more than another couple of years. And who knows whether fuel cells, nanotech or gourmet coffee will be viewed as curios or commonplace by our kids?

But if there is one thing you can count on lasting until the end of time, it's governments' desire to separate citizens from their money without taxing them. Morgan Stanley reports that 200 jurisdictions around the globe have authorized lotteries; Oklahoma is probably next in line in the U.S. to add one, and it could be followed thereafter over the next few years by Mississippi, North Carolina, Alaska, Alabama and Arkansas. Overseas, lottery fever is reportedly flaring up in Russia, China and Thailand.

Lotteries aren't new, of course. Historians say the Great Wall of China was partly funded by a form of lottery, as were Harvard and Yale in the 18th century. A type of lottery funded much of the Revolutionary War.

Lotteries funded a variety of U.S. state functions in the 19th century, but corruption and scandals led to a congressional prohibition on interstate lotteries until the 1960s, when New Hampshire set up a lottery that it coyly called a "sweepstakes." New York and New Jersey timidly followed in 1967 and 1970, and soon industry and state lobbyists managed to get federal law changed to permit the rapid expansion of games elsewhere.

Limiting the Players

Two key types of games are run today: "Instant ticket," in which players scratch a rubbery coating from a printed ticket to determine whether it's a winner; and "online," in which a player picks five to seven numbers at random and learns whether he's a winner in a weekly televised drawing.

GTech and Scientific Games make most of their money by skimming a percentage off all revenue of the games that they create -- typically $6 to $12 per 1,000 tickets. So they have incentive to try to create increasingly fun contests in dizzying variety with names like "10 Times Lucky" and "Payday Tripler," which draw in new players and encourage regular players to bet more.

The companies also take hardware and software development, licensing and maintenance fees, and they're moving into the more comprehensive role of running entire lotteries on an outsourced basis in place of an entire state bureaucracy. Most of the growth is in instant-ticket sales -- about 15% in 2002 and 10% in 2003 -- because they feed gamblers' quest for a quick adrenaline rush. In May, the Iowa lottery will debut a game by Scientific Games that resembles the dynamics of a slot machine. A push is on to ramp up distribution by creating self-service kiosks, and partnerships with IBM (IBM:NYSE - commentary - research) and NCR Corp. (NCR:NYSE - commentary - research) have led to cash registers that can print lottery tickets.

Investors always need to focus on business' barriers to entry because competition drives down prices and profit margins. This is where GTech and Scientific Games sparkle. Several factors have limited the number of players, but the most important seem to be:

The need to prove the security of the ticket-printing process.
The difficulty in managing the regulatory process and the need for proprietary software.
Hardware terminals that interoperate across state boundaries with 99.999% reliability.
Every lottery director fears the week he might need to put out a press release that says the week's drawing is canceled because of a software glitch. Contracts are awarded for three to five years and typically renewed automatically. Historically, once a company has won a state's business, it rarely loses it.

The Smarter Bet

Which one is the better bet? GTech is no slouch, but the nod now probably has to go to Scientific Games. It's the pioneer in instant-ticket games, the fastest-growing segment of the business, and recently bought an online unit from industry titan International Game Technology to bolster its ability to expand in that area.

New contracts include an instant-ticket win in Wisconsin worth about $3.5 million per year. Analysts believe the company will win a comprehensive lottery-services contract in Virginia at the end of April that would start at $4.6 million per year. It's on track to win the California instant-ticket business. The company's efforts in Europe are paying off with an Italian instant-ticket contract, and contracts in Germany and Spain also loom.

Plus, Scientific Games has leveraged its know-how in secure printing into the creation of a large prepaid-phone-card business. And you can't leave out its growing business in horse racing, where its "totaliser" systems provide the hardware and software required by tracks to take wagers, figure odds and payouts and manage the entire parimutuel betting process.

Scientific Games has guided analysts to expect earnings of 76 cents to 83 cents per share in 2004, but given the gaming that goes on with such guidance, so to speak, you can probably expect it to come in at more like 85 cents to 90 cents. A company growing at 30% that sports a forward P/E multiple of around 20 is not much of a gamble. Because there is some earnings risk in the first quarter due in part to the lack of big Powerball jackpots, you might wait until after it reports next Thursday and try to pick it up under $18.

Stick the IRS in the eye by investing some of your tax refund here. In a couple of years, maybe you'll win back all of your 2003 taxes.

Lottery Post: The Two Titans of the Lottery Industry

Movie Rentals

Rental Kiosk Provides Movies To Students Around The Clock

CCSU Vending Machine 1 Of 6 On East Coast Campuses

May 3, 2004
By ED HARRIS, COURANT STAFF WRITER

NEW BRITAIN -- Last year, a small island in a college parking lot sprouted a vending machine that dispenses candy for the eyes - movies.

It's the business idea of Yoni Hornik, who is betting that the simple machine that transformed the snack food industry can do the same for movie rentals.

His MovieBox kiosk in the Willard-Diloreto parking lot of Central Connecticut State University is one of a half-dozen that Hornik has at East Coast colleges, including Cornell and Rutgers universities.

Hornik, who owns New York-based Movies Around the Clock, says his vending machines carry dozens of DVDs and VHS videotapes of newly released films and older movies.

He said the rental costs compare with those in chain movie rental stores. His machines require credit or debit cards - no cash.

Rentals are for 24 hours. The user's credit or debit card must be swiped both to get a film and return it. The card is charged for the rental when the movie is returned.

Ashley Rake, a CCSU freshman, used the stand to rent the movie "Legally Blonde 2" in November.

"There's a pretty good movie selection," Rake said, "The prices are around the same as movie stores such as Blockbuster."

Frank Resnick, chief CCSU financial officer, whose department negotiated the lease agreement with Hornik, said the machine offers a service to students.

"I'm very pleased with its implementation and how it looks," Resnick said.

The CCSU kiosk is on a little island in the center of the parking lot between the Carroll and Barrow residence halls and the Willard and Diloreto academic buildings.

Mandi Scala, resident director of Carroll Hall, said she has seen many students using the kiosk, even over winter break, when most students are home.

"I used it because it was convenient," said Samantha Ware, a CCSU student who lives on campus and has rented at least five VHS tapes from the machine.

Hornik said there is no way that credit card numbers could be stolen from the machine.

"Pure steel, no one can go into the machine," he said.

Credit card numbers are "firewalled" - protected by a computer security system - and not stored in the machine. Transaction records are taken from the machine every day, he said.

Students are not the only ones at Central using the kiosk.

"I have used the kiosk once when a movie I wanted to watch was checked out at all the area video stores, even the local public libraries," said Loucindy Raymond, who works at the CCSU library.

The Rutgers kiosk has been up and running for eight months and is popular with students, school officials say.

"I think they liked it, because the student government requested more of them," said George Hefelle, associate director of the Student Center. Hefelle said the Rutgers machine averages 50 to 100 rentals a week and has functioned perfectly.

Cornell has two kiosks, one for each of its community centers.

The students have embraced them and use them every day, said John Riva, Cornell's special contracts manager. "Generally, I'd say the machines are acceptable."

For the moment, Hornik is keeping Movies Around the Clock in New York, New Jersey and Connecticut, but he doesn't rule out expansion.

"We believe in this business," he said. "There's a huge niche for this."

http://www.ctnow.com/news/local/hc-nebkiosk0503.artmay03,1,1890366.story?coll=hc-headlines-local

Non-traditional Vending

For those in a hurry, Staples offers vending machines

By Keith Reed, Globe Staff | April 22, 2004

Soft drinks, candy bars, ice cream sandwiches -- and ballpoint pens?

Staples Inc. has installed vending machines at Logan International Airport and a handful of college campuses, hoping to learn whether captive consumers in need of emergency office supplies will pay a premium for computer mice, pens, headphones, batteries, or travel-size Monopoly games.

While no one actually used the two red vending machines sitting across from US Airways's ticket counters in Terminal B one afternoon this week, plenty of passers-by stopped to get a closer look at what was inside. Many of them said they welcomed the convenience, even if it often comes at a higher price.

''I would say that it's a darn good thing," said Chris Root of Woods Hole, who passed the Staples machines while on a layover at Logan.

''Most of it looks reasonably priced and it all looks like stuff you could come up short on."

Louise Sawyer, a Boston nonprofit consultant en route to New York, discovered the machines while wandering Terminal B looking for a candy machine.

''I came over here because I was hungry," Sawyer said. ''They've got me right where they need me. It shows that the company is thinking about business travelers."

Staples is just one of many retailers now experimenting with so-called nontraditional vending to sell products at higher prices with lower overhead, said Michael Kasavana, a hospitality business professor at Michigan State University, where Staples has two vending machines.

The ability of vending machines to accept credit cards is driving the trend, as is the appeal of being able to reach consumers at times when traditional retail stores aren't open, he said.

''Cashless payment systems allow you to get a lot more for products," he said. ''People aren't going to necessarily have $50 in their pocket, but they'll use a credit card."

Vision Inc. of Bethesda, Md., has developed machines for companies like McDonald's, which experimented with huge so-called mini convenience store machines in their parking lots, and Playtex Products Inc., which wants to sell its Banana Boat brand of suntan products in vending machines.

''We're trying to bring new brands to the automated retail space. One way to do that is through branded vending machines," said Joe Preston, Vision's president.

Staples's machines look and act just like others where you might buy candy or a bag of chips, with a few added twists -- and some familiar glitches. Products -- from a $60 SanDisk compact flash memory card, a $45 Targus USB optical scroller mini mouse, or a $3 box of Crayola crayons -- are lined up in slots that are identified by a combination of a number and letter.

Slide your cash or swipe your credit card into the appropriate slot on the machine, punch in the location of the item you want, and wait for the metal coils to rotate, dropping your merchandise down behind a door where you can reach in and pick it up.

It's a pretty simple transaction when it works. A reporter using a credit card was able to buy the optical mouse, a $6 pack of Duracell AAA batteries, and the flash memory card with no problem.

Buying a $25 Cross brand ink pen, though, was a no-go. The machine initially rejected two credit card swipes before finally accepting the card and spitting out the pen. But as it fell, the pen's box fell apart, with only the empty box top landing behind the pick-up door and the pen itself on a shelf beyond the reporter's reach.

When told of the glitch, Staples spokeswoman Deborah Hohler said it was the first complaint the company has gotten about its vending machines, which have been in operation for about six months. She noted that a toll-free customer service number is posted on the front of the machines for such problems.

''Obviously, that shouldn't have happened, but if you call that number, they'll completely rectify the situation," she said.

Hohler would not say how many vending machines Staples was testing or their locations, citing company policy against detailing experimental efforts. But vending machines are not Staples's first foray into alternative retail channels. The company once had a handful of retail stores in airports, including Logan, but has since shuttered them.

A clue of the potential scope of the vending-machine experiment is a similar test the company did in 2000, when it put kiosks linked to its website in 20 of its then 1,200 stores. The chain now has 1,600 stores.

Staples would not disclose the cost of the machines, but an interview with airport officials revealed that the company likely subleased either its machines or the space they occupy from All Seasons Services Inc., a Canton company that leases space for 16 Terminal B vending machines from the Massachusetts Port Authority.

All Seasons pays $1,575 a month to Massport, plus the greater of 20 percent of annual vending machine sales of less than $100,000, or 25 percent if sales exceed that amount.

Phil Nay, a district manager for All Seasons, said Staples products have generated moderate sales since they were installed. Office supplies are the most unusual item his company has yet sold in vending machines, Nay said.

Not every consumer was instantly sold on the idea, though.

Elizabeth Malakie, a student from Allston, and her sister, Julie Malakie, of Phoenix, said they'd have no use for the machines under most circumstances.

''If they were in the right place, I'd use it," Elizabeth Malakie said. ''But neither of us use business supplies much."

Keith Reed can be reached at reed@globe.com.

Boston.com / Business / Office supplies, snacks on the side

Vending Machines

And the low-carb craze continues: To vending machines we go.

rom the April 9, 2004 print edition of the Washington Business Journal
From the print edition
Retail & Restaurants
Bethesda firm pulls low-carb lever in vending market
Eleni Kretikos

And the low-carb craze continues: To vending machines we go.

A Bethesda company is taking products to the work place. Low Carb Vending either will sell you a new branded machine packed with low-carb items or adapt the ones you already have to be able to handle the items. If you don't want to buy a new machine but still want workers to know the machine has healthier options, Low Carb Vending also sells decals to promote well-known brands.

"There are 6 million vending machines in the U.S., and there's so many older machines -- and some vending operators who don't want to buy new equipment," says Joe Preston, co-founder of Low Carb Vending.

Its first three Low Carb Vending-branded machines have been placed at Shady Grove Adventist Hospital in Rockville, NBC News' Washington bureau on Nebraska Avenue NW and the Marriott Corp. headquarters in Bethesda.

"The whole purpose is to test prime locations," Preston says. "Our market research indicates that branded or dedicated Low Carb Vending machines are the most effective method to cater to the 30 to 50 million Americans that are either carb conscious or on low-carb diets."

Low Carb Vending (www.lowcarbvending.com) is partnering with Beltsville's Monumental Vending (www.monumentalvending.com), one of the largest independent vending operators in the region.

Within the next month, the company will roll out 50 to 100 machines in New York, California and Arizona. Preston says the goal is to have low-carb products in 6,000 machines by year-end.

An initial strategy: Buh-bye Snickers and barbecue-flavored potato chips.

The machines are stocked with the shakes, chips, bars and vitamins of the moment: Atkins, Slimfast, EAS, Carb Solutions, CarbWise and others. The machines will sell up to 30 products.

Low Carb Vending is targeting the machines in office buildings, hospitals, hotels, health clubs, golf courses, resorts and vacation spots and amusement parks.

Industries & Communities - bizjournals.com

Vending Machines

Vending Machines Are Being Stocked With More Than Snacks

Convenience, No Store
Vending Machines Are Being Stocked With More Than Snacks

By Margaret Webb Pressler
Washington Post Staff Writer
Saturday, April 10, 2004; Page D12

Imagine waking up in a hotel in the middle of the night with a splitting headache and discovering you don't have any Tylenol. Or rushing through the airport on your way to an important business meeting and realizing you forgot your laptop's power cord. Or jumping into the rental car at that vacation resort and remembering the suntan lotion is at home on the bathroom shelf.

New high-tech vending machines may be the answer.

Target, Staples, Kodak, Banana Boat and Avis are among the brand names being emblazoned on a new generation of vending machines anchored in high-traffic areas such as universities, airports, theme parks and hotels.

All over south Florida, for example, machines are popping up that dispense Banana Boat sunscreen to travelers and outdoor enthusiasts where they need it the most. Thirty machines are set up in "points of sun" such as Miami International Airport, an Avis rental car center, Boomers water park in Dania Beach, Fla., and the Doral Golf Resort and Spa in Miami.

Test runs are being considered by cosmetics manufacturers, drug companies and other consumer-product makers.

Marketers are hoping the United States will finally get over its hang-up about vending machines, long the domain of snacks and sodas, and join countries that have embraced the machines as the easiest and most convenient form of retailing, even for more expensive items.

The focus of the U.S. market on small items costing less than a dollar keeps estimates of annual vending sales in the $20 billion to $25 billion range. That's half the size of the vending market in Japan, where technically advanced -- and reliable -- machines allow consumers to buy products including blue jeans and expensive lunches. By contrast, many Americans associate vending with having to kick a machine to dislodge a candy bar.

"That's probably the biggest hurdle we have to overcome, the historical negative impression that vending has had," said John Roughneen, vice president of strategic development for USA Technologies Inc. of Malvern, Pa., which has produced vending machines in joint ventures with film giant Eastman Kodak Co. and office-products retailer Staples Inc. "It's my feeling that it's natural to take well-known, brand-name items and dispense them closer to the point of use," Roughneen said.

USA Technologies has developed credit card processing systems that work in the new generation of machines -- a critical technology for development of the business because people are more likely to buy higher-priced merchandise if they can just swipe their cards.

Other developments that make higher-end vending machines possible include online monitoring of inventory and delivery guarantee systems -- aimed at eliminating the menace of stuck candy bars.

Consumers have to believe that if the item doesn't come out for some reason, the consumer's credit card won't be charged. Vending experts say reliability is perhaps the single most important feature that the new machines have to offer potential buyers.

Despite the hurdles, there are increasing signs vending machines are moving into new markets.

"The brands themselves want to clearly differentiate themselves from their competition, and they want to create more consumer touch points," said Joseph Preston, president of Bethesda-based marketing company Vision Corp., which is working with Banana Boat. "The whole goal is to reach out to the consumer."

Preston's company is also in negotiations with other major brands interested in similar machines to sell makeup in airports, over-the-counter medicines on college campuses and licensed toys in movie theaters, he said.

Staples has been successful with a recent test of several machines selling traditional office supplies and technology products, such as universal cell-phone chargers, laptop cords and headphones, according to Roughneen of USA Technologies, Staples's partner in the venture. The machines are in place at universities and in airports, including Boston's Logan International Airport near Staples headquarters, as the company tries to figure out the best markets and product assortments.

Some retailers are using vending machines to give their businesses 24-hour convenience. San Francisco-based Zoom Systems, a well-funded start-up pursuing the high-end vending machine market, has installed a machine outside the Virgin Records megastore in San Francisco, selling CDs and DVDs even when the store is closed.

"It's the more innovative first movers who are experimenting and testing it right now," said company President Gower Smith.

Zoom Systems also has installed about 50 hotel gift shop vending machines, in just about every major hotel chain, selling personal-care items, as well as cell phones, cameras, pantyhose and even neckties.

Hotels like the machines because they save them the cost of running a gift shop and give guests 24-hour access to Tylenol, Smith said, but the profitability of the machines can vary widely depending on where they're placed. The company has also created the Avis Travel Store vending machine in several rental car locations on the West Coast and in Newark, N.J. There travelers can pick up maps, food, games for kids, prepaid cell phones or a laptop adapter.

Zoom is trying to find a formula for a profitable multi-item machine, which McDonald's Corp. couldn't do with its Redbox automated convenience stores, which were shut down last year.

There have been other failures too. Chain retailer Target Corp. recently removed its vending machine from the student union at Arizona State University in Tempe, before its year-long test was up. Target did not return phone calls seeking comment, so the fate of its other vending machines could not be determined.

Kodak, too, is ending its recent vending program selling film and one-time-use cameras because the company is focusing on digital photography. Its several hundred machines did well, Roughneen said, especially at zoos, theme parks, aquariums and maternity wards in hospitals, so other companies may step into that void.

Every disappointment makes it harder for vending companies to persuade other major brands to test the concept. But they still expect the business to take off.

Consultant Bruce Yuen, of Global Vending Partners in Ridgefield, Conn., is brimming with ideas for items to vend if he can find the brands willing to try: foot-care products at state parks, golf balls at country clubs, towels at water parks, personal-care items in hotels and offices.

"The only issue," he said, "is making it available."

washingtonpost.com: Convenience, No Store

DVD Rental

FlickStation Media's DVD Rental Machine

FlickStation Media's DVD Rental Machine to be Deployed in EarthLink Corporate Offices
< back

ATLANTA, March 30 /PRNewswire/ -- FlickStation Media, Inc. announced today
that it is deploying its DVD Rental Machines in the Atlanta and Pasadena,
Calif. corporate offices of EarthLink, Inc., a leading Internet Service
Provider (ISP). The FlickStation employs robotic technology and an
intelligent suite of software to rent a DVD in mere seconds. The FlickStation
is about the size of a soft drink machine, as easy to use as an ATM, can hold
over 2,100 DVDs and uses an intelligent suite of software with cutting-edge
robotics to rent and return DVDs in seconds.
"Being part of the FlickStation community means no more extra trips to the
movie store and no more waiting for the mail to arrive with your DVD," said
Dean Gebert, President and CEO of FlickStation Media. "We are thrilled to
include the EarthLink employees in the FlickStation community."
"EarthLink seeks to foster a focused, responsive and enjoyable work
environment," said Stacie Hagan, director of employee communications for
EarthLink. "Providing our employees with the convenience of renting DVDs at
the office is an excellent way to bring an element of fun to the workplace."
EarthLink's Atlanta office will receive a FlickStation in April and the
Pasadena office is scheduled to receive a FlickStation later in the second
quarter of this year.
The community of FlickStation users is able to avoid the headaches
associated with a mega-video store chain or Internet movie rental service by
renting DVDs instantly at their place of work. All a FlickStation user needs
is a valid credit or debit card to ... Rent, Return and Repeat!

About FlickStation Media
FlickStation Media, Inc., a privately-held, technology and entertainment
company based in Atlanta, GA, makes it easier for their community of users to
rent DVDs by placing FlickStations in locations with high consumer traffic.
The FlickStation is a DVD Rental Machine that is about the size of a soft
drink machine, as easy to use as an ATM, holds up to 2,100 DVDs and uses an
intelligent suite of software with cutting-edge robotics to rent and return
DVDs. The FlickStation offers a convenient alternative to renting DVDs from
an online movie rental service or mega-video chain. By satisfying a
consumer's sense of instant gratification, the FlickStation provides the
ultimate convenience in renting and returning movies on a regular basis. For
more information, visit http://www.flickstation.com .

Silicon Valley Biz Ink :: The voice of the valley economy

Software on Demand

Microsoft will offer some applications in the SoftwareToGo kiosks, developed by Protocall Technologies Inc. And CompUSA will roll out the kiosks to all its stores starting next year.

story link

Software Kiosks Expand
Deals signed with Microsoft, CompUSA

By Richard J. Dalton Jr
STAFF WRITER

December 16, 2003

A Commack company whose kiosks offer software on demand has reached agreements with two big-name companies in the technology industry: Microsoft and CompUSA.

Microsoft will offer some applications in the SoftwareToGo kiosks, developed by Protocall Technologies Inc. And CompUSA will roll out the kiosks to all its stores starting next year.

"The key advantage is that the product will never be out of stock because it's held in an electronic inventory and produced on demand," said Bruce Newman, president and chief executive of Protocall.

Software-on-demand could become an important part of Microsoft's product distribution, Steve Schiro, vice president of retail sales and marketing for the software giant, said in a statement.

CompUSA has already installed Protocall Technologies' SoftwareToGo in 25 stores and will install it in all 228 stores from January through April, said Dewey Thoes, senior buyer for Dallas-based CompUSA.

While many people can download software on-line and burn it onto CDs, kiosks are still useful because some applications can be as large 600 megabytes and some publishers worry that downloading directly to the computer user would make it easier to illegally copy the software.

The kiosks prevent piracy by including holograms in the innermost ring and by adding copy-protection technology, Newman said.

About 230 publishers offer software via SoftwareToGo, including Microsoft and Symantec, Newman said.

Protocall licenses the application from the software company and marks it up for sale at CompUSA. Newman wouldn't disclose further details on financial terms.

Redbox Shut Down

After a year-long experiment, the fast-food giant is pulling the plug on all four Redbox automated convenience stores in the Washington area

link: http://www.washingtonpost.com/wp-dyn/articles/A28278-2003Nov11.html

Lid Is Closed On Automated Redbox 'Stores'

By Michael Barbaro
Washington Post Staff Writer
Wednesday, November 12, 2003; Page A01

Turns out McDonald's was thinking a little too far outside the box.

After a year-long experiment, the fast-food giant is pulling the plug on all four Redbox automated convenience stores in the Washington area, dashing the hopes of vending industry executives who predicted that time-strapped U.S. consumers were ready for a 24-hour glass box that dispensed products as varied as portobello-and-goat-cheese sandwiches and toilet paper.

The 18-foot-wide, 130-item Redbox machines -- in Adams Morgan, Bethesda and Baltimore-Washington International Airport -- remain in place for now, their contents removed. A cardboard sign inside the Adams Morgan Redbox thanked loyal customers for their support.

The decision highlights the challenges companies face in trying to sell American consumers -- long infatuated with quality control and customer service -- on the idea of buying groceries from faceless machines.

McDonald's would not comment on the performance of the four coin-, cash- and credit-card-operated machines, the largest experiment of its kind in the United States. "We are focused on bringing more customers to our 30,000 restaurants around the world," said spokeswoman Lisa Howard. "Unfortunately, the Redbox automated convenience store did not fit into our long-term growth strategy."

She said, however, that the 12 McDonald's-owned vending machines in the Washington-Baltimore region that dispense DVDs draw customers into stores and thus will continue to operate.

In Japan, a country that has eagerly embraced automated shopping, consumers can buy beer and even ties from street-side vending machines. But in the United States, where vending industry sales now total $24.3 billion a year, according to the 2002 report of Automatic Merchandiser magazine, the technology is tucked away in office hallways, where machines dispense such mundane products as bags of Doritos and bottles of Diet Pepsi.

"People still want to touch an item in a convenience store or supermarket," said Michael L. Kasavana, a Michigan State University professor who teaches a course on vending.

McDonald's believed it could overcome that barrier with the kiosks designed by Belgium-based New Distribution Systems NV, which operates automated convenience stores in Europe.

McDonald's billed the 24-hour automated systems as the future of convenience stores, which are plagued by low profit margins, high property costs and relatively expensive labor. In 2002, per-store profits fell by 27.9 percent to $20,400, the lowest level in a decade, according to the National Association of Convenience Stores.

The Redbox machines carried a wide variety of goods -- milk, eggs, bread, laundry detergent, shaving cream, paper towels, Band-Aids, tampons. Items sat behind a large glass wall. The machine was designed to cool its contents at precisely 40 degrees. It took credit cards. And if anything went wrong -- if, for example, the coin dispenser ran low or Advil sold out -- the machine sent an e-mail and page to McDonald's support staff operating out of a Bethesda branch.

Richard Geerdes, president of the National Automatic Merchandising Association, said vending machines can be surprisingly expensive to operate. Fresh foods, for instance, must be replaced daily. Profit margins hover around 5 percent, Geerdes said.

"The technology to vend a gallon of milk is not cost-effective right now," he said.

After the Redboxes were installed, they attracted crowds mesmerized by their high-tech gadgetry, even if the gawkers often did not place much money into the machines.

Last night a group of college-age women, walking by the red steel box on the corner of 18th and California streets in Adams Morgan, stopped when they saw the machine was shut down. Then they had their picture taken in front of it.

"Oh, that's so sad," said 32-year-old Arlington resident Sibel Kulaksiz, who also strolled by last night. "I always saw this as the future supermarket."

New Focus for Kodak

Kodak slashes dividend, targets digital markets

ROCHESTER, N.Y. (AP) - Eastman Kodak Co. slashed its generous $1.80 annual dividend to 50 cents a share -- the first cut in over a century -- as it struggles to accelerate growth in digital photography to offset sliding film and camera sales.

The move, announced Thursday, is aimed at reducing spending and boosting investment in digital markets by as much as $3 billion over the next three years. Kodak wants to drive up sales from $12.8 billion last year to $16 billion in 2006 and $20 billion by 2010.

Investors didn't like what they heard, sending Kodak's stock price down $3.47 or 13 percent to $23.52 in early trading on the New York Stock Exchange.

The world's biggest photography company is trying to quickly widen its range of digital products in the consumer, commercial and health imaging fields as it shifts away from investing in the chemical-photography businesses that turned it into a 20th-century icon.

``This is probably the biggest turning point in our recent history, certainly a major turning point for a 120-year-old-plus company,'' chief executive Dan Carp told investors at a meeting in New York.

``The decline that became evident for sure in the second quarter of this year to the historic film-based businesses can be managed,'' Carp said. ``It requires hard work, a different model ... heavily driven on cost reduction and then selected investments for growth.''

Kodak said in July that it was eliminating up to 6,000 jobs this year -- shrinking its global payroll to around 62,000 from a peak of 136,500 in 1983. It blames the three-year slump in film sales on a sluggish economy and the rapid rise of filmless digital picture-taking.

By the end of the year, industry analysts expect digital cameras to begin outselling film cameras for the first time in the United States.

Cutting the dividend by 70 percent will give Kodak extra financial flexibility, said Robert Brust, Kodak's chief financial officer.

``This reallocation of cash will help us achieve our revenue targets while carrying an amount of debt that's appropriate for the goals we intend to pursue,'' he said.

Kodak's dividend yield -- which was 6.67 percent based on its closing stock price Wednesday -- was the highest among the 30 stocks in the Dow Jones industrial average. Its payout reduction is the first since Kodak introduced a dividend in 1902, spokesman Gerard Meuchner said.

In July, Kodak said it expected to end up with $500 million of free cash this year after dividend payments and debt reduction. But its $500 million buyout that month of PracticeWorks, an Atlanta-based company that provides information technology systems for dental offices, would leave Kodak with no free cash, analysts said.

The company expects to winnow down its debt from $3 billion at the end of June to between $2.1 billion and $2.4 billion at the end of this year.

As the switch by consumers to digital photography comes on faster than expected, cutting deeply into the film, paper and photofinishing businesses that anchor Kodak's profits and image, the company has chopped jobs, consolidated its divisions and made large-scale changes in top management.

It hired Hewlett-Packard veterans Antonio Perez in April and James Langley in August to help guide its development of digital businesses.

The consumer and professional photography businesses, which account for about 60 percent of Kodak's annual sales, were combined this summer in an effort to pool resources.

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