Manufacturers Court Curious Retailers With Digital Print Kiosks

By Greg Scoblete On May 21 2001 - 6:00am




NEW YORK — With CE retailers leading the way in digital camera sales, they find themselves facing an increasing demand to furnish print solutions for their digital camera customers.

Major retail chains such as Best Buy and Circuit City, as well as a host of smaller shops, have reported that they are exploring ways to cash in on the profitable business of providing prints for digital camera owners. These solutions take the form of an in-store kiosk, an online fulfillment Web site or both.

"What they're really doing is addressing a pent-up demand for digital printing," said Steven Blum, VP of Digital Imaging at Sony Professional and Broadcast Co.

Consumers who purchase digital cameras suddenly find themselves in relatively uncharted territory when they attempt to get prints; the photo-finishing infrastructure they've come to expect with film is not established for digital cameras. Home printing on inkjet printers, online fulfillment at Web sites such as Shutterfly and Ofoto, or in store solutions are currently vying for their prints and profits.

Consumer use of kiosks for digital print fulfillment is still embryonic. The latest numbers from the Photo Marketing Association (PMA) revealed that only 11.1 percent of kiosk users brought digital media (including CD-ROM, flash memory cards, floppy and Zip disks) to the kiosk. Of that 11 percent only 4.8 percent brought flash media, the type primarily used in digital cameras.

However, one research company sees kiosks becoming more popular.

A study conducted by InfoTrends Research Group found that kiosk awareness and usage is growing and the company expects the installed base of photo kiosks in North America to grow from around 26,000 in 2000 to almost 150,000 by 2006. The report outlines the impact of these digital systems (both kiosks and digital minilabs) in retail environments and indicates that digital camera users seeking simple output will make up an increasingly significant market.

"Though less than 20 percent of U.S. households have used a photo kiosk, satisfaction among users is relatively high," said Kerry Flatley, research analyst for InfoTrends. "There is an opportunity for much growth."

The question for retailers is how to capitalize on the relatively high margins offered by printing, especially for those retailers who do not have photo-finishing experience. According to many retailers, kiosks offer an attractive alternative to traditional (analog) or even hybrid digital/analog minilabs because of the lower cost and turnkey operation.

"Traditional printing requires a large capital outlay for equipment and is traditionally analog based," said Bob Gunderson, merchandise manager at Best Buy. "We looked at throwing a lot of money into minilabs but it's easier for Best Buy to try to create new consumer behaviors" such as seeking prints from in store kiosks.

New York-area retailer The Wiz, along with Texas retailer Conn's echoed that sentiment. Store representatives, while not willing to talk about specifics, indicated that before year's end they would have a solution in place for offering digital printing in store and/or online.

But it's not just the allure of offering prints on demand that make kiosks a viable option for retailers.

"Having a kiosk demonstrates the immediacy of digital imaging," said Laura Oles, vice president for Austin, Texas-based Pixel Magic Imaging. "If you have a customer who's debating between a $200 or $400 camera, or a 2 megapixel versus a 3 megapixel, you can snap a picture of them, walk over to the kiosks and produce prints. You have a tangible demonstration of the quality and the immediacy of digital imaging."

Kiosk manufacturers are in a full court press to woo prospective retail clients, as many view the CE retail arena as the most logical place to offer their service. Kodak, Xerox and Pixel Magic have already come to market with self-service print kiosks, while Sony and DigitalPortal Inc. are beta-testing their solutions at various locations nationwide.

Kodak has the widest North American retail presence, with 18,000 of its Picture Maker kiosks placed mainly in drug stores, supermarkets and specialty retailers like Kinkos and Wolf Camera. The kiosk costs about $20,000, while consumables like ribbon (it has a dye sublimation printer) and paper run approximately $2 a page or 75 cents per sheet of small format paper.

While the Picture Maker has primarily been a print-to-print vehicle, Kodak claimed that 70 percent of those installed kiosks enable digital still camera memory card printing and by the end of 2001 it expects that number to climb to 80 percent. Older Picture Maker models feature memory card adapters to handle the various flash memory formats, while newer models feature direct plug in.

According to Kattia Sanchez, product manager for the Kodak Picture Maker, since the system is PC-based, storeowners can, for a fee, update the software on the system to enhance editing and other special features. They can also connect Picture Makers to the Internet for image uploading or downloading.

Henry Hill, manager of Spokane, Wash.-based Huppin's Hi-Fi Photo and Video, said that his store, purchased a Picture Maker several months ago because of the software.

"It's basically a PC, a flatbed and film scanner, CD burner and touch screen monitor, but what sets it apart is the customized Kodak software," said Hill. "We are doing quite well with digital camera sales and we wanted something to enhance that business, something that would keep these customers in our stores and print from virtually any input. Since it doesn't take any chemistry and because it's primarily software driven, it's virtually foolproof to operate."

Kodak is also working on a digital still camera kiosk (tentatively labeled DSC) that will be designed strictly for digital camera media input, foregoing the flatbed scanner of its predecessor. It will also be designed to function more independently, with a credit card input.

"It's still in the planning stage now," said Rob Pignataro, product manager of the Picture Maker. "We're showing the concept in the market to get feed back and help us refine the product. We'll be testing it at various locations this year."

Pignataro also claimed that while the DSC Picture Maker will offer Internet connectivity, it will not necessarily route pictures directly to Kodak's own Internet ventures. Though a final decision has not been reached, Pignataro indicated that if a retailer was affiliated with a different Web site (their own, or a third party's) pictures uploaded at the DSC Picture Maker could be routed there. He also claimed that if consumers choose to upload and receive prints online from Print@Kodak (via the kiosk) that retailers would remain in the revenue loop.

"We're really targeting retailers who sell digital cameras but don't offer printing, or locations that have a lot of traffic of people who own digital cameras," said Pignataro, who said that the DSC should be available in production models in late 2001 or early 2002.

Sony is hoping to capitalize on its digital camera market share dominance with their tentatively titled Digital Print Station. Sony is now beta-testing it at several major retail chains. The Print Station can produce dye sublimation prints in a variety of sizes from the gamut of digital media, including CompactFlash, SmartMedia, CD-ROM, SD and the company's own Memory Stick.

"Most of the current systems are analog film based or a hybrid," said Sony's Blum. "We want to go very squarely after the digital camera owner because we think that's where the market's heading."

The Digital Print Station is scalable, so that various configurations from a small countertop model to a larger networked piece could be established according to individual retailer's needs. The Sony kiosk will carry a similar price tag as Kodak's Picture Maker, running about $20,000.

Concurrent with the launch of the in-store kiosk will be a "Print by Sony" branding campaign to "build awareness of this and other Sony digital printing services. I think it's going to be a very visible program for retailers," said Blum.

Flash-memory card manufacturer SanDisk joined forces last year with Photo-Me International (a UK-based photo kiosk manufacturer) to form DigitalPortal Inc. (DPI). DPI is beta-testing units at a variety of undisclosed retail locations with hopes for a rollout later in the third quarter.

Unlike the aforementioned systems, DPI's kiosk, while self-service, is chemistry based producing silver halide prints from digital images. DPI does not sell the kiosk directly but will enter into a loan/profit-sharing agreement with the retailer. For its part, DPI maintains the chemistry and remotely monitors the status of the kiosk to ensure its optimum performance.

According to recently named CEO Barry Szabo, DPI will work with retailers to co-brand a kiosk and/or configure it so that images can be uploaded to a retailer's Web site.

"Once a retailer sells a digital camera, they never see that customer again," said Szabo. "We have a solution that provides high quality, silver halide prints that requires nothing more from the retailer than to place it in their store."

Xerox has entered into the market with its Pixography kiosk, which features inputs for all digital media and a flatbed scanner for photo prints. It is available as either a countertop workstation or a stand-alone kiosk for $20, 995 (with the DocuCutter 545 finisher) or for $13,995 without the finisher.

The Pixography is complemented by epixography.com — an online solution that will allow consumers to create documents, pictures, cards, etc., at either epixography.com or a participating retailer's Web site. Once ordered online, these orders are routed to the retailer's store where they are fulfilled by the Pixography and picked up by the customer.

Fujifilm has two solutions geared toward retailers: the Aladdin Digi-Cam Center and the Aladdin Digital Photo Center. The Digi-Cam center sells for $3,000 and fulfills prints from digital media via a thermal autochrome process that uses true photographic paper and water, not dyes or inkjet.

"This is a system to determine whether you can make a go of offering digital prints," said Joe Welsch, director of marketing, retail products, Fujifilm. "Not enough people are making prints from their digital cameras. This a good way to establish a paradigm and build from there."

The next possible step could be the Digital Photo Center, which sells for $10,000 (without printer) and takes all digital media and has the ability to upload pictures to the Web (either to Fujifilm.net or the retailer's). The retailer would then choose between two printers: the PG3500, for $7,000, that makes prints to 8 x 10 inches; or $2,000 thermal autochrome model that makes prints to 5 x 7 inches.

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