Nautilus Hyosung interested U.S. market

 

An opportunity to better understand a company they have indirectly worked with for nearly a decade was something distributors of Nautilus Hyosung ATMs welcomed. Last week, they got their chance.

 

Seoul, Korea-based ATM manufacturer Nautilus Hyosung Inc., which is owned by the $5.6 billion Hyosung Corp., opened its U.S.base nearDallas. To help it celebrate, the company invited a couple hundred distributors and partners and offered them a glimpse at how Nautilus Hyosung plans to penetrateNorth America.

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"It helped me understand the underlying company better," said James Ray of B.E.S.T. Advisory Merchants, a New York-based independent sales organization. "All I knew was Tranax."

 

Nautilus Hyosung is part of Hyosung Corp.'s Information and Communications group - a group that accounts for about 9 percent of Hyosung Corp.'s overall sales. In that group, Nautilus Hyosung is the most important performance-unit subsidiary. The company expects the group's contribution to Hyosung Corp.'s revenue to grow from 9 percent to between 15 percent and 20 percent within the next five to 10 years, primarily because of growth related to Nautilus Hyosung.

 

Since Tranax Technologies Inc. and Nautilus Hyosung announced plans to officially sever ties back in January, Nautilus Hyosung has put forth a Goliath-like effort to educate distributors in theUnited States about its business, its business model and how it can better serve the market. Nautilus Hyosung is focusing its attention on retail and financial-institution placements, and it's hired a group of seasoned ATM professionals to help it make a mark.

 

The parent company, founded in 1957, has come a long way since getting its start in the textile business, said Christopher Cho, Hyosung Corp.'s senior executive vice president and a member of the Nautilus Hyosung board. In addition to textiles, Nautilus Corp. now operates subsidiaries in trading, power and industrial, industrial materials, chemicals and construction.

 

"We were the first company to develop a notebook PC in 1982, and then we wanted to diversify, so we got into the ATM business (in 1993-94)," Cho said. "In 2001, we decided to make the business bigger by spinning it off, rather than just being part of the computer group," hence the birth of Nautilus Hyosung.

 

Nautilus Hyosung now holds about a third of the FI and ISO ATM markets inKorea, Cho said. It now hopes to leverage its Korean experience to accelerate its growth inNorth America.

 

The company's North American presence up to this point has been guided by its distribution relationship with Tranax. Since that relationship is over, Nautilus Hyosung is fostering direct relationships with distributors that once sold Nautilus equipment through Tranax.

 

Distributors at last week's conference said they were pleased with Nautilus Hyosung's efforts and expect the company to enjoy success in the market.

 

Nautilus Hyosung's competitors have their own views.

 

Brian Kett, president of Long Beach, Miss.-based Triton Systems, said he doesn't expect the company's business to change much, only its distribution channels.

 

"Nautilus Hyosung has been one of our primary competitors inNorth America for years," he said. "We've always looked at Nautilus as our competitor, not Tranax. To me, the only thing that's changed is that they were working through a master reseller - Tranax - and now they've adopted a multiple-channel relationship. I don't see why Nautilus won't be a good competitor, like they've always been."

 

As far as Tranax is concerned, the industry is taking a wait-and-see approach. Tranax is expected to unveil new products at its distributors conference July 13. In February, Tranax released its Mini-Bank 1700 as a replacement for the Mini-Bank 1500, which it distributed for Nautilus Hyosung. And in February 2006, Tranax released the Mini-Bank c4000, the first ATM manufactured by Tranax independent of Nautilus Hyosung.

 

Dr. Hansup Kwon, Tranax's president, says he isn't concerned about Nautilus Hyosung's presence in the market.

 

"In my opinion, they are totally underestimating theU.S.market, and they aren't coming up with things to compete," Kwon told ATM Marketplace in January. "The important thing is the preparation, and we see the ATM market in the States getting saturated. To provide another revenue opportunity to our distributors, we are offering self-service terminals."

 

The relationship between Tranax and Nautilus Hyosung is visibly strained. How it will play out remains to be seen, Kett said.

 

"Nautilus Hyosung is just duplicating what its master reseller (Tranax) has in theU.S.," he said. "What they're doing is necessary to support their sales going forward. The relationship between Nautilus and Tranax seems very adversarial, and I'm not sure any adversarial relationship is good for our industry. But they've been a very significant player inKoreaand they've been a very strong competitor in North America for the last seven years."

 

 

To that competitive end, Nautilus is branching out with new products that it plans to sell through multiple channels in theUnited States.

NH 5010:It's a new machine expected to hit the market later this year, probably during the fourth quarter. The 5010 can come with an embedded system, similar to the 1500, or with a Windows CE board. It also will have a color monitor. The company initially planned to market the 5010 as a replacement for the 1500.   

 

NH 1500: Plans to discontinue production of the 1500 have been halted, at least for now. As long as distributors want it, Nautilus Hyosung says it will deliver.