Article
New kid in town
With a new name and a new commitment to the U.S. market, Wincor Nixdorf is trying to break the stronghold of more established domestic players. Can they do it?by Ann All, editor
March 11, 2002
When discussing the machines produced by German manufacturer Wincor Nixdorf, those in the ATM industry tend to toss around such superlatives as "awesome," "robust" and "well engineered."
And yet the former Siemens Nixdorf, renamed Wincor Nixdorf after its October 1999 purchase by the investment firms Kohlberg, Kravis, Roberts & Co. and GS Capital Partners, is struggling for U.S. market share.
The mature U.S. market, with an installed base of about 230,000 machines, isn't exactly friendly to newcomers. Diebold and NCR have a near-lock on the financial institution market, while Triton and Tidel dominate the ISO world.
While Wincor Nixdorf is the third-largest ATM supplier in the world and the second-largest in Europe, the company commands just 2 percent of the U.S. market. According to the Nilson Report, the company shipped 117 of the 50,153 machines in the U.S. last year.
Ch-ch-changes
Two significant shifts in the market may benefit Wincor Nixdorf, however. As long term contracts begin to expire, the replacement market will heat up. And some deployers -- convinced of the benefits of offering added services like e-commerce at the ATM -- may decide to invest in more high-tech machines.
Wincor Nixdorf's line of ProCash Compact ATMs, with such features as Pentium processors, VGA monitors and multiple cassettes, fits the bill.
"As marketing at the terminal becomes more important and being Web enabled becomes more important, I see that as a vast opportunity," said Scott Hackl, vice president of sales for Wincor Nixdorf in the U.S.
"(Deployers) want to make the right technology investment," he added. "Whether or not they're going to fully utilize (the technology) or not today is another question."
The few, the proud
A few deployers have already opted to make a significant investment in Wincor Nixdorf products.
The Bailey Group, a Bozeman, Mont.-based ISO that owns most of its machines and provides its own armored car service, signed a contract to purchase 1,000 units in September of 1998. The company has installed several hundred ProCash Compacts in Texas, New Mexico, Utah and other Western states.
Beth Bailey Alexander, president of The Bailey Group, said she wanted "the flexibility to offer on-screen advertising and dispensed items without having to make future upgrades."
She added, "We feel like this is where the industry is going, and it's where we want to go."
Robert Needham, president and CEO of Advanced Technology and Media Network (ATMN), said his Birmingham, Ala.-based company wants to be "an advocate of open technology" found on Wincor Nixdorf ATMs. Wincor's entire product line is based on the Windows NT operating system and WOSA/XFS standards.
"When we shopped the industry for equipment, we knew we wanted to deploy advertising and new media as much as we did cash dispensing. We needed a PC-based platform and, more importantly, open architecture," Needham said. "As we interviewed the competition, we found that they were still developing closed architecture with a limited platform.
"What (other manufacturers) are deploying today is closed technology, and we didn't want to wait another six, eight or 10 months to get started."
ATMN is working with National Equipment Providers, LLC, an Ashland, Ore.-based company that last December made a commitment to purchase 1,000 Wincor Nixdorf machines. NEP has an agreement with Information Technology Systems, Inc., which will manage, install, service and provide transaction processing for the ATMs.
Needham said NEP has commitments to deploy 300 machines in the Miami, Atlanta, Philadelphia, Dallas and Los Angeles areas. They should be installed by Aug. 15.
Noting that many contracts written in the early years of off-premise ATM deployment will expire in the next two years, Needham said, "We see ourselves as an alternative to replacing the legacy equipment out there today that lacks technological capability."
Dr. James Nobles, president of KPN Technologies, Inc., said that while his company's primary line is machines produced by Cross International Technologies, Wincor Nixdorf "gave us something to work with when we needed something just a little bit more than what we had in our back room."
Wincor Nixdorf once had a reputation for "over-engineered" equipment, but Nobles said the manufacturer addressed that issue by scaling back its hardware slightly. "They've taken a few of the bells and whistles off, but none of the functionality."
In addition to Cross and Wincor Nixdorf, Livonia, Mich.-based KPN Technologies sells machines produced by Triton, Tidel, NCR, Diebold and Greenlink Technologies.
The Wincor Nixdorf units "allowed us to do so many things we hadn't been able to do with the Tritons, the Tidels and the Crosses," Nobles said.
Price is right?
But does fuller functionality come at a higher cost?
The widely-held perception that Wincor Nixdorf machines are far pricier than those of the competition is incorrect, Hackl said. "When we're engaged in specific opportunities, we're very competitive for the value we offer. To me, price is not an issue."
Agreeing with Hackl, Nobles said, "If it's handled properly from a distributor standpoint, (deployers) can buy a Wincor Nixdorf machine for just a couple thousand more than what they're paying for the top-end Cross machine."
If Nobles' customers are any indication, some deployers seem willing to pay a little more for newer technology. KPN Technology sold about 150 Cross units and more than 300 Wincor Nixdorf units in 1999.
However, purchase price is not the only cost consideration, especially for off-premise deployers. The cost of parts and service must be factored in as well, said Sam Jonas, president of Englewood, Colo.-based Cash Resources, Inc.
According to Jonas, who has deployed a handful of Wincor Nixdorf ATMs and lauds their "super-high functionality," some early versions of the ProCash Compact required an undue number of service calls because of certain operating quirks. For instance, he said, a specialized sequence once used for initializing cassettes caused service problems.
"Once the technicians were trained, fine. But as soon as you had someone who wasn't trained or who was poorly trained on the crew, they would pop (the cassettes) in and walk out the door," Jonas said. "The machine would go into offline function, and you couldn't bring it back up until you got service back out there."
Wincor Nixdorf rewrote its software and changed the sequence in question.
Finding a technician trained on Wincor Nixdorf equipment also was sometimes a challenge, Jonas said. "A lot of the people who do service, they want to know that if they spend the money and take the time to get trained on a particular machine, they're going to get their money back. A lot of people didn't invest in it because they didn't see there was going to be enough business with that particular brand."
To serve and to service
Wincor Nixdorf is trying to address any former shortcomings and establish a strong sales and service infrastructure. Acknowledging that the manufacturer once outsourced virtually all of its service in the U.S., Hackl said that has changed under the company's new ownership.
"Now we are taking a different approach because we know we need to make sure we have the right parts and service levels available here in the U.S.," he said.
It's common for companies entering new markets to struggle with establishing an infrastructure, Nobles said. "When Triton introduced the 9600, they had growing pains out of this world. People tend to kind of forget that when it's over and done with."
A parts inventory is maintained at Wincor Nixdorf's U.S. headquarters in Austin, Texas. In addition, some distributors like Nobles keep a limited supply of parts on hand.
"When I needed parts six months ago, there was an issue," Nobles said. "But now when I need something, if it's not overnighted, it's because it's sitting in my back room."
Hackl said the modularity of the ProCash Compact line offers an advantage to cost-conscious deployers because of "a commonality of parts and modules that minimizes the number of parts required to maintain one of our machines."
Noting that Wincor Nixdorf has identified financial institutions with $10 billion or less in assets as a promising niche, Hackl said the company recently signed up distributors to serve that market in 40 states and has launched a sales and service training program for them.
"We are taking great care to invest in their start-up," Hackl said. "We see them being able to provide a strong and complete value. Financial institutions can expect high levels of service when dealing with a local company that is closely backed by the manufacturer."
He added, "We are starting to see some sales to regional banks and credit unions, validating what we thought the market would hold for us. We will continue to grow as our people gain experience and as we complete training from both a sales and service side."
Wincor Nixdorf has service and maintenance agreements with IBM in Canada and South America. While there are no immediate plans for such a relationship in the U.S., the manufacturer doesn't rule it out.
WOSA-palooza
According to Hackl, Wincor Nixdorf's software is another key differentiator for the company. Its open architecture facilitates advanced programming activities, including running Wincor Nixdorf applications on other vendors' ATMs.
Software has "opened the door for us" with large, high-profile clients like Citigroup, Hackl said, noting that the company occasionally even sells its software as a stand-alone product.
"Once big banks in the U.S. have to replace their old machines, they won't only look for new hardware and leave the software network the way it is," predicted Julia Pallasch, Wincor Nixdorf's marketing manager for self service products. "They're going to see what they have to do to stay competitive. I think that's where Wincor Nixdorf has a great chance because we've had experience with WOSA/XFS applications for almost three years now."
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