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  • A Sales Pitch With That Soda?

    By Leslie Walker
    Washington Post Staff Writer
    Thursday, June 24, 1999; Page E1

    Whenever futurists evangelize about the Internet being on the verge of hooking itself up to our refrigerators, cars and toilets, we all wonder the same thing: Who would do this to us, and why?

    To find out, I picked one ubiquitous device, the vending machine, and began tracking down the folks trying to Net-i-fy it. The trail led to the same kind of technodreamers who have already taken us so many places we had no idea we wanted to go.

    It turns out there are two teams trying to link the Internet to the world's vending machines, including the 5 million machines in the United States, which last year spit out more than $23 billion of drinks, junk food and sundry other small items. One team started in Australia, the other in Israel. They're moving fast: Both have begun marketing their devices to Fortune 500 companies worldwide.

    And both believe they can help traditional merchants compete with cyber-retailers by providing electronic tools that let them take names – like Amazon.com does – and track who buys what. The carrot to consumers for lost privacy is supposed to be convenience and the promise of quicker, easier ways to shop.

    Farthest along is Zoom Systems Inc., a small start-up with 30 employees that moved from Australia to San Francisco last year. It aims to dispense small convenience goods and bulky office supplies from Internet-connected vending machines equipped with speakers, display screens and touchpads.

    The screens and speakers give consumer pitches that could be devised and updated from company headquarters – pitching one product in the machine to the lunchtime crowd, for instance, and another to nighttime visitors. The network could also keep the owner apprised of restocking needs, breakdowns and break-ins.

    The Zoom executives hope the "E-stations" they debuted with Hewlett-Packard Co. in Texas last month will spawn an entirely new retailing environment. It would become common, they say, for vending machines to sell cold medicine, compact discs and printer supplies in subway stations and office buildings, all under the electronic control of Web sites.

    In corporate offices, Zoom hopes the vending machine's ability to monitor the supplies that employees consume will make them a logical replacement for traditional supply rooms.

    In Israel, meanwhile, the even tinier TeleVend Inc. has crafted a vending machine that allows people to buy goods on the spot using cellular phones. They call a number posted on the machine, punch numbers to request what they want and pay on the cellular phone bill. The hoped-for result: less hassle of carrying coins; more impulse buying.

    TeleVend's prototype also lets customers pay with credit cards, coins and even Palm Pilots. The wireless billing mechanism is being ogled by some of the world's largest beverage manufacturers, casino owners and subway operators, TeleVend said.

    The Internet already is seeping into traditional stores. Dozens of small companies are building Internet kiosks that provide free Web access, allowing, for example, department store shoppers to get product information quickly. Also being demonstrated are kiosks at which customers at music stores can sample CDs using streaming audio from the Web.

    But the machines from Zoom and TeleVend are designed to push the frontier further, dispensing goods, not just information.

    TeleVend also wants to change the rules of the game by turning telephone companies, many of which already own credit card companies, into billing agents. The wireless vending machines may be particularly attractive in Europe, where most countries have heavier cellular phone usage than the United States.

    TeleVend's device would allow frequent customer discounts. It also has a printer that spits out coupons while it pipes entertainment and ads through its screen and speakers.

    "I call it Vend-tainment," said Steven Weiss, who runs a consumer research think tank called Quest Futures Group. "What the Internet will do is add an element of entertainment and marketing to the vending machine."

    Weiss believes TeleVend's TeleDrink machine could create new revenue streams for all sorts of businesses, including telephone companies and retailers where the machines are parked: "Let's say the machine was right by a 7-Eleven, and you printed out a coupon with each soda you sold from the machine, saying 'Go use this coupon in 7-Eleven.'"

    Gedaliah Gurfein, one of TeleVend's founders, said his company's 10 employees spent the past year writing software that converts existing vending machines into TeleDrinks, controllable from the Net. A machine owner plugs in a small box that costs about $500, Gurfein said. Add a phone number to the front, and voilà, it's ready for dial-in-ordering.

    When I pooh-poohed the idea, TeleVend had really developed so much technology that Gurfein demonstrated his machine using two phone lines. While I dialed his Internet control center with one, I listened through the other as Gurfein held his cell phone up to the TeleDrink machine in Jerusalem.

    "Hi, welcome to TeleDrink," a recorded voice blared from the Web site. "Your drink will be automatically billed to your home phone. Press one for cola. Press two for diet cola. Press three for orange . . ." I pressed "1" on my touch pad, then through the other phone heard the clunkety-clunk of a can dropping.

    A voice said: "Hungry? Take this can to Pizza Home for a free slice."

    People promoting these devices tout the shopping convenience they can bring – and anyone who has run out of cash and kicked a Coke machine might vouch for TeleDrink.

    But I fear the evangelists attribute too much intelligence to computerized marketing, presuming that machines could ever decipher people's irrational wants enough to deliver ads that are more relevant to our interests than the hundreds of messages that already bombard us daily.

    Maybe in the future, TeleDrinks should dispense free earplugs with every can of Coke. We just may need them when the world finishes converging into one giant marketing machine.

    Leslie Walker's e-mail address is walkerl@washpost.com.

    © 1999 The Washington Post Company

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