I am surprised that more people are not talking about the fact that Coin Acceptors just took a majority ownership stake in InOne Technology. To my mind, this deal is the most significant news to come out of the industry in a long time.
It is not surprising that a manufacturer of coin and bill acceptors would buy a company known for remote machine monitoring, DEX upgrade kits and cashless payment acceptance, but it is indicative of where the vending industry is headed. And it may spur more deal making and consolidation in the vending equipment space.
This deal echoes what has been going on with a lot of technology providers in other industries: it is creating a larger "one-stop shop" experience for operators. Of course, Crane Co.'s vending division has a broad offering that includes machines, peripherals and software, but due to the economy, retrofittable upgrades are where the action is. For this reason, I consider the Coinco and InOne combination to be on an equal footing with Crane.
In other areas of technology, we are seeing a lot of mergers and acquisitions as the vendors attempt to create a single source for end-to-end solutions. It becomes a game of musical chairs, where it is necessary to bulk up quickly to meet the demands of the marketplace. Usually this is prompted by flattening or falloff in demand, and margins that are flat to down, as well. Our industry fits that description in spades. Essentially, it is cheaper to buy than it is to build.
Now that this has happened, it will be interesting to see what will happen next. It is public knowledge that Cantaloupe Systems and USA Technologies have raised capital recently, and from what I can see, these funds are largely being used to discount their products to operators.
While it is arguable whether this was the best use of investment capital, the result is a price war, and the commoditization of vending-related technology is accelerating. Cashless payment acceptance and remote monitoring used to be differentiators; now they seem to be the latest things for players to lock horns over -- to the point where capital is needed to reach a "magic number," or units in service according to the business plan. And if the plan does not succeed, a big enough network will give them an exit strategy.
So that has to be why the deal occurred. InOne is now part of an 800-pound gorilla, and USAT, Cantaloupe and a few others find themselves in the position of being the small and nimble player that has to innovate. (And let's not forget MEI and Apriva.)
Don't get me wrong: I am not ignoring the importance of USAT or Cantaloupe by any means. Apple showed the world that with an innovative product map, anything could happen. It is my bold prediction that there will be more action in the space, and that this will only benefit the operators.
I also predict that this deal will bring change to our industry. Now that Coinco has made a move, you have to think that someone will respond.
Will the NAMA OneShow become a fancy dinner with four huge operators on one side of the table, and four giant manufacturers on the other? No. But get ready for some fireworks: I think 2011 is going to be a huge year for mergers and acquisitions. This will require operators and equipment providers in the vending space to form a clear vision of what they want to do. The choice is clear: grow or die. But it does not have to be a painful death. The day I sold my vending business, I had a great day. But I planned it for a year.