ATM&Debit News
Nautilus Hyosung Inc., the Korean automated teller machine manufacturer that until recently made machines for Tranax Technologies Inc. of Newark, Calif., now is selling them under its own name and plans to challenge Tranax and others in the competitive U.S. off-premise and small-bank markets.
Six months after an angry public split with Tranax, Nautilus has scheduled its first users' conference for this week; 200 independent sales organizations and customers are expected to attend the meeting at its offices in Coppell, Tex.
Nautilus and Tranax ended their agreement in January, seven months before it was scheduled to expire, though Nautilus had stopped shipping ATMs to Tranax in November. Before the split Nautilus had manufactured ATMs for Tranax since 1998 at its manufacturing plant in Gumi, South Korea. Tranax had been Nautilus' sole distributor in the United States.
In January the two companies issued dueling announcements, each claiming it had dumped the other due to differences in strategy.
Tranax said it wanted to make multipurpose kiosks for a growing market while continuing to sell ATMs in the off-premise market. Last year its ATM sales increased 7.8% from 2005, to 14,500 units, making it the third-largest ATM distributor behind NCR Corp. and Diebold Inc.
Nautilus said it wanted Tranax to continue selling only off-premise ATMs. Numerous industry experts say the market is contracting, but Carlos Siewczynski, vice president of Nautilus' North American retail self-service division, disagreed with that assessment.
"There is a consistent annual volume of 30,000 machines," he said.
Bill Dunn, Tranax's vice president of retail ATM products, said that over time, the two companies had grown apart. "We went in a different direction. We had different goals."
In its announcement, Tranax seemed polite and thankful but gave the impression it was looking forward to life without using Nautilus as its manufacturing partner.
"The partnership between Tranax and Nautilus Hyosung has served both companies profitably and well," said Hansup Kwon, Tranax's co-founder and chief executive officer. "But now it's time to take more control of our products and destiny."
Nautilus said the parting of ways led the ATM company to develop a new sales and distribution strategy.
Tranax was "our exclusive distributor in the U.S.," Mr. Siewczynski said. "Now, we're going to sell through the ISO channel. We will recruit ISOs at the conference."
Nautilus may be planting seeds in fertile ground.
Tranax recently launched a blog to improve communications with ISOs, and one company angrily chastised Tranax on the site for not realizing how its breakup with Nautilus would affect its ISO customers.
"The way the split occurred placed many Tranax customers in a bind, and Tranax lost some goodwill with the ATM community because of it," an ISO executive wrote on the online forum.
But Mr. Dunn (who also writes "Bill's Blog" for Tranax's ISO partners) says the comment was not representative of the industry's views.
"For every person who had something negative to say, several had positive comments," he said.
Tranax has begun manufacturing its own ATMs at a non-Nautilus plant in South Korea, and it has installed the first board of directors in the company's 21-year history.
Nautilus owns the intellectual property rights to the successful Mini Bank ATM, a popular off-premise model that Tranax had sold.
"There are 80,000 Mini Bank ATMs in service in the United States, from the very first models to the latest models," Mr. Siewczynski said. "We're successful at the top tier."
Mr. Dunn said that Tranax made the Mini Bank 1500 ATM famous. "They should send us a thank-you note."
Nautilus says it will continue to make ATMs for the retail market, and it has created a financial services division to sell machines to banks. The company plans to distribute ATMs from its office and warehouse in Texas. The office will house sales, marketing, accounting, and technical support.
"We can do light assembly here and load software," Mr. Siewczynski said. "We can house up to 1,000 ATMs here."
Mr. Dunn was dismissive of his competitor's new strategic direction. "They have been selling into the financial services market two years and have yet to crack the top 10," he said.
