The Vendor Benders

During a four-hour flight delay at London's Heathrow Airport two years ago, Norman Crowley battled boredom by putting his business acumen to use. Crowley is co- ceo of Inspired Gaming Group, a company whose software transforms analogue machines into digital ones. He and several coworkers found themselves staring at a Coke machine that attracted one customer every 20 minutes. "We thought, this is crazy," it could be doing so much more.

Crowley called an old friend, Clyde Pereira, the chief information officer at Coca-Cola HBC, the company's European distributor, and told him he could make Coke's machines more profitable. Similarly, in early 2005, Stuart Farrell, retail development manager for mobile operator Vodafone UK, and Ralf Pearson, project manager at UTL, a logistics company that works with Vodafone, were discussing ways to improve distribution of prepaid mobile phones — which make up 60% of the U.K. market — when they noticed a candy machine in a tube station. Farrell joked about selling mobiles from vending machines, "and we both laughed." But Pearson wasn't laughing when he called Farrell a week later. Research suggested that the idea wasn't so wacky after all.

Those two eureka moments could help drive Europe's vending machines into the digital era. Coca-Cola HBC recently finished a six-month trial of 30 networked Coke machines at Dublin Airport in Ireland that sold mobile-phone top-ups, ring tones, games and logos — all downloaded from a central database — as well as soft drinks.

It's now fine-tuning the business model, ensuring revenues cover the technology's cost. And Vodafone is field-testing two QuickPhone kiosks that sell ready-to-use prepaid handsets and SIM cards. But the machines, located in two Manchester, England, Vodafone shops, also have broadband connections and may eventually dispense top-ups and other digital media content, too. The results look promising. The Coke machines' revenues doubled. And Vodafone's kiosk sales are exceeding expectations by 200%.