Toronto firm capitalizing on 'third wave' of Web with vending machine hardware

Communications & Networking - September 2002, Vol. 5 No. 9


As wireless carriers bring data capabilities to non-PC devices, such as cell phones and personal digital assistants, cStar Technologies Inc. is bringing wireless communications to a different class of devices entirely.

Toronto-based cStar's SkyGate product line is a wireless gateway designed for non-IT devices, such as vending machines. The company's founder, Stella Yoon, said companies that operate vending machines can save money by sending queries (for example, on which items, if any, need to be replenished, how much money is in the machines, whether it's out of change and whether there's a coin jam) through either carrier or wireless local-area networks. In some cases, she says, service technicians can receive alerts on whether machines need to be serviced right away.

The technology, which is also intended for meter reading, is designed to send information back to a corporate database using Unicenter software developed by Computer Associates International Inc.

Yoon founded cStar about seven years ago after leaving now-defunct Omega Digital Data Inc., which designed wireless point of sale terminals.

Yoon says cStar is focussing on the "third wave" of the Internet. The first wave let users connect their PCs through landline, while the second wave brought wireless data to cell phones and PDAs. The third wave, she says, brings wireless capabilities to the non-IT world.

CN: Can you describe what SkyGate is and how it works?

SY: SkyGate is basically a communications device which connects any non-IT device to the IT world. It has already connected over 5.2 million vending machines in the United States. The way they do it, without using our device, is the truck driver, who visits vending machines, takes sales information, what has to be restocked and whether there's a coin jam or whether there's something wrong. They have to physically visit and open each vending machine door and find all that information and write it down on paper. Then they come back to their truck, and from there, based on that information they put Coke, or Pepsi, or whatever on their trolley and go all the way back to each vending machine and service them. That is a huge waste of labour and time and there's not enough accurate information. We originally came up with this wireless WAN device, so before the truck driver or managers leave the depot with the products, they can pull up all that information from each vending machine. From the depot, they know how much cash is sitting in that cash box and which item has to be filled in and also, if there are any machine problems. From there, they know they don't need to visit certain vending machines. They will save up to 60 per cent on labour. That is one example. The other example is meter reading - electricity, water and gas. Now, the utility companies don't need to send people to read those meters. They don't need to estimate bills.

CN: With regard to the vending machine application, had you looked at any of the applications in Europe, and did you use any as a model or guide?

SY: What they had been doing (in Europe) was using wireless mobile commerce. Using cell phones, they could buy pop. Nokia started doing that in Finland and they finished a pilot, but unfortunately in their case, they only focussed on soda machines. Over 50 per cent of vending machines out there are also snack machines. In our case, we can do any machines. In Japan, (NTT) DoCoMo and Coca-Cola studied cMode-operated vending machines. I went through a lot of their data, and in my opinion, they have to start with brand-new vending machines. The vending machine has to be manufactured to fit that type of technology. I believe we should be able to provide technology that can be utilized on vending machines right now in the marketplace.

CN: Right now in Canada, can you pay for any of the purchases over a cell phone or wireless device? If so, how?

SY: That will be in the market this year. That is being worked out right now. There are two options. Number 1 is, you use a cell phone and the bill can go via the network operator. You end up paying for the Coke or Pepsi or any snack you bought on your cell phone bill, and the other one is, in the event that the vending operators desperately want (control of) the billing system, we can work with them.

CN: If you didn't want to bill the customer on the wireless carrier's bill, how would you go about billing them?

SY: That's where we have to work with the big vending operators. For small operators, it might be tough to work with the billing system. The best scenario is, it's best to work with the network operator. They have the billing system.

CN: What exactly is Internet Wave III?

SY: Internet Wave I is to connect any PC to the Internet. That is done. Internet Wave II, I consider connecting any PDA, palmtop (device) or laptop to the Internet, whether it's GPRS, 3G, or existing CDPD - it's slowly being done. Internet Wave III, in my view, is connecting any non-IT devices to the IT world. One example is vending machines. It will increase hugely. Let's say you are selling some important components, and some people don't want human operation - that's where vending machines kick in. We have the credit card capability. When the product item over $10, they should be able to use their credit card as well. Food manufacturers or magazine publishers want to be able to operate vending machines directly, so they can cut off that middleman and (eliminate) a lot of headaches. In the U.S., a lot of supermarkets have 24-hour operations. I believe vending machines can replace that. People like me, I do my laundry at 4:00 in the morning, and sometimes I run out, and that's where vending machines take care of that.

CN: What other kinds of applications do you for see for wireless data?

SY: Automatic meter reading and automatic teller machines are a huge thing. You can put them anywhere. That is the beauty of wireless. You don't have to wait for the phone company to come in and dig up the road. With phone lines, they can monitor meters, but the problem is, it's physically difficult to bring phone lines in. With phones, you have to pay monthly payments, no matter how much you use it, to read that data. With wireless data, you are charged by the packet. It's not circuit-switched.