Calculating and Accounting Machinery, Except Electronic Computers

SIC 3578

Companies in this industry

Industry report:

This industry covers establishments primarily engaged in manufacturing point-of-sale devices, fund transfer devices, and other calculating and accounting machines, except electronic computers. Included are electronic calculating and accounting machines that must be paced by operator intervention, even when augmented by attachments. These machines may include program control or have input/output capabilities.

Charles Xavier Thomas, of France, is credited with starting the calculating and accounting machines industry when he introduced the arithmometer in the 1870s. Frank Baldwin and William S. Burroughs also were major innovators in early calculating machine technology. During the industrial revolution and until the mid-1900s, mechanical and electrical adding machines dominated industry offerings. The invention of the handheld calculator in 1948 and the integrated circuit in the late 1960s, however, initiated the demise of traditional adding machines.

Both desktop and handheld calculators essentially became commodity items in the late twentieth century, and manufacturers shipped goods worth a total of $1.4 billion in the late 1990s. However, electronic cash registers, an offshoot of calculating machines, offered higher profit margins for manufacturers. Scanning technology and the demand for related inventory tracking systems in the 1980s and early 1990s spurred the development of new "high-tech" cash registers that buoyed profits for some prior producers of traditional calculating machines. Other competitors exited the market or shifted to production of other equipment.

Automatic teller machines (ATMs) and point of service (POS) devices, which were added to industry offerings in the 1980s, quickly escalated sales of cash registers and adding machines. Production of ATMs, which store cash and are used primarily by bank customers to conduct account transactions, skyrocketed past a total of 90,000 units in 1993. Less expensive POS devices, which allow consumers to conduct electronic account transactions from a purchase point such as a gas station or supermarket, numbered about 300,000 in 1993.

By the last quarter of 2003, ATM manufacturers were seeing double-digit increases in sales. Diebold alone had an increase of about 150 percent. The number of POS devices sold also increased, to more than 1.1 million units by 1997, as a growing number of retailers adopted this method of accepting payment. In the 2000s, the move toward self-checkout systems boosted sales in the industry.

By 2005, ATMs and POS terminals were required to comply with the standards for Triple DES data encryption, opening up a market not only for replacement machines but for upgrading or retrofitting old units. Upgrading was the more economical solution for ATM owners, since the majority of machines only needed new software or keyboards, a difference of $2,000 versus upwards of $25,000. In addition, requirements from the Americans with Disabilities Act regarding accommodations, as well as new check clearing standards, dubbed "Check 21," prompted growth in this industry.

According to the ATM Industry Association, in 2010, about 2.1 billion ATMs were in operation throughout the world. The United States was the largest market, with about 450,000 ATMs; China was second, with 208,000, followed by Japan, which had just over 187,000. The Central and Eastern Europe ATM market saw strong growth in the late 2000s, increasing 10.5 percent in 2009 after rising almost 28 percent in 2008. Western Europe, however, saw slower growth at only about 2.3 percent in 2009. By 2010, about 400,000 ATMs were in operation throughout Europe.

Industry leaders in the early 2010s included NCR Corp. of Duluth Georgia, and Diebold Inc. of North Canton, Ohio. NCR, the leading maker of ATMs in the United States, had annual sales of $4.6 billion and 21,500 employees in 2009. The company also manufactured POS terminals. About two-thirds of its sales came from outside the United States. Diebold had $2.7 billion in 2009 sales and about 16,400 employees. Originally a maker of safes and still with a hand in that industry, Diebold produced ATMs and check-cashing machines, as well as voting machines for Brazil, garnering about three-quarters of sales from overseas. Triton Systems of Delaware Inc. of Long Beach, Mississippi, also manufactured ATMs but was a relatively much smaller company, registering sales of $55 million in 2009.

At the beginning of the 2010s, manufacturers of ATMs continued to improve technology and usability. Factors driving industry growth included increased demand for envelope-free ATMs (called "intelligent ATMs"); smaller, micro-ATMs, which were either handheld or smaller versions of traditional ATMs; and cardless ATMs, which as of 2010 were already being used in Europe. Other trends included "talking ATMs," which provided audio equipment and headphones so customers could speak with a live bank teller while conducting transactions. In 2010, Bank of America converted all 18,000 of its ATMs into talking ATMs, according to Bank Systems + Technology. Other banks and financial institutions were using ATMs called Personal Tellers, which featured videoconferencing capabilities.

Despite these new technologies, the economic recession of the late 2000s took its toll on the industry as cash-strapped financial institutions and companies put off buying ATMs and POS systems or replacing old ones. According to Credit Union Times, industry leaders NCR and Diebold both experienced declines in revenues in the fourth quarter of 2009.

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