Magazine

Diebold


For most of its 142-year history, Diebold Inc. (DBD) never worried much about global strategy. As a premier name in bank vaults--and then automated teller machines and security systems--the North Canton (Ohio)-based company focused on U.S. financial institutions, content to let partners hawk what they could abroad. But in 1998, with the U.S. ATM market saturated, Diebold decided it had to be more ambitious.

Since then, Diebold has taken off. Sales of security devices, software, and services surged 38% last year, to $1.74 billion, led by a 146% jump in overseas sales, to $729 million. The momentum has continued this year. With ATM factories in Asia, Latin America, and Europe, international sales have gone from 22% of the total to 40% in just two years, and should soon overtake North America.

The ventures overseas have taken Diebold into whole new directions. In China, where it now has half of the fast-growing ATM market, it also is helping the giant International Commercial Bank of China design its self-service branches and data newtork. In Brazil, Diebold owns and manages a network of 5,000 ATMs--as well as surveillance cameras--for a state-owned bank. In Colombia, it's handling bill collection for a power utility. In Taiwan, where most consumers still prefer to pay bills in cash, Diebold is about to introduce ATMs that both accept and count stacks of up to 100 currency notes and weed out counterfeits. And in South Africa, its ATMs for the techno-illiterate scan fingerprints for identification.

FOREIGN ACCENT. Diebold didn't plunge willy-nilly into overseas markets. "We tend to put a high emphasis on analyzing the daylights out of things before we go in," says Michael J. Hillock, Diebold's international operations president. In the 1980s, wary of going it alone, it used foreign electronics giant Philips to distribute its ATMs, before forging a manufacturing and sales joint venture with IBM. By 1998, though, it needed faster overseas growth to lift its bottom line. And it figured it knew enough to assert more control over foreign operations. So Diebold bought IBM's stake, snapped up the ATM units of France's Groupe Bull and Holland's Getronics, gained majority ownership of its China ATM manufacturing venture, and bought Brazilian partner Procomp Amazonia Industria Electronica, a top Latin American electronics company.

Diebold found it could serve much broader needs in emerging markets than in the U.S. Across Latin America, consumers use banks to pay everything from utility bills to taxes. So Diebold ATMs handle these services, 24 hours a day. In Argentina, where filing taxes is a nightmare, citizens now can fill out returns on a PC, store them on a disk, and have their disks scanned on one of 5,000 special Diebold terminals, most of them at banks. Red Link, which owns the biggest network for the tax service, gave Diebold the job because "they're extremely flexible and can adapt technology to solve any problem," says Commercial Manager Armando Avagnina. Diebold also is landing new contracts across Latin America to manage bank ATM networks.

The $240 million acquisition of Brazil's Procom also gave Diebold an entree into an entirely new line: It landed a huge contract to supply electronic voting machines for Brazil's presidential election last year. Now Diebold is getting into the voting-machine business in the U.S., where it expects demand to surge in the wake of the controversial Presidential contest in Florida. Globalization, it seems, can even unveil new opportunities at home. By Michael Arndt in New Canton, Ohio, and Pete Engardio in New York, with Joshua Goodman in Buenos Aires


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