The fact that NCR dominates the market for airline-ticket kiosks does suggest that they may be able to move beyond their core business in ATMs. Still, airline kiosks are a lot more like ATMs than movie kiosks are. NCR gets to deal with a manageable number of airline customers, rather than having to deal with a distribution system that has to tuck movie kiosks in at all sorts of retail chains or even in individual stores. With the airlines, as with the banks, NCR doesn’t have to worry about selling the end product–the airlines sell the tickets, and the banks supply the cash and related services. By buying a movie-rental business, however, NCR has to deal with all the vagaries of retail customers and what they want.

On your more general point, yes, GE moved beyond industrial equipment, 3M moved beyond minerals, and so on. It’s possible to move into adjacent markets, even ones with a tenuous connection to the core market. It’s just that the odds of success aren’t very good. For every 3M, there seem to be numerous Blue Circles–once one of the biggest cement companies in the world, it started selling lawn mowers, on the theory that cement was used in homes, and homes had lawns; the company went into bankruptcy proceedings and was then sold.

There seem to be two tricks to getting adjacencies right. First, you try to move into markets that don’t differ greatly from your core. You try to make sure that the customers are the same, that the purchases of core and adjacent products happen at the same time, that the distribution channels are the same, and so on. There obviously will be some differences, but you try to minimize them. Second, if you want to range further afield, as NCR is doing, you make multiple small bets, on the assumption that most will fail but that the one or two winners will more than pay for the losers.

The problem, to us, is that NCR is making a big bet on a market that’s too different from its core.

Let’s put it on our calendars to revisit this issue two years from today and see who’s right.

3M would not be the same company if it had remained in minerals. Nor would other companies such as GE, UT,etc.

This is a big swing and clearly redbox has a head start but do not under estimate NCR.