Samsung Hits the Vending Machine for Profit

Korean electronics manufacturer Samsung is taking a big bite out of the retail sector as it seeks unusual new markets for its LCD panel technology.

Samsung has teamed up with U.S. food giant Kraft(KFT Quote) to build a new breed of 21st-century vending machines. The snack machines use a specially built 46-inch LCD panel, which functions as a giant touchscreen, bringing up a host of nutritional information on the food inside.

For Kraft, the Internet-connected machines can also be used to sell additional products to hungry customers.

"It has been 30 years since anything technological has happened within the snack vending world," said Michael Miller, senior category business director at Kraft Foods. "We can deliver interactive video advertising, we can deliver promotions [that] we can tailor to the time of day."

Miller told TheStreet.com that Kraft is subsidizing the cost of the devices for vending machine operators in return for control of the media that appears on it.

"It's almost the sky's the limit as we explore this," he told TheStreet.com, explaining that 10 prototypes are currently being tested. "We expect to be in a test market somewhere in the northeast in the second half of this year [and] if everything goes as we have planned, we're hoping to roll out by mid-2010."

For Samsung, the vending machine is part of a long-term strategy to boost its LCD business, which generated 14% of the firm's 28.67 trillion Won ($21.4 billion) first-quarter revenue. Despite registering an operating loss of 310 billion Won ($230 million), Samsung said that its LCD division outperformed the broader market thanks to increased sales of large-size panels.