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Android Is About To Truly Kill The POS Business Model
Again, the POS vendors had an answer: “This is a consumer-based product that is not built for commercial use. Do you think that can get wet? What happens when someone drops it? And you still have all the problems of managing different hardware and software vendors. We don’t think that’s a good idea.”
These were also good arguments, and once again retail CIOs became cautious. “Those screens are easy to break. Imagine how many we will break or, even worse, have stolen.” These doubts have certainly impacted tablet POS adoption. (Although many retailers have decided to experiment with iPads as a POS platform, few major chains have decided to go all-in.)
People have to stop thinking about these devices in a mobile sense and simply think of them as a computing platform. Tablets are a touchscreen with plenty of CPU and memory to handle even the most complicated POS functions. Put them in a larger case (or even mount them to the counter), and you can use them as a full POS platform.
Now, all of the arguments against these platforms still hold true. But the big difference is the price-point. At $100, a retailer can afford to buy four spares for every main terminal and still pay 75 percent less than what a traditional POS package costs. Drop it? Grab a spare. Can’t get it to work? Grab a spare and fix it later. Need to replace one? Amazon will ship another one overnight.
This obviously isn’t news to the big POS players; they have had price pressures for years. But instead of taking the opportunity to pass along savings to their customers when the price of their components dropped, they continued to beef up the horsepower and keep the same price-point. They could have been better prepared for today, but they chose to protect their top line.
POS vendors’ opportunity now is to focus on their intellectual property and their software, and to do it in the cloud. That’s why Micros is pushing its Symphony platform and why NCR specifically called out Radiant’s cloud-based approaches as one of the reasons it acquired the brand.
The big players need to turn their attention to figuring out how to make their software the one that best operates on all the other platforms. I think we’ll see a lot of R&D efforts on POS in HTML5. That way it is compatible with all devices, rather than having to build an application for each platform.
Outside of the costs, the additional benefit is to take technology out of the store and put it into datacenters (cloud). These tablets also have the ability to add redundant Internet connections through integrated 3G cellular.
What do you think? Do you think these new Android tablets will be the straw that breaks the camel’s POS strategy? If you disagree (or even, heaven forbid, agree), please comment below or send me a private message. Or check out the Twitter discussion on @todd_michaud.
-Marc
January 18th, 2012 at 11:22 am
I agree that with tablets specifically becoming cheaper, they do offer a form factor that can be used in the retail environment. But, I still see the adoption happening slowly before it becomes ubiquitous.
January 19th, 2012 at 1:10 pm
Classic sides squaring off here: existing POS providers want buyers to believe tablet-based POS is discontinuous innovation with whole product risk – where to get service if not from one vendor, industrial grade?, theft, etc. Tablet suppliers will dis-intermediate the incombants by positioning their innovation as re-segmenting the existing POS experience with continuous innovation for forward-thinking retailers. Here is my thesis.
Why limit POS to front of store where we only do mind-numbing checkout. That was yesterday’s need for yesterday’s problem – expensive POS that had to be fixed to the floor.
I would position the tablet enabled buying experience as solving a much more valuable retail problem… 1:1 service at scale with increasing cart size and margin per customer. “Our tablet based enabler allows your professional customer service personnel to meet the client in the aisles, help them with style, fit, selection, accessories and use rich media to explain the premium price value. Our version 2 moves from transaction enablement to relationship mgmt whereby customers prior purchase history is available to accessorize and extend with each visit, no matter which tablet toting retail assistant they greet.”
I have seen one great example already of this discontinuous innovation: Chair lift boarding in Utah ski resorts! Smart tickets are sensed at the turnstyle and lift attendants in snow and cold alternate holding the iPad. Season ticket holders, instructors and out of town guest pictures are displayed to the attendant who can:
1) recognize a large picture and eliminate season pass fraud
2) get warnings when fast skiers return to queue too fast and can suggest more challenging terrain where slower skiers are at less risk
2) greet out of towners and offer lunch reservations with discounts onto their day pass.
Its not about how the tablet does the existing mind-numbing checkout cheaper. Its about how the iPad allows higher end retail and mass retail to sell more premiums, increase avg sale, move excess inventory, and change a trx to a relationship. Big box competes on price and must rely on volume inlane checkout at minimum wage. Tablet enabled experience is for everyone else. I see the future world where you will endure the big box for commodity purchase at lowest cost. For considered purchases, we will favor friendly, more personal experience at retailers who know your persona, sell with deeper product content/comparison, and check out in aisle much like Hertz and Avis do today.
If your readers or retailers want to discuss enable the vision with new positioning, please call or write:
chris@couloir.net or 650-868-7440.
chris roon
January 19th, 2012 at 11:21 pm
I see the flight of smaller service and food vendors to tablet based checkout happening right now in the burgeoning Hayes Valley shopping district.
However, to completely displace the traditional POS *software*, payment acceptance is only part of the requirement.
What is holding back the rest of us is the lack of a viable software solution for inventory-driven businesses. Square just doesn’t cut it, at least the last time I looked at its capabilities. Inventory management and reporting, purchasing and invoicing, as well as multiple location and channel capabilities are some the features that force us to the much maligned legacy POS solutions.
There doesn’t seem to be a middle ground between the entrenched, large scale POS solutions and the agile ‘startup merchant’ apps that run on tablets or iphones.
Furthermore, as demonstrated by the recent Carrier IQ scandal, there are real security and transparency concerns around the use of cutting-edge products like the iPad. Once these wifi,bluetooth and cell-enabled devices become ubiquitous as a payments platform, I think we’ll see some consequences of having their much larger attack surface. So much more to hack than that old wired POS!
But to steer back to the original subject, I agree that the fossilized, register-centric POS will be inevitably much of their market share to the new breed of retail-enabling hardware, but find that in my personal experience its the software, not the hardware that is limiting the progress.
cheers,
david