Microsoft’s POS Move May Make It a Viable Retail Option

Written by Evan Schuman
October 5th, 2004

When Microsoft Corp. unveiled its embedded operating system for retailers on Monday, it stressed the mini-OS’ plug-and-play capability. But one key motivation for the company might have been the fear that retailers were considering upgrading without Microsoft.

Late 2004 has retailers at a key IT management point, with aging POS (point of sale) systems pressuring them to upgrade, but many standard upgrade paths unappealing. This has driven some retailers to consider Linux.

Microsoft’s Monday announcement is intended to stop such thoughts, with Windows Embedded for POS having a footprint roughly one-tenth the size of Windows XP Pro, Microsoft officials said. Although company officials wouldn’t release the exact size of the yet-to-ship software, one official said it would likely be 150MB to 200MB in size, compared with a comparable XP Pro, at about 1.5GB.

The new product?officially dubbed Windows Embedded for Point of Service (continuing an industry buzzword move to change POS from referring to Point of Sale to Point of Service)?is supposed to ship in the first half of next year through Windows Embedded partners.

One key reason Microsoft cited for the rollout was to help retailers more easily integrate various peripherals, including scanners, receipt printers, cash drawers and magnetic stripe readers, said John Starkweather, a product manager in Microsoft’s mobile and embedded devices division. He said retailers have been asking for such plug-and-play capabilities during retail meetings with the Redmond, Wash., company.

The new product pledges support for UPOS (Unified Point of Service), compatibility with Win32-based applications and support for the Microsoft .Net Framework. It also promises stronger default security settings and tools.

But a potentially even more powerful reason for the move, Starkweather said, is to prepare for a future that includes quite a few tech retail technologies?including RFID, self-checkout, biometric authentication, new payment systems and various wireless functionality?that older systems are simply not prepared to handle.

The new product “is being built with RFID in mind. And wireless technology is native in the product. Maybe I want to move this kiosk across the store without calling an electrician?” Starkweather asked. “How will retailers make the platform choices today that will meet the needs of tomorrow?”

That question resonated with Mike Prince, the CIO for multibillion-dollar Burlington Coat Factory, which has more than 300 stores in 42 states in the United States. Burlington Coat made the move a couple of years ago to Linux, and part of the reasoning was making the business more technologically future-proof.

“You don’t upgrade your point-of-sale systems because you want to,” said Prince, potentially the most senior of any retail CIO, having held the CIO job at Burlington for 25 years. “We milked an 18-to-20-year-old POS system to death.”

Prince said the embedded OS move made sense for Microsoft, and it was a good thing for retailers, in the sense that it gives them another viable alternative. But the reason it gives retailers a viable alternative, Prince said, is that today’s Microsoft OS is a truly unattractive option for retailers.

“It certainly makes sense to not put Windows, with all of its overkill and its susceptibility to viruses and the like, [in as a POS OS],” Prince said. “One of the concerns is the [large] footprint of Windows XP. This levels the playing field between Linux and Windows.”

Prince cautioned that he’d want to see the per-seat pricing before concluding whether it truly makes sense for retailers. Microsoft has not announced pricing for the Embedded for POS and won’t until shortly before it ships, Starkweather said.

Microsoft’s timing is good, as retailers are now going to have to migrate or upgrade their POS systems very soon. “In this day and age, there is so much happening on the regulatory front and the like that your POS system can’t stay static. There are simply too many opportunities out there such as electronic checks, RFID, new Visa regulations,” Prince said. “There is just so much pressure on evolving point of sale and, with the limitation of older platforms, there are plenty of reasons why people are going to want to move.”

That said, Prince doubts that this new Microsoft will prompt many large retailers to change. “I doubt that for many people this will be a tipping point. The operating system is not the tail that wags the dog. You [change POS systems] because of limitations in your current environment.”

As for Microsoft’s peripheral plug-and-play claim, Prince said he hasn’t seen that as an issue recently due to standardization and other initiatives. “The bigger issue for us were the older legacy devices that nobody was supporting anymore.”

Microsoft’s Starkweather sees quite a few retailers making the move soon. He cited figures that would have as many as 75 percent of retailers preparing to replace their POS within 18 months to two years.

Starkweather pointed to lack of standards and the difficulty of systems management within POS today as critical issues for retailers looking to move on. Windows Embedded for Point Of Service is “a fixed operating system that is easy to set up and manage. It includes just those components that make the most sense” for retailers, he said.

Microsoft said that it is working with more than 30 retail device makers and application vendors, including Fujitsu Transaction Solutions Inc., Micros Systems Inc. , Wincor-Nixdorf Inc., Altiris Inc., CRS Retail Systems Inc., InfoGenesis, NSB Group, Retalix and xpient Solutions; retail peripheral companies APG Cash Drawer Inc., Ingenico, Seiko Epson Corp., Sorimachi-Giken Co. Ltd., Memory Technology Corp., Tatung Co. and Ultimate Technology Corp.; and systems integrator BSquare Corp.


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