|[April 19, 2012]
IHL Group Reacts to IBM's Sale of POS Business to ToshibaTEC
FRANKLIN, Tenn. --(Business Wire)--
Earlier this week the retail POS industry had the most significant
announcement in the last 10 years, as ToshibaTEC announced the purchase
of IBM's (News - Alert) Retail Store Solutions (RSS) Business. Following is an analyst
commentary from Greg Buzek of retail research and advisory firm IHL
Group, which has tracked the retail POS industry for more than 20 years.
The fact that IBM RSS was for sale was one of the worst kept secrets in
the industry among analysts. But it was a bit surprising as to who
purchased the company. There are some great synergies here, some
potential holes, and some dramatic market disruption. The new company
will be a joint venture in which Toshiba (News - Alert) will own 80% and IBM 20% for
the next three years to aid transition.
Several years ago, RSS was a much larger group than the $1.15 billion
revenue that was reported in this week's press release; nearly
everything in retail that wasn't related to mainframes or core supply
chain fit under RSS. As IBM continued to move its strategies, both
corporately and in retail, to a services and software-led sales
approach, IBM added acquisitions in BI, Analytics, CRM, Supply Chain,
Optimization, and other technologies that expanded the retail business.
However, these split the new strategic parts into the software
organization. Increasingly, more and more of the influence of IBM in the
retail accounts and IBM internally shifted to these software and
services components and away from POS.
As HP and later Dell (News - Alert) entered the PC-based POS market, RSS continued to
get leaner asthe net selling price of POS systems decreased. Yet at the
same time, the overall pie of Retail PC-Based POS grew dramatically over
the last 10 years, thanks to lower costs, the move from ROM-based cash
registers in hospitality, and the rise of China, Mexico, Brazil and
India and other emerging economies.
POS Vendor Market Share Data Service, IBM and ToshibaTEC Worldwide
currently have 18.8% of the worldwide installed base of units and about
13.7% of the shipments. (Keep in mind, however, we count PCs and Macs
being used as cash registers as POS systems, while others may not. So if
they only count retail-hardened POS systems, these numbers would be
close to double. In addition this includes all hospitality segments like
hotels and cruises, casinos, stadiums, etc.) The challenge for IBM has
been that the growth has occurred mostly at the low end and in emerging
countries, even further challenging margins.
Add to this margin challenge the threat of mobile displacing POS. In our
recent Mobile POS Study (Mobile:
A Gutenberg Moment for Retail, a Threat to POS), we found that 72%
of U.S. specialty stores were planning to offer mobile POS in the next
12-18 months. Additionally, this same group said they would be
purchasing 20% fewer traditional POS terminals going forward. IBM
doesn't have a mobile story, while ToshibaTEC does.
for the rest of IHL's commentary, which focuses on the future of other
major players in the POS industry and the impact of IBM's announcement
on the retail industry.
About IHL Group
IHL Group is a global research and advisory firm headquartered in
Franklin, Tenn., that provides market analysis and business consulting
services for retailers and information technology companies that focus
on the retail/hospitality industry. For more information, visit www.ihlservices.com,
call 615-591-2955 or e-mail email@example.com.
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