IBM said Tuesday that it will start installing a rapidly growing retail version of Windows in its computerized point-of-sale (POS) terminals and other devices it markets for use in retail stores and restaurants.
The decision reverses IBM's earlier anointment of open-source Linux as the sole heir apparent to the proprietary IBM 4690 operating system, which runs in various models within the company's market-leading SurePOS terminal line.
IBM now plans to offer Microsoft's Windows Embedded for Point-of-Service (WEPOS) software in all of the SurePOS machines, as well as its self-service checkout systems and an interactive AnyPlace Kiosk product line that was introduced last year.
WEPOS, which is aimed at smaller retail stores, is a three-year-old operating system that was updated by Microsoft last April. The number of WEPOS users grew 250% last year, according to a report released last week by IHL Services, a market research firm that focuses on retail technology.
IBM's embrace "is a big deal for WEPOS," said IHL President Greg Buzek, who noted that the company is the "undisputed" leader in sales of POS terminals.
IBM has long claimed to be OS-agnostic in the POS market, where it supports a variety of software platforms, including DOS and various versions of Windows. But Buzek said IBM clearly has been leaning toward two operating systems: its own 4690 software and a retail version of Novell Inc.'s SUSE Linux.
Despite their antiquated, DOS-like user interfaces, 4690-based terminals still bring in about US$1 billion worth of annual revenue in North America, according to IHL, although most of that is in the form of maintenance fees.
IBM strongly pushed users of the proprietary terminals to switch to systems running SUSE Linux, which it began offering in 2004. But after an initial surge in the overall use of Linux-based POS systems within the retail market, their sales growth quickly slowed due to a combination of Microsoft's introduction of WEPOS and the natural inertia of users that already had invested heavily in Windows-based devices.
Last year, Linux-based POS devices generated about US$475 million worth of revenue in North America via device shipments and maintenance fees, according to IHL. But that was just one-eighth of the US$3.8 billion pulled in by Windows-based retail terminals, the firm said. That gave the various versions of Windows a 68% share of the overall POS market, which IHL put at US$5.56 billion.
Buzek said Windows is winning in POS because of a familiar theme: the large number of applications from third-party software developers that run on the different permutations of the Microsoft operating system.
Moreover, Microsoft's update of WEPOS last spring improved features such as the software's plug-and-play support for POS peripherals, which makes that product especially attractive to smaller, mom-and-pop stores. Such businesses still comprise about half of the POS market, Buzek estimated.
As a rival to Microsoft in many other parts of the IT market, IBM had held out for Linux vs. WEPOS as long as it could. But the deal to support the Microsoft operating system should cement Linux's fate as a niche offering that is attractive mostly to grocery store chains and similarly sized US-based hard goods retailers, such as Pep Boys or Circuit City, Buzek said.
"It's like with blood types," he added. "Windows is like a universal type. But not everyone matches well with Linux." He predicted that Windows and Linux will eventually divvy up the POS market in a roughly 75:25 ratio.