Microsoft's retail POS OS gets update, gains ground

Point-of-sale-flavored Windows on the march for market share

Microsoft Corp. on Thursday announced an update to its two-year-old version of Windows intended for use on store cash registers and other point-of-sale (POS) devices.

Windows Embedded for Point of Service (WEPOS) 1.1 Update has three main new features, according to David Feldman, senior product manager for Windows Embedded: support for Serial ATA hard drives; support for 33 languages, including Chinese, Russian and Thai; and, via POS for .Net 1.11, plug-and-play support for new types of devices commonly plugged into POS terminals. Such devices include biometric readers, electronic journals, bill acceptors and image scanners.

First released in May 2005, WEPOS is based on Microsoft’s Windows XP Embedded operating system, one of the plethora of Windows operating systems used by retailers.  

Even before WEPOS’ launch, Microsoft dominated the retail POS market. Last year, a Microsoft operating system ran on 75% of the 6.2 million POS devices in North America, according to Franklin, Tenn.-based IHL Consulting Group Inc. WEPOS, the newest Microsoft offering, has increased its share over the past two years, doubling its hold on the North American retail POS market to 7%.

WEPOS's greatest success is in fast-growing retail segments, as well as those that tend to replace their POS terminals more often. For instance, WEPOS shipped on 13% of PC-enabled gas pumps sold last year.

Among category-killer stores such as Best Buy Inc., WEPOS held 10% of the market. Large users of WEPOS, according to IHL, include Hollywood Video (15,000 terminals), Brown Shoe Co. (2,600) and Best Buy (2,000).

Ease of use vs. cost of deployment?

Some retailers say that WEPOS is easier to maintain than XP Embedded. But by charging $100 per device for WEPOS, has Microsoft hurt its adoption? IHL thinks so, writing in its annual market report that "WEPOS acceptance would have been greater, but XP Embedded is priced at $10 less per POS, causing many retailers to embrace XP Embedded instead."

As a result, WEPOS has an installed base of just 2%. Meanwhile, DOS holds 10%, while Windows XP Embedded has an 8% share, according to IHL.

One reason for slow WEPOS adoption is inertia as a result of the high labor cost of replacing POS terminals in stores. "Retailers tend to buy a platform for 15 years," said Feldman. POS terminals "will be collecting dust but still running."

But Feldman also notes that shipments of POS terminals using DOS or Windows NT, another operating system with a larger installed base than WEPOS, are declining.

Microsoft hopes that WEPOS will be more than merely the preferred upgrade from existing Windows POS devices. It sees in WEPOS the opportunity to win over users looking to upgrade from IBM’s proprietary, DOS-like 4690 terminals. IBM is pushing many of those customers to Linux, which helped the open-source operating system earn 9% of the 2006 market, according to IHL.

But IHL also sees Linux having most of its success on thin-client POS systems, where most of the applications still reside on servers. "Among traditional PC-based POS, Linux is at least on the radar screen in this segment, but it is dwarfed by the Microsoft operating systems," the company wrote.

Copyright © 2007 IDG Communications, Inc.

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