Adoption of Linux for retail point-of-sale apps slows

The holiday shopping season is bringing tidings both comforting and not so comforting to Linux vendors that are looking to break into the Windows-dominated market for point-of-sale terminals used in retail stores.

Linux's share of the US retail POS market is nearing 10 percent, according to Greg Buzek, president of IHL Consulting Group. But he said the rate of the open-source operating system's gains is slowing, largely because of Microsoft's introduction in May of a scaled-down version of Windows that is tailored for retailers and has a cut-rate price.

But other analysts and some IT managers said that Linux is hitting a natural plateau. After attracting some early adopters, it now has to win over retailers that have invested heavily in Windows technology and Microsoft training for their IT staffers. Those companies may need strong reasons to make a complicated and potentially expensive switch to a different system.

"I always love those technology conversations where everyone assumes you have a 'green field' environment," said Robert Fort, IT director at Virgin Entertainment Group, which operates 17 Virgin Megastores in the U.S.

Los Angeles-based Virgin is upgrading about two-thirds of the 300 POS systems used in its stores from 5-year-old green-screen terminals running IBM 's 4690 operating system to Windows 2000 machines. The new systems will also run software called TransactionWare GM from Triversity, a Toronto-based vendor that SAP acquired this year.

"We run Windows Server 2003 and Windows XP on the desktop, so my administrators are very familiar with the Microsoft kernel," Fort said. He did strongly consider 360Commerce's Java-based POS software running on Linux. But Fort said he ultimately decided that the slightly more expansive features offered by 360Commerce weren't worth the extra cost and hassle.

Virgin is running Microsoft's new Windows Embedded for Point of Service software on 206 in-store kiosks rolled out in October. Fort said that WEPOS costs 40 percent less than the older Windows XP Embedded technology and is easier to maintain. It also supports Internet access, multimedia applications and plug-and-play connectivity for handheld scanners and other devices used by POS systems, he said.

Market positioning

WEPOS will eclipse other flavors of Windows as Microsoft's primary POS offering and prevent Linux's market share from exceeding 15 percent "anytime soon," Buzek predicted. Just 71,000 of the POS terminals sold in the U.S. last year ran Linux, making up 6 percent of the market, he said. He added that Linux's share should increase to 8 percent or 9 percent this year.

IBM's deal earlier this year to use Novell's Linux Point of Service software in its flagship POS offering could boost the open-source technology's adoption rate by encouraging retailers to migrate from their 4690 systems, Buzek said, noting that 15 percent of the POS devices in use now are 4690s. But he expects Windows, which ran on 71 percent of the terminals sold last year, to maintain its share. "When push comes to shove, Microsoft still wins most battles," Buzek said.

Mike Prince, CIO at Burlington Coat Factory Warehouse, has been running Linux on the 362-store clothing chain's retail systems since 2000. Burlington Coat now has 5,000 Wincor Nixdorf POS systems and 2,000 Dell servers on Red Hat Linux in its stores -- all maintained by a four-person team at its IT facility in New Hampshire.

In addition to the store systems, the company has 45 servers running Novell's SUSE Linux operating system and Oracle's 10g database in its central data center. Prince said he chose Linux for its stability, ease of remote administration and similarity to Unix. "There's never been a virus in a store computer," he said. "I never have to worry about things like that."

But Gordon Haff, an analyst at Illuminata, said Windows' lingering reputation for insecurity and instability is without merit. He also noted that many retailers look at the availability of POS applications and equipment, where Windows still has an advantage over Linux, more than they consider the merits of the operating system itself. "The operating system is a small piece," Haff said.

Ritz Camera Centers is a case in point -- but on the Linux side of the ledger. In August, the 1,200-store chain announced plans to upgrade its 4,000 Unix POS terminals to SUSE Linux. Bob O'Hern, Ritz Camera's senior vice president of information systems, said this month that the retailer is moving to Linux partly because it wanted to run a Java application called Xstore from Datavantage.

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