Microsoft Has Its Eye on Small Retailers

Pushing a complete POS bundle-including hardware-Microsoft is looking for retail growth in the fastest growing segment and to avoid entrenched OSes in the larger chains.

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In one corner of Microsoft Corp., the smaller the better is the order of the day for new customers. Microsofts latest retail push is focusing on the smallest of retailers, those with perhaps a single checkout lane and no more than nine stores.

Microsofts pitch is a fully bundled $3,000 package with software and just about all necessary hardware, either for brand-new retailers or for those contemplating major upgrades but wanting to avoid the piecemeal integration headaches.

/zimages/3/28571.gifMicrosoft details its Office release for small businesses. Click here to read more.

"The most important thing were doing is taking a lot of the cost and complexity out," said Brendan OMeara, Microsofts general manager of its Retail Management System. "The retailers will know that these pieces are all going to work together."

OMeara also argues that the $3,000 integrated price is attractive. At the typical volumes a small retailer can justify, "a single register install can be $4,500 to $6,500," he said.

The software included—Microsoft Business Solutions Retail Management System 1.2—can automate inventory management, accelerate card transactions, create productivity reports and track customer purchase trends.

Hardware included is a POS computer, 15-inch LCD monitor, keyboard, receipt printer, cash drawer, bar-code scanner, magnetic stripe reader, mouse plus various cables and accessories.

/zimages/3/28571.gifMicrosofts new POS approach may make it a viable retail player. To read more, click here.

From the perspective of the worlds largest software company, the strategy makes sense for three reasons.

  • Its positioned for the fastest-growing segment of retail, with the most profit because of small retailers inability to purchase in volume. Retail is the largest category within all small businesses, and single-store retailers account for the overwhelming majority (98.8 percent) of all retailers, according to Microsoft.
  • It sidesteps the more difficult sales to the huge chains, with 15-year-old to 20-year-old installed base OSes that are costly to upgrade given the equipment that will need to migrate. (Someone else at Microsoft gets to worry about those.)
  • By making it relatively easy for the small retailers to migrate to an all-Microsoft environment, the Redmond, Wash., company is hoping it will lock in many sales for many years, especially as some of those small retailers grow into big retailers.

Microsoft is eyeing fast-growing businesses with the most anticipation because thats where the growth strategy lies. The larger a retailer gets, the more difficult it is for a new vendor to get inside because of support and compatibility issues.

Next Page: Outgrowing the system.