Linux Goes Ka-Ching

Open-source OS pares the cost of POS systems.

Linux is making cash registers ring, and not just for Red Hat Inc., SuSE Linux AG and other distributors of the open-source operating system.

Retailers of all sizes are investigating the use of Linux on POS, or point-of-sale, systems to provide some flexibility in their software deployments and lower operating costs by avoiding licensing fees. Cost savings is crucial in the world of retail, where life is lived on razor-thin margins.

When it came time to decide whether to run POS PCs on Windows or Linux, retailer Batteries Plus LLC pulled the plug on Microsoft Corp.

"We were on [Windows] for a couple of months, and it comes down, really, to performance," said Michael Lehman, vice president of technology at the Hartland, Wis., company.

More than a year ago, Batteries Plus migrated from a traditional store-based POS system that ran under Windows to a WAN-based system that used Synchronics Inc.s CounterPoint software, which provides POS and other retail business management capabilities. The system initially ran on Windows with Citrix Systems Inc.s MetaFrame but after a few months, it became clear that the CounterPoint implementation had problems. Connections were dropped consistently, Lehman said—not a good thing when customers are waiting in line to buy batteries.

The company already had two identical servers with the same hard drive and memory configurations. One ran Windows, the other ran Red Hat Linux. Exporting data from the Windows system took hours, whereas importing the same data into Linux took "a matter of minutes," Lehman said. Likewise, reports that took 7 to 10 minutes to run on Windows took 40 seconds on Linux.

Given Batteries Plus previous experience with Linux, its attractive price and better performance, the choice of Linux for the front end was easy, Lehman said. The company now uses simply configured PCs running Red Hat Linux Advanced Server in its stores. The PCs are connected to keyboards with built-in swiping systems for credit cards. They hook to virtual private network connections through frame relay, digital subscriber line or cable modems to a central server, where the Batteries Plus central database resides.

Batteries Plus is hardly alone. Hannaford Bros. Co. earlier this year became the first major grocery chain to begin deploying Linux POS systems. The Scarborough, Maine, company plans to finish installing Wincor Nixdorf Inc. hardware and Retalix Ltd. software running Red Hat Linux at its 119 stores next year.

Andee Pure, general sales manager at Synchronics, in Memphis, Tenn., said about 20 percent of the retail software vendors customers are using Linux on the front end and that "most of the big ones"—retail chains with 100 or more stores—are now using Linux.

Software vendors hear the ka-ching of those cash registers. Thats why Pervasive Software Inc. late last month released a Linux remote access component to its Pervasive.SQL 8 database, allowing it to remotely manage and maintain PCs running Linux, including POS systems.

Separately, Minneapolis-based POS software developer Retek Inc. last month said it is porting its namesake applications to Linux to make the systems cheaper to operate, more flexible and simpler, officials said.

Sales of Linux servers to retailers will grow at a compound annual growth rate of more than 31 percent between 2002 and 2007, according to International Data Corp., of Framingham, Mass.

Despite this momentum, several things are blocking Linux from wider deployment, according to Greg Buzek, president of IHL Consulting Group, a retail research company in Franklin, Tenn. First, although Linux is free, "it takes a sizable IT department to customize it and put it together," Buzek said. "It takes a more demanding internal requirement to write the Linux applications and take ownership of it and support it. Its not like having a third-party, Microsoft-like partner who takes ownership of the application." Another reason retailers arent moving more aggressively toward Linux is that Microsoft is tweaking pricing. "Not to say there arent people who are through with Microsoft," Buzek noted.

Finally, Buzek said, there are many retail situations where older, proprietary systems or AS/400s are getting upgraded. Such installations often deal with transactions that are more complex than a simple Price Lookup, and as such, customers prefer Windows functionality over Linux.

Indeed, Microsoft, of Redmond, Wash., still claims many retailers as customers of its Windows XP Embedded operating system. Last month, for instance, it announced that electronics vendor Circuit City Stores Inc. will deploy POS systems using Microsoft software at 600 stores. In addition, some analysts said that Microsofts move last month to license The SCO Groups Unix patents was motivated in part by the desire to persuade the installed base of SCO Unix users with POS systems to migrate to Windows instead of Linux.