What’s New With POS? by Ed Tittel

The Point-Of-Sale Market Continues To Evolve
One of the biggest and most pervasive uses of computers in business occurs in all kinds of retail outlets, where POS (point-of-sale) terminals, computers, and peripheral devices make the customer checkout experience possible. From scanning the merchandise to totaling the bill, these hardy machines perform many tasks, including figuring taxes due, updating inventory information, scanning credit or debit cards, handling signatures, printing receipts, and more.

Estimates of market size for POS systems in North America last year vary from $12 billion to $18 billion, with over 6% growth expected this year, according to Lakewest and IHL Consulting Group.

What’s New?

Specialized support for lots of peripherals is one important element in the POS marketplace. What’s new is a shift from older RS-232, RS-485, and Centronix parallel interfaces toward more modern USB-based interfaces. It’s not atypical for a modern POS PC unit to include anywhere from five to seven PS/2, serial, and parallel ports, along with a like number of USB ports.

In fact, most POS system vendors endow their peripheral ports with sufficient DC power to run the devices that attach to them, as well as using them to shuttle data between the PC and the peripherals themselves. That’s why you’ll find USB and other ports rated at 12V or even 24V DC on so many devices, rather than the more typical 5V. As an increasing number of devices are needed on POS systems, POS system vendors are scrambling to provide them to their customers in ever larger counts.

Larger, higher-resolution color displays are also becoming more typical. From applications where underlying graphics can drive more complex and capable touchscreens to applications where more and better ways to display transaction information, subtotals, counts, and other purchase data makes operators more productive, more screen real estate means better, faster, more capable service.

Then, too, payment and identity management devices are popping up on POS systems. It’s not unusual to see one or more keypad devices with MSRs (magnetic strip readers) attached to POS systems. In many newer systems, these devices will include signature scanners as well as keypads and MSRs to make it easy for customers to interact with the POS system directly themselves. Some systems are beginning to incorporate support for the same kind of small fingerprint scanners found on newer notebook PCs to provide more positive proof of a person’s identity.

“We’re seeing lots of interest in different payment options above and beyond standard MSR hardware,” says Cathy Boss-Fessel, marketing programs director with Fujitsu Transaction Solutions. “These include Speedpass-type applications that use RFID chips on a key fob to speed purchase completion and improve customer service.”

Brad Tracy, NCR director of industry marketing, says, “Self-service is moving further and further into the mainstream, where applications for its use are endless. ATMs, pay-at-the-pump gasoline purchases, price check kiosks, and self-checkout stations are just the tip of what promises to become a major component of POS system deployment and use.”

Another set of new options for POS systems revolves around the OS in use. Microsoft owns a substantial portion of this marketplace, and most of the major POS system vendors typically support WinXP Pro, Windows CE, and even WEPOS (Windows Embedded for Point of Service), a special stripped-down version of WinXP Pro specifically engineered for POS or service systems and kiosks.

Likewise, many of the major vendors—including industry leaders IBM, NCR, and Wincor Nixdorf—offer POS systems built around various Linux distributions. The versions of Windows combined represent the vast majority of systems, while Linux accounts for somewhere between 4% and 7% of systems sold last year. Other OSes, including MS DOS 6.2 and various proprietary operating systems, are also still widely used.

POS Marketplace Drivers

Leading POS system vendors such as IBM, NCR, Wincor Nixdorf, and Fujitsu Transaction Solutions, as well as up-and-coming POS players such as Dell and HP, are unanimous in their perception that they design modular, component-oriented systems to make it easy for them to meet a wide range of customer needs and requirements. Of course, they also understand it’s essential to make it easy for customers to deploy such systems once they’ve been purchased.

Alison Bullock of Dell says her company, like other players in the POS space, “builds systems that work well with the peripherals that customers need for retail and other specialty applications. We ask our customers what they want, and then we do our best to deliver it to them.”

Dayna Fried, an HP Retail spokesperson, says her company understands that “POS is all about providing a positive, fast, and trouble-free checkout experience for retail customers.” That’s why the company has focused on industry standard peripheral interfaces and makes sure to deliver DC power to devices through them, as well as to handle device communications.

Bigger POS system vendors, such as NCR and Wincor Nixdorf, speak to concerns more pressing for larger chains and megastores in some of their system capabilities, which include centralized system management. This permits servers in specific central locations to not only monitor and manage individual POS systems but also to push out updates and patches as needed and to set up comprehensive system security and access controls. Likewise, many of the bigger players’ offerings also include built-in UPSes to keep systems running enough to shut down gracefully and prevent loss of transaction data owing to power loss or ungraceful shutdowns. Both midsized and top-tier players clearly recognize the need for powered peripheral ports in their systems to eliminate the need to plug in an additional AC-to-DC converter for each of the half-dozen or more peripherals typical on a modern POS system.

Another positive aspect of the inherently modular nature of POS systems is support for both piecemeal and wholesale upgrades or swap-outs. Industry analyst Sunita Gupta of the Lakewest Group notes that many customers are dragging out the selection process to limit their capital investment needs and exposures in an economy where consumer confidence ebbs and flows with prices at the gas pumps and interest rates. Other customers are trying to stretch their dollars and their time frames by simply adding signature scanners to existing systems, thereby extending functionality without replacing them entirely. In the same vein, many retailers start out with pilot projects to establish proofs of concept before switching over to newer systems. And even when the new comes along to replace the old, savvy retailers will often run both systems in parallel for a while to make sure of a successful cutover.

More & Better Techniques

But when all is said and done, what’s really new about the POS market is that system and software builders keep finding more and better ways for retailers to get the data they need from customers to speed the checkout process and to increase overall sales. There is also a move toward more wireless POS systems for seasonal or promotional items or on shop floors where cases, counters, and displays can become more mobile. According to Lee Holman, a principal analyst at IHL Consulting Group, self-checkout systems—particularly from big players including NCR, Fujitsu, and IBM—continue to represent the biggest growth vector in the POS market as more and bigger retail operations climb aboard this bandwagon.

POS systems are proliferating into many kinds of businesses. Most shoppers will interact with them several times a week. As more functions and capabilities get integrated into them, POS system vendors will continue to add more ports and connectors to accommodate them and provide the power they need to run. The results should be a fast and comfortable shopping experience for the customers who benefit from them and a better sense of who's buying what for the retailers who use them.