VB Star and Barclays Spain’s Manuel Romero discuss the impact and the challenges of the evolution of the ‘Bring Your Own Device’ trend in banking: ‘Bring Your Own POS’.
Last April IBM announced that Toshiba TEC is acquiring IBM’s Retail Store Solution Business, which offers retail point-of-sale solutions worldwide. The purchase price: US$850M. The announcement is a significant move in the retail POS industry and made me think that something must be happening in this industry. It could be another step by IBM to shift away from a hardware company to an enterprise software company. But with a long history of foresight, IBM could be anticipating that retail checkout machines will face long-term secular challenges from mobile payment and checkout trends.
BYOD (Bring Your Own Device)
The consumerization of IT, led by Apple, has brought a movement in which employees bring personally-owned mobile devices to their place of work, and use them to access privileged company resources such as email, file servers, and databases. Consumer products (tablets, smartphones and laptops) infiltrate the corporate market – and strong consumer brands like Apple win. According to a Barclays CIO survey conducted in April 2012, 93% of respondents indicated that their firm was interested in or is already supporting the use of tablets (40% of respondents indicated that tablets are already in use with 36% trialing/testing tablets). And as the company Good Technology indicates, mobile workers employed by their enterprise customers show a clear preference for Apple products. So Apple is also shifting the IT culture in many companies.
Bring Your Own POS
But what about if IBM is discounting the same BYOD trend in the POS industry and, once again, Apple disrupting a new industry? What about if IBM is discounting a great success of Square and the rest of competitors that followed it that would impact in the long term in the profitability if its Retail Store Solution business?
You probably know how Square was devised. A friend of Twitter co-founder Jack Dorsey explained to him how he couldn’t complete a $2,000 sale because he could not accept credit cards. This was in 2009 and one year later they both launched a card reader device which plugs into the audio jack of an iPhone, iPod Touch, iPad and Android based mobile plus a Square card reader app. No need for a POS, just a smartphone and a card reader.
Others have followed and with different solutions, but generally we find two different business models:
– based in transactions: Square, Paypal Here, Sail, iZettle, Intuit GoPayment, ProPay
– based in licensed software: Pay with Square, GlobalBay, BreadcrumPOS, Starmount, Erply
with some companies trying to succeed in both.
IHL Group also confirms this trend: by 2016, over 3.6 million tablets will have been shipped for use in North American Retail/Hospitality, and will have a dramatic impact on traditional POS shipments over time, reducing overall POS shipments by 13% in 2016 and in some segments as much as 20%.
And Motorola Solutions found in a survey conducted between December 2011 and February2012 inNorth America,United Kingdom,FranceandGermanythat sixty-six percent of retail respondents were interested in mPOS, while 42 percent of retail respondents were piloting or starting trials within the following 36 months.
For this to happen, retailers will ask theses new solutions for not only work as a traditional POS, but also to manage inventory, product information, loyalty programs, etc. Companies with a comprehensive solution set are likely positioned well to capture this opportunity. In fact, Intuit recently announced the integration of QuickBooks Point of Sale with GoPayment. According to Chris Hyle, VP and GM of Intuits Payment Solutions division, ´we´re liberating retailers from their cash registers so they can better serve their customers and ring up more sales both in store and on the go´.
Also, retailers will want new mobile solutions to be tightly integrated with their existing infrastructure, which may provide an advantage to payment industry incumbents. But IBM may think differently.