Microsoft Eyes Small Retailers, Unveils POS Software

By Dan Muse | Posted May 18, 2005

If you run a retail shop, the competition is all around you. You have the superstore chains on one side and other local small businesses on the other. Competitive advantages don't come easily, but Microsoft, a company that knows a thing or two about competitive advantages, says PC-based point of sale (POS) systems can provide the edge small retailers need.

While the company has long offered its Retail Management System for mid-market retailers, today the software giant announced the release of Microsoft Point of Sale, which according to Mike Dickstein, director of Microsoft Business Solutions Point of Sale Solutions, is aimed single-store businesses.


Microsoft Point of Sale
Microsoft Point of Sale
(Click for full-size image)

Microsoft Point of Sale is designed to track and manage sales, inventory and customer information. According to Dickstein, retailers can use Microsoft Point of Sale out of the box with their existing PC and peripherals or they can purchase hardware and software bundles from Microsoft technology partners to build a complete POS system.

While aimed squarely at QuickBooks Point of Sale (see Retailer Rings Up Sales With QuickBooks), Microsoft is taking a different approach than its rival when it comes to how it expects small businesses to put together a POS system.

Intuit taps hardware vendors to make the scanners and printers that it sells with QuickBooks Point of Sales, but it offers small retailers the option of buying a complete system in a box. Intuit provides support for all the hardware. However, Dickstein said, Microsoft will sell the POS software only and rely on its partners to sell the credit-card and bar-code scanners, receipt printers and so on to complete the system. Microsoft will also rely on its partners to pre-bundle vertical solutions for segments such as, for example, beer and wine stores or apparel stores, Dickstein said.

No POS in a Box
The move to not offer a complete system ready to run out-of-the-box is a little surprising, said Joe Wilcox, senior analyst with JupiterResearch. (JupiterResearch has the same parent company as this site). "Office supply stores are a big option for businesses with five employees and below," he said.

What's not surprising to Wilcox is that Microsoft is relying on developers and partners to add value. "Microsoft's first customer is not necessarily the buyer," he said. "Personally, I think Microsoft builds more complexity than it needs to into its products and allows third-party developers to put it together. The customer experience is more complex than it needs to be."

While Microsoft covets the small business accounting market, it also recognizes that the market currently belongs to Intuit, so its POS product integrates with QuickBooks, which Dickstein said technically is not that complex to do. Of course, Microsoft is also eager to integrate its new POS software with its Small Business Accounting Software, which is scheduled to ship in September.

"It absolutely fits with the Small Business Accounting product strategy. Microsoft is trying to leverage its presence on the desktop. It's a familiar environment and they want to take that familiarity to the retail product." And while Microsoft Point of Sale will work QuickBooks, "the integration with Office is better than it is with QuickBooks," Wilcox said.

Microsoft Fights for Accountants
With QuickBooks currently in control of the small business accounting market and certainly out in front in the small retail store POS race, is there any reason to think that Microsoft can catch up to Intuit?

It's definitely laying the foundation to make its run. In another move to prepare for the small business accounting product launch, Microsoft on Monday announced the Microsoft Professional Accountants' Network, designed specifically to gain mindshare among accounting professionals.

"We recognize the value of CPAs as trusted advisors and will offer deep training and support," said Cindy Bates, general manager of the U.S. Small Business Group at Microsoft. Bates said Microsoft estimates that there are about 250,000 accounting professionals in the U.S.

The network will provide training, technical support and professional networking opportunities. While not an exact replica of Intuit's Quickbooks for accountants program, it's similar in its attempt to influence small-business influencers.

As part of the program, Microsoft will make available for accounting professionals a special prerelease version of Microsoft Office Small Business Accounting 2006. Accountants will have access to software and support as well as direct access when they call Microsoft Support for assistance with Office Small Business Accounting 2006.

Microsoft said it will provide 24 hours of Continuing Professional Education (CPE) credits and three hours of online lab training on Office Small Business Accounting 2006. It will provide accountants with a Web portal to provide product information, newsletters, information on customer referrals and marketing tools, templates and an online directory listing.

While the service is free, for $300 per year, Bates said, accountants can get 10 licensed versions of Microsoft Office Small Business Accounting 2006, 10 licensed versions of Microsoft Office Small Business Management Edition 2006 and Small Business Server 2003.

Microsoft in for the Longhaul
As new SMBs enter the market, selling them accounting software appears to be shaping up as a two-horse race between Intuit and Microsoft. "There's lots of turnover among SMBs and lots of opportunities," Wilcox said.

"You have to think of Microsoft as a chess player. Its looking 10-to-12 moves head," Wilcox said. "It has benefit of being able to look five years into the future. When you have Windows and Office, you can afford to be patient."

And while QuickBooks and QuickBooks Point of Sale dominate the market today, Microsoft has been in this position before, Wilcox said. "Microsoft has historically taken advantage of the strategic errors of other companies and then crushed them. There's a long line of casualities — Netware, WordPerfect (the first time around), Lotus 1-2-3," he said. "Intuit had better watch its back."

Dan Muse is executive editor of internet.com's Small Business Channel, EarthWeb's Networking & Communications Channel and ServerWatch.

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