IBM Sells Point-Of-Sale Business To Toshiba 120
ErichTheRed writes "Yet another move by IBM out of end-user hardware, Toshiba will be buying IBM's retail point-of-sale systems business for $850M. Is it really a good idea for a company defined by good (and in this case, high-margin) hardware to sell it off in favor of nebulous consulting stuff? 'Like IBM's spin-offs of its PC, high-end printer, and disk drive manufacturing businesses to Lenovo, Ricoh, and Hitachi respectively in the past decade, IBM is not just selling off the RSS division but creating a holding company where it will have a stake initially but which it will eventually sell.' Is there really no money in hardware anymore? "
Who knew (Score:3, Funny)
Re:Who knew (Score:5, Informative)
Re:Who knew (Score:5, Insightful)
Because of smartphones and tablets. Or, more specifically, the miniaturization and commercialization of the components. It is the same reason you are seeing things like the Ecobee thermostat. The price of POS equipment is really high, but super-cheap commodity tablets could be used to replace almost all of that. You still need the cash drawer and some other accessories, but IBM has wisely seen that POS is being threatened by software replacements on tablets.
As an example, there is a hot dog stand that I go eat at once or twice a week and the guy takes credit cards via his iPhone and a Square CC reader. He has no POS gear. That's today. In ten years, those POS equipment vendors could be very disrupted by newcomers to that industry.
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and that hot dog stand doesn't even go to a cash register place, he goes and buys a register at Staples.... then takes it into a cash register place when it breaks and they tell him they don't work on those cheap store bought models and, even if they did, the labor charges would almost be the cost of a new one.... minimum.
I worked on a project involving some store upgrades in the late 90s. Just as you said... they seldom upgrade whole systems, they were running IBM servers from the 1980s in 1997, and the pl
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Canada has mostly converted, accept most of the US chains that are also up here.... Starbucks still doesn't have chip and pin, and Walmart took a long time to update.. So my general assumption as you point out is that they haven't done it in the US.
Biggest change I have seen in Canada is that many business now have the portable cart processing units... Everything from restaurants to hairdressers.
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I don't think you fully appreciate the POS system.
Actually i think IBM is smart here. They were an early pioneer and got in while the getting was good. They serviced few (compared to the number of businesses doing retail sales) but very big customers.
In any case, these card reader things are not so much part of the POS system. They connect to it, but the credit card payment infrastructure is a beast all its own. The payment processors often work similar to cell phones with the "you buy the approved equipmen
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Speaking from experience
While there _are_ some legacy cobol code that are still being used in big irons, but a lot of code already been rewritten
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Because of smartphones and tablets. Or, more specifically, the miniaturization and commercialization of the components. It is the same reason you are seeing things like the Ecobee thermostat. The price of POS equipment is really high, but super-cheap commodity tablets could be used to replace almost all of that. You still need the cash drawer and some other accessories, but IBM has wisely seen that POS is being threatened by software replacements on tablets.
Cash drawer, receipt printer, pinpad, barcode scanner, we also used fingerprint readers for time and attendance and label printers for reprinting labels. Tablets aren't there yet but desktops are. We could buy commodity PC hardware for almost half the price of an IBM or HP POS kit.
As an example, there is a hot dog stand that I go eat at once or twice a week and the guy takes credit cards via his iPhone and a Square CC reader. He has no POS gear. That's today. In ten years, those POS equipment vendors could be very disrupted by newcomers to that industry.
Yeah but hotdog guy doesn't have real time sales reporting and replenishment, nor time and attendance, timesheets and staff management or collaboration or stocktaking, transfer, or any of the other myriad or features required by a
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actually its not much more "stuff" that would be needed to do that and none of it is exactly POS software
all you really need is a decent backend server (to coordinate everything) and a few Cobra Scanners for each terminal and you are set.
the only bits left that are POS bits would be the cash drawer and maybe the "customer screen"
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Why? I see their hardware in checkout lanes everywhere. I assumed others have noticed too.
Yes, but you don't see them as much in restaurants, I see more Micros stuff there... or even grocery stores. Empirically, just from personal recollection, they seem to be popular in all the brick and mortar types of chains that seem to be struggling themselves. Hmm.
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A Kroger near me featured extensive IBM hardware until recently. They just did a semi-refresh of the store and tossed all the IBM hardware. They have another brand now. It's flashier and newer and quieter.
I miss the distinctive IBM printer noises. That clattering is unmistakable. The sound of commerce.
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Their servers and DS equipment ?
Re:Who knew (Score:5, Funny)
I'm sure some Slashdotters, particularly those of overly-zealous Apple or Microsoft bend, thought all IBM divisions were POS divisions...
Re:Who knew (Score:4, Funny)
Yeah, a ghost that just today announced first quarter profits of $3B on revenue of $25B.
Let me guess, the IT circles you move in consists of that really cool server with a glowing case you built in Mom's basement?
Re:Who knew (Score:4, Insightful)
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We have probably quad-9 uptime reliability with the IBM, while our Microsoft boxes constantly have downtime.
Lol
1. Microsoft don't makes 'boxes'
2. You 'probably' have quad 9 uptime? You either did or you didn't. 'Probably' is not acceptable. Neither is 'constantly' an officially metric for uptime.
This is typical nonsense we get from IBM types where I work.
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Indeed.
Costco (HQ Issaquah, WA) uses iSeries-I've seen the screen at the warehouses and they occasionally list iseries jobs. Most casino corporations use the system for their HR and Finance systems. Some use it for their Hotel and Casino systems.
Their real mainframe (System z) is in use in tiny places like the State of California's tax collection department, and last I heard, Citibank used them and upgraded at least their Las Vegas ones about 3 or so years ago.
Look around most LV casinos and restaurants y
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On occasion, someone takes this stuff at face value and installs Lotus Domino on the iSeries running their main assembly line. That's when the chuckles really begin.
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If you shop at stores you do. A lot of us used to work on their stuff too. Where do you think all of those OS/2 installs were at? For a long time that is what ran countless retail stores systems.
And those damned printers suck. Bad. Almost as bad as the ones on those fuji registers that had bubble memory for main storage.
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I doubt most /. readers even knew IBM had a POS division...
What about their hard drive division?
Thank you! Tip your waitress, try the veal!
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So much for quality. (Score:4, Insightful)
As it has done with Lenovo and the other manufacturers, the quality will decline.
Re:So much for quality. (Score:4, Informative)
As it has done with Lenovo and the other manufacturers, the quality will decline.
Lenovo still has a pretty good rep. Anyway, nothing beats the quality of those old IBM card punches.
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As it has done with Lenovo and the other manufacturers, the quality will decline.
Lenovo still has a pretty good rep. Anyway, nothing beats th,e quality of those old IBM card punches.
Agree, While not as legendary as the X60/X61, the X201 and X220 are miles ahead of their competitors in term of performance and durability
Re:So much for quality. (Score:5, Interesting)
Because of disruptive tablet and other mobile technologies in this market, the quality will decline regardless of the manufacturer. IBM has rightfully recognized this and is selling off before that decline can hurt the IBM brand. Look at HP for a comparison of inevitable dropping quality on commoditized (race to the bottom) hardware hurting the parent brand.
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The writing was on the wall years ago.
I used to work for IBM, on a very large project to supply POS equipment (and develop software) for a very large customer in the United States. This customer had very specific requirements, so much so that the customizations on the software ended up being more lines of code than the base retail point of sale software product (the base product was designed to be customizable).
To keep the costs in line with something the customer would pay, we actually - as IBM - ended up
Re:So much for quality. (Score:5, Insightful)
isn't that why they're selling? The premium for IBM quality isn't justified or isn't sufficiently profitable anymore, and IBM wants the IBM brand to remain premium. So you sell off any non premium divisions to other people.
From the perspective of IBM no one should ever be fired for buying an IBM. That may mean you have an 80% markup on some things to make sure it's going to work and you can support it if it doesn't. But it damn well better work. If you can't justify that price or can't make it work sell the business and move on to something else.
Can't make heads nor tails (Score:2)
I can't make heads nor tails of these big purchases any more. Valuing things like this looked easy in college. Maybe I am getting ancient.
Good (Score:1)
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I agree that it's a good move. The stock market also seems to approve as IBM's stock is up about 240% since the sale of their PC business in 2004. Building hardware is a low-skill business relative to *designing* hardware -- or software. IBM doesn't make a lot of money off an assembly line worker building commodity hardware for low-tech applications. They do make a fortune marking up a highly educated, highly skilled knowledge worker designing novel network or supercomputer topologies built on commodity
Ex-IBM Employee (Score:1)
As an ex-ibm employee I should hope they trip, fall, and die... but I own to much stock in the company... so party on.
Of course there's money in hardware (Score:5, Insightful)
This is why they have a buyer.
But their consultants will look more honest when they go out shilling Toshibas POS systems, and they still have their slice of the pie. They wont be baking it, just slicing and serving.
Re:Of course there's money in hardware (Score:4, Insightful)
IBM made mostly good stuff, though I still don't care for their Lexmark printers nowadays. Otherwise, they could do well if they're shilling whatever hardware they need to push, not just their own.
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I'm not a fan of Lexmarks either, but having a printer fixer guy for the last many years, I think they are better designed than HP units of the same era. Lexmarks are more cheaply made (I've had brand new ones jam right out of the box because plastic casting "hunks" were left in the paper path), but HP printers are just monstrosities. Over engineered and under
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IBM also had a line of servers running InfoPrint as a front end for really big production printers that used rolls of paper, etc. And then there were giant cut-sheet printers too. But most of those were developed by Kodak and sold by Kodak and also with IBM, Canon, and Heidelberg branding. Same printer, three or four names. This was big stuff meant to compete with Xerox production printers.
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Mainland, not Taiwan (Score:2)
Lenovo was bought by a People's Republic of China (i.e. mainland) company, not a Republic of China (i.e. Taiwan) (Of course, it is kind of a moot point because both official claim that there is only 1 china, but...)
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Is it really a good idea (Score:2)
Is it really a good idea for a company defined by good (and in this case, high-margin) hardware to sell it off in favor of nebulous consulting stuff?
Oh yes indeed, if the margin on the service side of the business is larger than the hardware business it makes loads of sense. Put it this way: it's cheaper for IBM to buy Lenovo PCs for its engineers and consultants than to build them itself.
There is a lot of money in hardware (Score:5, Insightful)
We tend to talk about cheep labor, an expression which degrades labor in general when used so often. And so we end up with a lot of decision makers and wall-streeters who have no regard for physical things in general. Decisions will be made in favor of offices instead factories and money will flow to offices instead of factories.
As we can see in the example of China (owning a large part of the US) there must be money in hardware.
Germany, as an exception to the rule, seems to do quit well producing hardware but in general it is below our dignity to make our hands dirty producing something and this is the reason hardware returns little money in our culture.
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Noone in the US could live on $290 a month (Foxconn wages for iPad line person).
You are delusional to think that we would be better off making the hardware than using it. How many Chinese workers can afford an iPad or mid-range generic PC at 2 months pay? To continue the comparison it's as if a 40k/year US worker had to pay $6,800.
If we made iPads here that's likely how much they would cost retail. $6,800. Sounds great right?
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Noone in the US could live on $290 a month (Foxconn wages for iPad line person).
Sure they could, if (like the Foxconn workers) they lived in the company barracks, ate at the company mess hall, and wore company uniforms. 3 hots and a cot doesn't sound like much, but it's better than being homeless and starving.
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In my opinion there is a lot of money in hardware.
That is not the same as saying there is a lot of PROFIT in hardware.
Most mature hardware is a commodity item. In an ideal marketplace, the cost of a commodity approaches the cost of production. There is money to be made in a commodity market, but what profit there is generally comes from efficiencies of scale, cost reduction, etc. Competing in a commodity market is almost always a race to the bottom.
IBM has survived as long as it has because it knows when it's time to leave a market. They look forwar
Makes perfect sense since. (Score:4, Interesting)
Makes perfect sense because IBM has not been a consumer company for quite some time now. They are as much a "good high-margin hardware company" as Apple is a set-top-box manufacturer. Sure, they essentially brought the PC to market, but those Model-M keyboards /.ers love and the Thinkpad division they dropped years ago were already then tiny slices of their business.
There's no innovation left in POS. It's a solved problem. IBM makes their money as an extremely large scale systems innovator. That's what they're good at, and that's what they can market well. At this point, the only innovation happening in POS is wireless/mobility use, and there are countless tiny little startups cornering that market via iOS and Android apps.
Build cash registers is a commodity market and essentially a race to the bottom. IBM is smart for selling off this business segment while it still has value, and focusing on the big systems and big data that is their core business.
Would you rather that IBM operated on the MS model? They could buy everything under the sun and have incredible research, but then do a shitty job trying to manage and integrate across their product lines and business services. Or they could go the Xerox route and not put any of their cool research into anything usable.
No, as both a shareholder and a consumer who has respect for the brand, I'm glad they can focus on what works for them, and sell off divisions that are in stagnating industries that no longer benefit from the innovation focus they've had for the last 100 years. I don't see anyone here complaining that they sold off their typewriter division (thus forming Lexmark).
re: race to the bottom (Score:2)
Yeah.... A good friend of mine worked for a POS installation and support company for years, and he always said the real money was in the support, just like most situations with computer equipment.
With IBM's high markup for their POS hardware itself, I'm sure it was profitable to sell it ... but the vendors doing the installation and selling the maintenance contracts were doing far better than IBM. IBM only profits once, when the new equipment is sold, and after that, maybe an annual cut from vendors who p
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But 99% of the POS customers out there aren't mega-corps. You've got all the corner bars and hair salons and independent car repair garages where the only person who cares about the POS system is the owner, and he/she is typically not a "computer person".
Of course, that was never IBM's market. IBM couldn't figure out how to sell to Mom & Pops if they wanted to. IBM's definition of a "small business" is one with annual revenues of less than $4 billion.
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You can't predict the future. Integrated POS systems might even become more prevalent as stores shift to self-checkout and fire most of their staff (Looking at you, Home Depot). 40 years ago steam turbines were considered a mature technology for power generation. The Gas turbine looks like it is going to be a promising new cash cow. GE turns their R&D attention to the gas turbine and licenses their steam turbine technology to Toshiba for some sho
Services.. (Score:1)
Posting anonymous for obvious reasons.. but their Software Services are a joke. I've worked for and with IBM for several years. Their GBS (Global Business Services) department is a joke. I've seen multiple failures to deliver on time, and most often they go over budget or get canceled by the client. Somehow they still manage to survive. They also refuse to train these "experts" and charge the client $280/hr for someone to warm a seat.
In addition, their software is pretty bloated and over-architected. While
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What I want to know... (Score:4, Informative)
Is when Toshiba makes the purchase, will it be credit or debit?
Note that one of IBM's first products in 1911 was a commercial scale. Since supermarket POS systems usually include a scale for weighing produce, this ends a century of IBM selling weighing devices.
just like Pfizer- selling alll the cash cows (Score:3)
Final step, call it toasted and done.
Of course, the Senior Management make a profit at each step- clown shoes flapping all the way to the bank.
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Just like that, except for the part where IBM sells off all the low-margin, no-profit stuff like POS, printers, disks, PCs, and keeps the high-profit, cash cow stuff like mainframes, servers, software, and services.
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The time to sell a cash cow is when it's still giving milk. Selling your current cash cow, knowing that it won't go on giving milk forever, lets you invest that money in NEW cash cows that have a future. If you try and milk every last drop out of it, no one will want to buy it.
This is why IBM is still going strong after 100+ years and Kodak is bankrupt. If Kodak had sold off all their film assets to Ilford or Fuji a decade ago and invested it all in digital, they'd be at in great position now. Instea
Hardware is a dead-end (Score:5, Interesting)
There is no money in hardware. I found out the hard (stupid) way.
A hardware engineer with a PhD gets paid, entry, 100-110k on average.
A software engineer with MS get paid, entry, 100-100k on average.
A software engineer's work experience accrues without much 'expiration' date - this is more true as you move up higher in abstraction (so I'm not talking about firmware software driver guys, although they should be damn good at C/C++ which helps with getting into other things).
A software engineer can be an entrepreneur: see: Youtube founders out of Ebay, fresh-out-of-college grads. Software initial cost is almost 0.
A hardware engineer cannot be a real entrepreneur. He has to battle a mine patentfield (yeah, same for CS but usually you can get acquired quickly) and huge initial costs. Tools licensing is astronomical. A industrial grade SPICE license + Synthesis + Layout + P&R tools + etc will cost in the hundreds of K, if not hitting a million.
A hardware engineer faces huge elimination by being too close to the transistor level. A switch out of the BJT into MOS probably destroyed many engineers' accrued knowledge in one fell swoop, quickly. Similarly, the impending switch from MOS into double-gates will destroy many IC engineers' accrued knowledge just as quickly.
The same cannot be said for CS, as most of it can be abstracted quickly, and boils down to algorithmic practices which do not get outdated.
Laundry Iphone apps, Stupid dinky games, and apps to help you count how much you fart get millions in funding, while hardware startups flounder to get by (hence preventing others from even thinking of entering the HW game).
Yet, a HW guy (EE Major) has arguably the same skills, foundation, and fundamental knowledge as SW guys (CS majors). Its really just that EE guys don't like doing CS, but they could do it easily. I went to a top-tier uni with EECS as a combined major (and this is common at the top uni's). I can tell you the top EE guys aced their CS classes easily and beat out the top CS guys or were on par.
Why are we paid less? Yeah yeah low margins, blah blah. Well, f* this. I'm taking a stand and telling the ENTIRE next generation of EECS majors to do CS only. There is not much left in EE for the hard workers to do well in, other than work forever for CorpX earning less than CS majors, while doing the same workload with the same skillset. F** this.
Re:Hardware is a dead-end (Score:4, Interesting)
EE Majors are not idiots. They are well aware of the predicaments you listed. Even if you tell them all this they will still go into EE just as CS students don't all change into Law or Finance.
It is because they are passionate about what they do and don't like CS. Would you really want to spend vast majority of your life doing something that you just can't stand? Will you be able to go this extra mile (That all supervisors will judge you by) in a position that you abhore? When (Not if) you will get screwed over and need to look for another job, will you be able to get motivated to do it all over again?
In my opinion, career must be more than just money. You must enjoy what you are doing in order to persevere through all the downsides of the job.
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Wrong. Much as Dilbert's PHB, you assume that stuff you don't know is easy, based on the initial learning curve. Gra
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A software engineer with MS get paid, entry, 100-100k on average.
So what? You make even more money doing easier work as some kind of reptilian on wall street, figuring out new ways to loot the American Treasury Department.
RS
Commodity hardware (Score:2)
Has gone down the tubes, unless you can sell LOTS you wont make a dime.
The Chinese will eat you alive.
I don't expect Dell to be doing it much longer either.
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Dell has never really been in hardware. They are a resale/brand company.
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They were for some time, but not for at least a decade.
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I did a Google search on it (I know, not exactly thorough), but I can't find any reference to Dell abandoning their ODM relationships and going it alone. For example, it seems that all the current Alienware (Dell) laptops are built by Compal). I know Dell used to have a big relationship with Quanta for laptops as well. If they have abandoned the ODM's, did they buy their own factories, where? It was also my understanding that they outsourced design to the ODM's as well, has this changed?
(obviously, I ha
Brick and mortar technology (Score:1)
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It only took 40 years for IBM to figure that out? (Score:1)
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IBM is a long term player. Microsoft had a good decade in the 90s but they've been flat for 5-10 years now. IBM had some lean times in the PC era but that's behind them. I'd bet in 2050 IBM will still be making loads of cash meanwhile Microsoft will be a minor player or defunct.
But does it run Linux? (Score:2)
As far as I can tell, the majority of IBM's point-of-sale systems these days run Linux [wikipedia.org] with the older FlexOS based [wikipedia.org] systems now a small fraction of the installed base. Can anyone confirm?
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The majority of the installed base runs on the IBM proprietary 4690 OS...
IBM 4690 OS still had a market share of 12% in the POS register/client market in June 2005, when IBM was starting to phase it out in favour to IBM Retail Environment for SUSE (IRES) [wikipedia.org]
12% in 2005 does not sound like a majority to me.
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Your information does not seem to be good. Here is a sample [ihlservices.com] from an IHL report showing Linux at 13% in drug stores. Your definition of "failed miserably" must be different from mine.
Is there really no money in hardware anymore? (Score:2)
Of course there is no money in hardware anymore; haven't you been watching the valuations of hardware companies sink like a stone over the years? Hardware companies have no value; this is confirmed by the stock market indices. Try and name a highly valued company that makes hardware. Online pet food is where the money is....
ps: The quoted Subject: line demonstrates remarkable progress in sentence construction. Keep up the good work.
Apple (Score:1)
Apple seems to make a lot of money making hardware. Isn't that their goal? Use software to sell their hardware.
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Apple doesn't sell hardware, Apple sells Unicorn piss.
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Apple doesn't sell hardware, Apple sells Unicorn piss.
Apple fanbois will probably mod you into oblivion, but you're basically correct. Apple sells status symbols.
All you need to know is... (Score:1)
the new CIO, Virginia Rometty was the executive that brought IBM into the services era.
I would have to say the biggest driver of IBM hardware sales is the service arm. While they will accept anything as part of a DataCenter move, the refresh cycle is geared towards replacing with IBM hardware. The lower cost and maintenance schedule usually seals the deal. So really the only hardware that makes sense is midrange to Mainframe. Commodity is right out.
From the Q1 financial report this afternoon:
http://www.ibm. [ibm.com]
It's IBM, not hardware (Score:1)
I worked in IBM's hardware division for over a decade before I (voluntarily) left, so I know what it's like there.
The problem isn't hardware, there's plenty of money there, just ask Intel, Broadcomm, or TI.
IBM's problem is IBM. Look at the SEC 10K filings for IBM and you'll see that IBM has the highest SG&A expenses (sales, general, and administrative) of any tech company, and has had that for 40 years. That means that IBM's legendary internal bureaucracy and management wastes far more cash than anybody
Acronyms (Score:2)
Tosh: Wow, yeah !
** money changes hands
Tosh: This business is a total POS !
IBM: Haha
It's called Capitalism (Score:2)
Ummmm, IBM will do what it can to increase profits and shareholder value. If that means getting out of ICT and into a string of hotels and vocational schools, then so be it. Oh, right. ITT already did that...
IBM is staying in hardware (Score:1)