Beyond IBM's history of selling out key areas (printers, laptops, disk drives, etc.) a year or so before the market is about to die, this time it's the popularization of in-store tablets along with the integration of mobile and E-Commerce that is aggravating POS's demise. Retail Columnist Todd Michaud predicted in January that this year would see the death of the traditional POS. IBM apparently agrees.
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IBM's move is not solely to abandon POS hardware—Toshiba is expected, more or less transparently, to handle all of IBM's existing POS accounts, including Wal-Mart, Costco and Toys"R"Us—but to focus on its infinitely more profitable software and services effort called Smarter Commerce.
As IBM spokesperson Steve Eisenstadt phrased it: "We're fully focused on high-value growth opportunities."
David Grossman, a financial analyst with Stifel, Nicolaus & Company who has tracked IBM for years, agreed that IBM could smell it was time to move away from POS hardware. "A case could be made that they felt that (POS hardware) growth was slowing. They're not emphasizing hardware products," he said.
With Toshiba's agreement to provide the hardware to IBM customers, IBM loses very little.
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IBM's POS operation made about $1.15 billion a year. When combined with Toshiba, Toshiba will be at—or very near—the top in POS global marketshare.
Forrester retail analyst Brian Walker also saw that the market has shifted out from under Big Blue. "Retail store systems have become a maintenance business with little growth. Retailers are closing stores; distressed, commercial retail real estate is everywhere but the top luxury malls and downtown cores; and there is very little incentive for retailers to upgrade or replace retail systems today," he wrote.
Walker added that this move gives IBM an easier way to present its offerings. "The rationalization of POS and services with IBM's Smarter Commerce initiative was a problematic one. Which (part) trumps the other—POS or E-Commerce—and how do they coexist? That no longer presents a challenge as IBM can move forward with clarity, building an enterprise built around the E-Commerce, OMS, analytics, marketing and supply chain."
The deal itself is a bit complex. Here's how the official IBM statement put it: "A new holding company will be established in Japan. This company will hold the equity of a number of companies organized in countries around the world. Toshiba TEC will acquire an 80.1 percent stake in this holding company and to promote a smooth transfer, IBM will hold a 19.9 percent stake in the holding company. Eventually, the holding company will become a wholly owned subsidiary of Toshiba TEC. The new companies, including the holding company, will continue to operate Retail Store Solutions' business worldwide as Toshiba TEC's core retail point-of-sale solution affiliates."