IBM-Toshiba Deal Shakes Up POS Market

ARMONK, N.Y. — IBM’s agreement this week to sell its Retail Store Solutions (RSS) business, which includes its POS hardware and software products, to POS system maker Toshiba TEC, Tokyo, promises to shake up the POS systems market for food retailers, and form a more level playing field for POS technology suppliers, said Greg Buzek, president of IHL Group, Franklin, Tenn.

Ever since the early 90s, “IBM has had an overall dominant position (70% or higher) in grocery, drug stores, mass merchants, supercenters and warehouse club segments in North America,” Buzek said in an email communication. “But for the first time in nearly 25 years, a huge part of the US market … will now be on a more level playing field. This is a benefit to HP, NCR, Microsoft, Epson, Retalix, Dell and others.”

Under Toshiba TEC, asubsidiary of Toshiba Corp., the RSS business will miss the IT infrastructure, support, consulting IBM could bring, Buzek added. “In the next couple of years [RSS] will quickly lose that advantage and will need to stand on its own.”

The transaction is expected to close late in the second quarter or early in the third quarter of 2012. The purchase price is approximately $850 million. The Retail Store Solutions revenue in 2011 was approximately $1.15 billion.

While the transaction is being completed, the companies will continue to operate independently. After the transaction closes, IBM will continue to provide maintenance services to RSS clients under a multi-year services agreement. Retail Store Solutions customer service and product availability will continue as usual as the RSS operations are integrated.  

The acquisition establishes a new holding company in which Toshiba TEC will acquire an 80.1% stake. In order to promote a smooth transfer, IBM will hold a 19.9% stake in the holding company, but will relinquish that upon receiving final payment on the third anniversary of the transaction.

IBM will continue to offer other retail-related systems for procurement, marketing, sales and customer service functions under its Smarter Commerce initiative. As part of the transaction, Toshiba TEC will become an IBM Premier Business Partner for Smarter Commerce.

Steven D. Ladwig, currently general manager, IBM Retail Store Solutions, will become the chief executive officer of the new US company with headquarters in Raleigh, N.C.