The "Dell Effect" kicks in, but are the small and midmarkets buying?
There hasn't been a more opportune time for midmarket retailers to improve store systems. The focus on the midmarket by traditionally tier-one vendors (not to mention some relative newcomers to the space) has resulted in a sharp decrease in the cost of store systems hardware and software.
While the brand name Dell might conjure up thoughts of low-cost, consumer-grade computing hardware, the company is rapidly gaining market share in the middle tier of retail. The economic lessons it taught us along the way to becoming the biggest supplier of home computing equipment are echoed in its move on retail. The self-described "Dell Effect" loosely states that a market entered by Dell will see sharp decreases in hardware costs as the vendor builds volume.
Though in its infancy as a retail technology hardware supplier, the muscle behind Dell has already enabled the company to offer such previously unheard of equipment deals as a $299 thermal receipt printer. Thanks to a partnership with traditionally tier-one software provider 360 Commerce, the two companies can offer midmarket retailers a complete single-lane POS solution for less than $2,000. Dell has struck similar partnership package deals with Microsoft and others, and its Retail Brand Manager Brian Slaughter tells me that RFPs (requests for proposals) have kicked up significantly as a result. He sees Dell's pipeline bearing fruit in both the tier-one space and the mid-market in the 2006 time frame.
Small Market Software Sales To Soar
Speaking of Microsoft, its new release of Microsoft Point of Sale is the latest in its effort to meet small market retailing demand. This offering, targeted to retailers in the $1 million to $2 million revenue range, joins the company's two-year-old RMS product, which is geared for the midmarket. Microsoft Retail's Product Marketing Manager Brendan O'Meara says the company will convert users of electronic cash registers with the new POS offering, luring them in with inventory tracking and the elimination of credit and debit payment terminals and transaction fees. Like Dell, Microsoft has traditionally been a home and enterprise computing company. But with a single-lane license MSRP of $799, the vendor's Point of Sale product might create a "Dell Effect" of its own in retail.
While Dell and Microsoft have exhibited Johnny-come-lately tendencies in the POS hardware and software spaces, that isn't true of their retail technology offerings in general. When digital signage caught fire in retail last year, Dell was a lead player in the pomp and circumstance, promising affordable flat screens for all and keeping pace with Epson, Sony, and Panasonic. For its part, Microsoft's .NET platform, Smarter Retailing initiative, and, most recently, WEPOS (Windows embedded for POS) have gained traction fast across the large and midmarkets.
What's your take on Dell and Microsoft's encroachment in retail? What will be the impact on the small and midmarkets? And most importantly, are you buying it? E-mail me at email@example.com and let me know what you think.