Microsoft 'Embedding' Itself into the Retail Supply Chain

by Alex Woodie

Microsoft on Monday announced plans to release Windows Embedded for Point of Service, a variation of the new Windows XP Embedded with Service Pack 2 operating system, also announced this week, that's designed to be used in point of sale systems in the retail and hospitality industries. The software giant also announced plans to include radio frequency identification (RFID) capabilities in upcoming releases of three of its ERP applications.

One of the problems with POS systems today is the difficulty in setting up, using, and then administering all the devices on the network. National retailers opening new stores in cities across America spend hundreds of millions of dollars every year to get local systems integrator to configure their new POS stations and get them visible on the corporate WAN, and to overcome hurdles presented by dissimilar hardware, such as barcode scanners, receipt printers, and cash drawers. Centralized management of these POS devices is the answer, but can Microsoft deliver?

Microsoft hopes to alleviate these human-intensive POS endeavors with its new push toward "standards-based" POS devices, powered by its new Windows Embedded for Point of Service operating system. Windows Embedded for Point of Service will support the Unified Point of Service (UPOS) standard, feature improved security (through XP SP2), offer support for emerging technologies like RFID and biometric authentication, and will offer improved manageability through support for three Microsoft administration tools: Software Update Services 2.0, Windows Update Services, and Systems Management Server 2003.

Microsoft says that it's working with more than 30 other hardware, software, and services companies in the POS market, such as Wincor-Nixdorf, Seiko Epson, and system integrator BSQUARE, to build solutions on an early release of Windows Embedded for Point of Service. The software isn't expected to ship until the first half of 2005.

"When available, these solutions will give our mutual customers even greater hardware flexibility through innovative plug-and-play technology as well as a manageable platform that enables emerging technologies like RFID or multimedia to enhance the customer experience and to increase the productivity of in-store and information technology personnel," says Todd Warren, corporate vice president of the mobile and embedded devices division of Microsoft.

Many the functional enhancements Microsoft will be delivering with this POS release--including the improved security and support for the remote management utilities--will be traceable back to Windows XP Embedded with SP2, which is available now as a technology preview. POS system manufacturers, thin-client makers, and other OEM manufacturers will be able to pick and choose from among 10,000 features in Windows XP Embedded with SP2 to optimize the operating system for their particular industry. (One of the first moves might be to nix the Windows Media Player, which will probably drown the low-cost, low-speed processors favored by these manufacturers. Besides, why give check-out employees something else to watch or listen to besides their customers?)

While Microsoft now says it's working on the problem, the company isn't entirely without blame for creating the problem in the first place. The problem with the roll-out and management of POS devices is very similar to the problem faced by systems administrators who must maintain dozens or hundreds of PCs on a network. The company has improved in this area, with offerings like Software Update Services and Systems Management Server, but even these products aren't the silver bullet many administrators are looking for when facing huge product updates, like XP SP2, and even a mix of different operating systems. What's more, many administrators would rather rely on a third-party than Microsoft for assessing the necessity and impact of security patches, in particular.

For example, when national retail chain Discount Tire underwent a mass migration from IBM NetStation POS devices to Windows XP-based Dell OptiPlex POS devices, in 2003, it avoided Microsoft's administration and update tools in favor of the ON iCommand patch management technology, now owned by Symantec, which helped complete the roll-out and set-up of 3,300 devices in five weeks (see "Discount Tire Zooms Through POS Rollout with ON iCommand"). The software helped Discount Tire by centralizing the major aspects of POS device management, from bare metal provisioning and operating system deployment, to on-going security and application updates, disaster recovery, and de-provisioning. The software supports a variety of devices, ranging from desktops, laptops, POS systems, and PDAs, running Windows, Linux, Unix, and Mac OS X operating systems.

Meanwhile, Microsoft is also looking to "embed" itself into the back-office with new RFID capabilities in its Microsoft Business Solutions ERP applications. Last week at the EPCglobal US Conference 2004, in Baltimore, Microsoft announced plans to include RFID technology in the upcoming releases of Axapta 4.0, Navision 5.0, and the next major release of Great Plains. (Solomon, which was just enhanced this week with Version 6.0, is not due to get the RFID capabilities.)

An early user of Microsoft's RFID technology in Navision Version 3.7 is Jack Link's Beef Jerky, which is seeking to comply with Wal-Mart's RFID mandate. The first phase of Jack Link's RFID project involved tagging cases and pallets for select types of beef jerky products destined for the Wal-Mart distribution center in North Texas. The second phase will leverage RFID in connection with Navision for manufacturing tracking. In this phase, RFID tags will be attached to totes and racks in a closed-loop system and will replace the manual auditing process with automated recording of ingredient lot and finished products tracking, Microsoft says.

Even though Jack Link's isn't one of the top 100 suppliers that Wal-Mart is asking to start including RFID tags in shipments by January 1, the company wants to be proactive about the new technology. "We know RFID is coming sooner or later, and we wanted to ensure we are ready to continue to better serve our customers," said Karl Paepke, vice president of operations at Jack Link's.