IBM Sells POS Hardware Division for $850 Million

POSterminalThroughout the past decade, IBM has strategically re-oriented its primary business model toward software and technology services and geared up to become more clearly defined as a consulting firm. With the sale of its Retail Store Solutions business, Point-of-sale (POS) hardware is now going the way of IBM’s old PC business, which was sold to Lenovo in 2005. 

IBM and Toshiba TEC announced an agreement in April, under which Toshiba will acquire IBM’s Retail Store Solutions (RSS) business. The RSS business includes POS hardware solutions and services.

Part of the deal is a multi-year contract between IBM and Toshiba TEC, a subsidiary of Toshiba Corporation and Japan’s leading maker of POS systems, in which Toshiba TEC will become an IBM Premier Business Partner for Smarter Commerce.

In 2011, IBM launched the Smarter Commerce initiative, an initiative that helps companies integrate and automate supply, marketing and sales channels. With the sale of their RSS business, IBM is well poised to help Toshiba push POS hardware globally, particularly in emerging markets, as well as focus on the back-end analytics and integration services. And, as technology savvy companies begin to use mobile platforms and online sales in lieu of POS hardware, IBM can continue to leverage their industry expertise through Smarter Commerce.

IBM sold the POS hardware group for approximately $850 million. Toshiba TEC will benefit from IBM’s well-developed North American distribution and sales network, theoretically giving global retailers the ability to accelerate new store deployments worldwide. The deal will also make Toshiba the world’s biggest POS system provider.

IBM expects the deal to close late in the second quarter or early in the third quarter of 2012, depending of course on it passing regulatory muster. Under the deal, a new holding company will be established in Japan. Of this company, IBM will own 19.9% and Toshiba TEC will own 80.1%. Eventually the holding company will become a wholly owned subsidiary of Toshiba TEC.

As the deal is being completed, IBM and Toshiba TEC POS hardware divisions 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. As operations are merged, Retail Store Solutions customer service and product availability will continue as usual.

Distributors like ScanSource, will now be selling bundled Toshiba products instead of IBM POS systems. This may give other POS hardware giants, like HP, an inroad into some market share.

Currently, HP is number two in POS hardware systems. However, will big companies like Dell and HP go the way of IBM at some point, and divest themselves of hardware businesses?

According to IBM, the RSS business unit revenue in 2011 was about $1.15 billion, and the business unit employed over 1,000 people worldwide, plus maintenance specialists.

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