Recent news reports have indicated that CIOs are now allocating up to nearly one quarter of their budgets for open-source software. While this may be the case in some sectors, hospitality point of sale (POS) is not one of them. IHL Group's (www.ihlservices.com
) latest research indicates that 6% of 2008 hospitality POS shipments were running Linux (www.linux.com
), while Microsoft's (www.microsoft.com
) share of operating systems (OS) continues to dominate the landscape. There are of course numerous reasons for this continued trend, not the least of which is Microsoft's "bully pulpit" power in terms of historical OS dominance. However, there are several other substantive and possibly more compelling reasons for Microsoft OS preference.
The current economic downturn, and the subsequent
slashing of IT budgets, resulted in an overall decline of POS shipments to hospitality establishments of 4% in 2008. Given that most economic forecasts indicate recovery is still well down the road, a continued decline in shipments can be expected for 2009 as well. While it can be argued that innovation during tight economic times sets the stage for future prosperity, the reality is that most operators will hunker down and keep their current POS systems for longer than originally anticipated. Those that do choose to purchase new units will most likely stay with what they know. Recent research by IHL in conjunction with RIS News (www.risnews.com
) indicated that fully 86% of operators are using a Microsoft OS, and 93% of them will consider using Microsoft as their next OS. Meanwhile, the 13% of operators that are using Linux indicate only an 80% preference for Linux as a replacement option. While both Microsoft and Linux users are very loyal, the bottom line is that right now, operators will likely choose to stay with what they know.
The open-source push
Open source technology received a big boost lately with the announcement that the Obama administration was bringing on two open source advocates with the appointments of Vivek Kundra as the nation's chief information officer and Aneesh Chopra as the chief technology officer. While both have been advocates of cloud computing in an effort to fully integrate all of the disparate data the government currently possesses, the fact is that many retailers and restauranteurs become deeply concerned when they hear the term "open source." Fair or not, there is a very real perception among operators, particularly smaller operators, that open source software exposes them to a greater risk of data breaches. Given that they have spent countless dollars in recent years in an attempt to gain full PCI compliance, the thought of investing in any system that has perceived security risks (by less informed business unit execs) is unappealing at best and laughable at worst. Add to that the fact that hospitality systems (particularly in the lodging sector) often store a wide variety of personal data on customers (personal profiles, allergy information, service preferences) and any perceived security weakness makes open source all the less appealing. This helps to explain why the lodging segment shows only 1% of shipments for 2008.
Lower cost points have often been touted by those who lean towards the open-source camp. One of the efforts that Microsoft has introduced in an effort to combat this is the embedded operating system. Following the introduction of Windows CE in 1997, a steady stream of embedded systems flowed out of Redmond: Embedded NT (1999), Windows XPe (2001), WEPOS (2005), and then Windows Embedded POSReady 2009. These embedded systems eliminate the need for persistent storage, driving down the initial cost of the POS and eliminating one of the most significant maintenance issues. More recently, the embedded operating systems now allow operators the option of separating out components, thereby allowing them to pick and choose which parts to use particular to their own situation. This focus on cost points has taken away one of the primary pro open source arguments.
Another reason Windows dominates is the fact that it brings more application options. If a single software player fails or goes out of business, there are many others that support the Windows environment. Often, with Linux the company chooses to go it alone or team with a single vendor for the life of the installation.
All in all, the use of open-source operating systems will certainly continue to gain market share at POS, but it will not be at the explosive rate once envisioned. Linux, MAC OS, and even Google's Android will convert some restaurants, but the folks in Redmond should continue to dominate for years to come.
Sean Alexander brings more than ten years of operational experience to IHL Consulting Group, where he is involved in the production of POS Terminal Market Studies and oversees the development and production of the Sophia Data Service. Prior to joining IHL, Alexander held positions at Marriott Hotels and Starbucks Coffee Company.