IBM (NYSE: IBM) and Toshiba TEC Corp., a Japanese maker of point of sale hardware systems, announced an agreement for Toshiba TEC to acquire IBMs Retail Store Solutions (RSS) business, which offers POS solutions.
Upon completion of the $850 million transaction, Toshiba TEC will offer hardware, software and integrated in-store solutions, and will team with IBM to bring Big Blue’s Smarter Commerce experience to retailers and their customers. IBM said the deal is expected to close late in the second quarter or early in the third quarter of 2012.
This deal is another in a series of moves IBM has made over the years to continue to shift away from commodity businesses to deliver higher-value, higher-margin solutions and services.
In a report on the deal, written by analysts Krista Macomber, Jack Narcotta and Allan Krans, Technology Business Research (TBR) said:
The sale of RSS elevates software and services to the forefront of IBM’s retail strategy. IBM will shift its focus from hardware to expanding its portfolio of Smarter Commerce software and services, positioning it to more effectively capitalize on what it has identified as a $90 billion global opportunity. IBM will establish Toshiba as a Premier Business Partner and work to link Toshiba’s retail solutions with the industry-specific expertise IBM is cultivating with its Smarter Commerce campaign.
The overarching value proposition of IBM’s broad Smarter Planet initiative and the more discrete Smarter Commerce strategy is to provide actionable insight and business value from raw data. With the sale of IBM’s retail point-of-sale systems to Toshiba, the strategy for Smarter Commerce will shift more distinctly to analyzing the streams of data coming in from the point of sale. Fueled by software acquisitions such as Sterling Commerce, DemandTec and Emptoris, IBM’s Smarter Commerce analytics engines are only as powerful as the data flowing through them. By continuing an ongoing partnership with Toshiba, IBM maintains access to the raw data that drives higher-margin Smarter Commerce analytics and services revenue and avoids the lower-margins associated with POS hardware sales.
As part of the deal, Toshiba TEC will enter into a multi-year agreement with IBM in which Toshiba TEC will become an IBM Premier Business Partner for Smarter Commerce. This agreement will help ensure that IBMs portfolio of enterprise-level Smarter Commerce solutions and services—which extend from the corporate data center to the local retail store—and Toshiba TECs customer-facing retail store POS solutions are available to customers to meet the growing demand for multichannel commerce.
It is expected that upon completion of the deal, Toshiba TEC, a subsidiary of Toshiba, will acquire RSS’s overall business operation functions globally, including development, sales and related in-store maintenance. Toshiba TECs retail store POS solutions operation will benefit from a worldwide distribution and sales network, enhanced product and solution selection for customers and decades of innovation by both companies.
In 2011, IBM announced a major Smarter Commerce initiative that helps businesses automate and infuse intelligence into their procurement, marketing, sales and customer service functions to better serve todays empowered online consumer in the era of mobile and social networks.
"Together, IBM and Toshiba TEC represent the broadest multichannel offerings worldwide," Craig Hayman, general manager of Industry Solutions for IBM Software Group, said in a statement. "The pace of retail expansion requires a strategy to serve this dynamic marketplace. This acquisition by Toshiba TEC s not only the world’s leading point-of-sale company, but also a key business partner for IBM in its strategically important Smarter Commerce initiative. Retailers can invest with confidence in the proven abilities of these two leaders to deliver multichannel commerce to more demanding consumers who want the same experience shopping online, in-store, mobile, social or by any other means."