POS Application Market to Reach $1 Billion by 2008

July 20, 2004
Natick, Massachusetts -- Global revenues for POS application software are expected to grow at a compound annual growth rate (CAGR) of 9.8% between 2003

Natick, Massachusetts -- Global revenues for POS application software are expected to grow at a compound annual growth rate (CAGR) of 9.8% between 2003 and 2008, according to a recent report by Venture Development Corporation, Global Markets for AIDC Application Software.

Global Shipments of POS Application Software (Millions of Dollars)

2002: $610.9
2003: $642.7
2004: $710.5
2005: $791.1
2006: $879.7
2007: $976.9

Double-digit growth is likely over the near term due to:

Compliance Mandates and Standards

- Compliance requirements such as Sunrise 2005, GTIN compliance and UCCnet's GLOBALregistry continue to drive strong demand for retail POS application software throughout grocery, drug, department, specialty, convenience, and hospitality environments.

- Mandates from major industry players (and several channel masters such as Wal-Mart and Target) are perhaps among the most important factors influencing retail POS software development and adoption.

Technology and Solution Trends

- Two-Dimensional (2D) Symbologies - the retail industry is one of the leading adopters of 2D codes along with the pharmaceutical, electronics, and automotive industries - driven largely by compliance standards and the need to store greater amounts of information on items. Although software vendors admit that inquiries about 2D symbologies have increased sharply among end users, few are racing to implement/adopt 2D code symbols.

- Radio Frequency Identification (RFID) - RFID will not have widespread use at the item level for another 5-10 years. Until then, POS applications for RFID will largely remain limited to automatic payment and access control in the hospitality sector. Within traditional retail environments, it is expected to play a larger role in the supply chain for tracking pallets and cases from supplier to warehouse to store.

- Wireless/Mobile POS Solutions - The development of standards for WLAN systems such as 802.11 a/b/g as well as the ongoing security improvements - Radius, WPA, 802.1x, 802.11i, etc. - provide retailers with the confidence that wireless systems are both secure and compatible across a variety of vendors.

According to VDC's AIDC Analyst Taylor Smith, "In order for vendors to make the most of this growth, they must market toward a specific retail industry with a targeted software product line. In this way they can establish a strong brand presence and a perception that they possess first-hand knowledge about the clients business processes and operations. Furthermore, software vendors may go one level deeper and target specific types of stores within an industry. For example, a software provider to the specialty store industry may choose to target tobacco/liquor stores, toy stores, bike shops, or some other genre."

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