Hello iPad POS!

With new product launches in the past week by Square, Groupon and PayPal, the market for small business (SMB) point-of-sale (POS) solutions is hot, hot, hot. It is either taking off or getting very crowded, depending on your perspective. The new entrants are competing with a host of others in the SMB POS market such as ShopKeep and Revel Systems as well as large entrenched players like NCR Silver and Verifone SMB Retail. PC world lists some more here. Most companies are offering integrated hardware and software solutions intended to streamline SMB operations. Here are some thoughts on the SMB POS market following the latest round of product announcements:

  • Apple is winning at SMB retail. They are going to sell a boatload of iPads into the SMB retail environment. I’m not seeing many Android tablet POS solutions delivered into the marketplace nor am I hearing demand from SMBs for non-iPad solutions. The best new & old technology solution companies see the iPad as the best platform to deliver a beautiful, seamlessly operating and well-packaged solution set to merchants.
  • A large market exists for tablet-based POS solutions. A March 2013 Constant Contact study showed that 18% of SMBs utilize an iPad POS. I expect that will continue to increase as more new business owners come from the generation that grew up using computers and getting their information on the internet. The technology sophistication of the average new business owner grows with each passing year.
  • Someone needs to sell directly to the SMB owner. Complex, integrated technology solutions won’t sell themselves. And most SMB owners won’t notice new product announcements on tech blogs or check out beautifully designed product websites on their own. The companies that set up the direct and channel sales strategies and tactics to make direct contact with SMB owners will take the largest share of market.
  • Simple is better. As an example, Square’s solution takes an Apple-style integrated approach: a hardware package with only 4 choices (Stand, Cash Drawer, Printer, Scanner) and Register software with a clean, intuitive merchant interface. Clean and simple will make any technology solution an easier sell into a skeptical buyer with an abundance of choices.
  • Focus on pleasing the business owner. Groupon faced extraordinary backlash from SMBs when angry business owners felt as if Groupon and customers were getting tremendous benefit from 50% off vouchers with little empirically proven benefit to the business. That’s not a recipe for success. Most of the SMB POS offerings look to be focused on streamlining a business owner’s operations, which bodes well for their long term success in aggregate.
  • Stay focused. POS companies shouldn’t add too much software complexity too soon. It’s far more important to make the initial sale and become the SMB’s operating system. There will be a time to add functionality later either via integration with 3rd parties or via organic updates. Companies like LevelUp in payments, Belly in loyalty and Constant Contact in marketing are laser focused on specific, critical customer-facing functions.
  • The credit card is here to stay. The swipe isn’t going anywhere anytime soon. Farhad Manjoo said it better than I can here.

Here’s to many happy card swipes on iPad POS’ in 2013 and beyond!

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