Software giant Microsoft is reaching out to the more than 3,300 companies exhibiting at MAGIC, and is partnering with the trade show to help peddle its Microsoft Business Solutions Retail Management System software.

Although Microsoft has dominated the word processing sector with popular software packages like Microsoft Office, it has yet to become the go-to name among small and midsize retailers looking to set up point-of-sale systems.

“It’s been a highly fragmented market and relatively underserved,” said Brendan O’Meara, general manager of retail management solutions at Microsoft. “It’s a category that we believe is just now about to boom, and MAGIC is one of the important industry associations where merchants attend, listen to, respect and look for recommendations on how to run their business.”

After acquiring the product from Sales Management Systems in 2002, Microsoft has been updating, building out and rebranding the software. It has seen 60 percent growth in sales in the last year alone, with about 20,000 installations nationwide. Apparel retailers account for one-quarter of the business. Among current users are Madison Carlsbad Village, based in Carlsbad, Calif., selling handbags, luggage, jewelry and accessories; the sports shops for the Golden State Warriors, based in Oakland, Calif., and Action Performance Cos., based in Concord, N.C., a retailer of racing collectibles and apparel, including NASCAR merchandise.

The category, which has previously been dominated by proprietary POS solutions such as electronic cash registers and PC-like cash registers, is now ripe for growth, said O’Meara.

“What’s changed is that PC economics have made it more cost-effective for smaller retailers,” he said.

According to O’Meara, retail software accounts for 10.8 percent of overall software spending in the U.S.; accounting software comes in second at about 8.5 percent. Microsoft data shows that small and medium-size retailers in the U.S. spent about $2.4 billion on packaged and custom software in 2003.

Unlike accounting software, however, retailers aren’t able to pick up a version of the POS software at a big national computer chain and be ready to ring up sales at their stores. The product, which will be available for sale and demonstrated at kiosks in the grand lobby at MAGIC, is sold only through Microsoft’s licensed partners and requires a fair amount of customization and handholding — at least initially. The price starts at $1,200 for the basic software. However, the typical installation price with software, hardware and setup included will run retailers an average of $5,000 to $6,000. More customization and additional store locations to service also drive up the cost.

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