OSDL Claims Linux Making Major Gains in $6 Trillion Global Retail Sector
Thursday, August 04, 2005
The Open Source Development Labs (OSDL), a global consortium dedicated to accelerating the adoption of Linux®, today announced highlights from recent gains reported by its members on the advance of Linux worldwide in the more than $6 trillion* annual retail industry. This announcement is the first Linux industry collaboration of its kind among major IT vendors, including BakBone Software, HP, IBM, Novell and Red Hat.
"We are seeing significant Linux adoption in the retail sector as companies look for flexibility, reliability and low cost as their legacy IT systems near end of life," said Stuart Cohen, CEO of OSDL. "The increasing availability of Linux-based solutions from both major vendors and ISVs is accelerating the trend. In retail, it's all about lowering costs, streamlining supply chains, and improving margins."
According to retail analyst firm IHL Consulting Group, Linux deployments in retail increased 34 percent in 2004 over 2003. Driven by new market entrants and the rising popularity of Linux, the average cost of a point of sale system has fallen dramatically over the past two years, from more than $4,000 in 2002 to under $1,000 in 2004, according to IHL.
Overall retail market spending on IT for 2005 is estimated to exceed $21 billion, according to market research firm IDC (July 2005).
According to OSDL members who are working with customers in the retail sector, the industry is under pressure in certain key areas that are helping to drive them towards the value, performance and uptime offered by Linux-based solutions:
- Multiple stores in distributed locations without local IT staff;
- Significant installed base of old technology that is being refreshed;
- Rapid move to reach new customers through the Internet;
- New technologies (such as RFID) that create opportunities and disruptive changes;
- Competition from very large global companies (with huge economies ofscale) and smaller companies (nimbler, faster to react to marketchanges);
- Increasing integration of companies with suppliers and partners.
Tens of thousands of retail companies are investing in Linux-based solutions worldwide. Six major retail firms working closely with OSDL members BakBone, HP, IBM, Novell and Red Hat reported significant recent advances in Linux deployments, including (see Appendix A below for details):
- Anaconda Sports, largest U.S. retailer of amateur league sports and school district equipment;
- Boscov's Department Store, largest family-owned retailer in the U.S;
- Burlington Coat Factory, 340 stores in 42 states;
- GLOBUS, 90 retail locations in Europe with more than 20,000 employees;
- Mercadona, Spain's largest supermarket chain with more than 900 stores;
- Retail Ventures, Inc., a holding company for DSW, Filene's Basement and Value City Department Stores, has more than 325 retail outlets nationwide.
The benefits of consolidation on Linux can be a critical factor for some customers.
"Our Linux on the mainframe solution has enabled Boscov's to drastically reduce software and systems administration costs, saving nearly $1 million over a three-year period," said Harry Roberts, CIO of Boscov's. "As we complete our transformation into an on demand business, we look forward to improving our service and introducing many innovative solutions that make shopping in our stores a unique experience."
For other customers, price and low total cost of ownership are the key decision criteria.
"In the highly competitive retail industry, technology implementation choices are driven by the need for reliable and robust solutions at the best possible price," said Dennis Moore, director of enterprise architecture for Retail Ventures, Inc. "We leveraged a secure, high-performance Linux foundation and BakBone's first-to-market support for the latest enterprise Linux versions to achieve enterprise-class data protection at an open systems price point."
And Linux offers performance, critical to meeting the demands for speed and convenience that customers expect in a retail experience.
"We were looking to improve the performance of our computing systems and the implementation of Red Hat technology simplifies and speeds up core processes at Mercadona," said a spokesman for the supermarket. "Our use of Red Hat will eventually lead to the optimisation of our customers' time in supermarkets, making the checkout process easier and helping cashier staff to process payments."
Linux offers retail customers a wide range of benefits to meet their industry-specific requirements. Among the most often cited are:
- Reliability -- delivering the uptime needed for stores, back offices and Websites;
- Remote management -- enabling distributed store locations to be easily managed by central IT staff;
- Flexibility -- avoiding vendor lock-in without compromising the security and reliability of legacy technology as well as ease of quickly porting to new processors (handhelds to supercomputers);
- Middleware for Linux -- enabling application, process and business integration throughout the supply chain;
- Applications on Linux -- increasing availability of key applications for e-commerce, store operations, back office processing and business intelligence;
- Low cost -- reducing systems administration, management and client license operating costs as well as lowering capital expense for hardware.
