Compaq Computer Corp. Wednesday continued its overt push into the retail services market, announcing a US$20 million investment into retail technology developer Systech Retail Systems Inc.
The investment is one aspect of a partnership between Toronto-based Systech and Compaq that will see both companies market front-of-store and back-end systems based on Compaq server platforms, including the ProLiant platform, and Compaq’s Evo and handheld access devices.
“If you look at what we’re laying out, it’s a broad-based strategy,” said Compaq Canada Corp. president and managing director David Booth. “It all ties together for where the overall market is going.”
Three weeks ago, Compaq Canada announced a US$500,000 investment into Burnaby, B.C.-based Info A HREF=http://www.infotouch.net Touch Technologies Corp. as part of a four-year alliance with the provider of Internet-based kiosk applications.
Compaq said the much larger agreement with Systech puts the company in a position to offer end-to-end retail solutions, covering both back-end applications like customer relationship management and front-end offerings such as kiosks and point of sale (POS) systems.
Both Compaq and Systech, which specializes in retail-systems software and services and counts Hudson’s Bay Co. among its customers, estimate Wednesday’s announced agreement will generate more than US$100 million in joint sales over the next three years.
The companies have developed a solution that allows companies to supplement the proprietary POS systems with a wireless, Internet and in-store SQL database platform that features Systech-developed applications running Microsoft Windows 2000 on ProLiant servers. Systech CEO William Moore said the platform will complement existing POS systems, alleviating the need “to replace all that stuff that goes on at the front of the store.”
“The reality is the architecture that the tech is built on is a decade to a decade and-a-half old,” Moore said, adding that the vast majority of technology currently in use is proprietary. “Our goal in working with Compaq is to allow retailers to a combination of proprietary and open systems.”
Both Moore and Booth stressed the agreement was non-exclusive, with Moore saying Systech has no plans to phase out agreements with other vendors, most notably, IBM Corp. But Booth said Systech will benefit from Compaq sheer size around world.
“One of the things we offer is global reach,” Booth said.
As part of the agreement, Compaq acquired preferred shares of Systech stock, which, if converted into common shares at the current conversion price, would account for one quarter of all Systech’s issued and outstanding common shares. But Booth played down the influence the shares give Compaq.
“It’s a policy that we will not take a board seat in any company that’s publicly traded in which we have equity,” he said.
However, agreements with Systech and Info Touch clearly show Compaq’s investments in smaller technology companies hinge in part on the new partner standardizing to a large degree on Compaq technology. One of those partners was Itemus, a hybrid incubator and software provider. In July, Itemus failed for bankruptcy, taking Compaq’s US$10 million investment with it to the technology company trash heap.
Booth would not comment on whether the Itemus failure influenced how Compaq entered into the Systech agreement, except to say, “we did due diligence.”
Booth also talked up the markets for POS systems and kiosk transactions, including air travel.
“I think you’ll see self-service environments grow despite what happened in New York City,” Booth said referring to the recent terrorist attacks on the World Trade Center.
Moore foretold of a future without checkout lines in grocery stores, as self-service checkouts, already functioning in one Markham, Ont.-location, become widespread.
“No more checkout queues,” he said. “I don’t know what The National Enquirer will do.”
