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Byline: Rama Ramaswami

X-box or XP? For the average consumer, the choice is obvious. But for retailers, the next big thing in the systems arena may well be Windows [superscript][registered] XP Embedded, Microsoft Corporation's powerful, retail-oriented operating system. The platform allows developers and systems integrators to build full-featured POS devices that connect seamlessly with current and future back-end IT infrastructure. Target Corp. is one of the latest businesses to adopt XP Embedded for its POS devices nationwide, scheduling it to run on registers at Target, Mervyn's, and Marshall Field's stores by the first quarter of 2003.

XP Embedded spearheads a fresh arsenal of retail offerings from Microsoft. Although retail applications aren't a new venture for the technology behemoth, only in recent months has it put major muscle into expanding its presence in the area. According to Gary R. Cooke, Microsoft's industry manager for retail and hospitality, the company "has worked in retail since 1994, but it was spread around in different pockets." Starting in July of this year, he says, Microsoft will develop a retail-specific consulting organization. In the new initiative, the core technology comes from Microsoft, "but the technologies that retailers will get excited about come from our partners." JDA Software Group Inc., for example, will jointly develop and market one of the first Microsoft .NET-enabled suites of applications for the retail, wholesale, and consumer packaged goods industries.

"Everything we do today is based on XML and on the .NET Framework," says Cooke. "The .NET Framework is a set of enabling technologies that allow different applications from different vendors to work together. Retailers don't want to throw away everything they already have to take the next step."

Microsoft's goal is to enable retailers to achieve what they've been talking about for a long time - to become "one organization where all information is available in one place," says Microsoft industry technical strategist Ernest Mindlin. A Microsoft application such as BizTalk Server, for instance, allows communication between businesses, such as retailers and suppliers. But a fully integrated enterprise is still out of reach for many merchants. Mindlin believes .NET will change that. "Everyone is using XML in their own little way," he says. "There's not as much of a savings as there could be. With .NET, the cost of doing business will change."

It appears to have done so already for Marks & Spencer, a 300-store-plus clothing retail chain in the United Kingdom. On top of a BizTalk Server-based system, the firm recently installed Microsoft's Visual Studio .NET to automate a fraud protection program. Real-time transaction tracking across multiple business units became possible. In the first few months of operation, the XML-based system enabled the retailer to transmit 700 documents per second, far greater than its goal of 250. According to Marks & Spencer, fraud has dropped by 10% and support costs by 19%, with the investment expected to pay for itself before the project is complete - a huge win in the retail game.