IBM, NCR win $218M USPS pact

IBM Corp. and NCR Corp. last week snared a $218 million U.S. Postal Service contract for point-of-service equipment. The dual-award pact sets the stage for a showdown between the vendors' retail product lines for a potential $1 billion in USPS business.

The award of the POS ONE contracts follows a condensed 120-day procurement. USPS said that the two-company selection cuts the risk involved in what the quasi-federal agency is calling the "largest rollout of retail terminals in the nation." When POS ONE concludes at the end of 1999 73 000 new machines will reside in 20 000 postal retail units. The new gear will replace Unisys Corp. POS devices in post offices nationwide.

But one rather than two companies likely will provide the bulk of those units. In the first phase of the contract starting in 1997 each vendor will supply 9 100 POS terminals. But for the wider product rollout USPS is expected to select just one vendor industry executives said.

The contract's first phase therefore will provide a very visible and critical competition between IBM's touch-screen POS solution and NCR's DynaKey system which integrates a color flat-screen display with a numeric keypad function keys and a magnetic strip reader.

"Having met with both companies I can say that both are excited to showcase their retail solutions to more of the American public than they could reach in any other way " said Dave Hunter USPS manager of Point of Service.

But Hunter acknowledged that a single vendor ultimately may emerge as the POS ONE supplier. "I don't want to commit for our organization " he said. "But candidly there is a desire to move to a single platform."

"This is how it will probably go " predicted Michael Berman NCR's vice president of business development and marketing Public Sector. "IBM and NCR will deploy in a dual award...to complete Stage One. USPS will then choose one [vendor] for stages Two and Three and will not use both. One-fifth of the products will be deployed in Stage One and four-fifths in stages Two and Three. The way the contract is written if any company falters USPS can award Stage One entirely to the other company."

POS Offerings

IBM's POS ONE offering includes its 4694 retail terminal and PostPlace application software. Both are part of IBM's "worldwide portfolio to meet the needs of the postal industry " according to a company spokesman. "We believe IBM has the technology retail and distribution experience customer focus and R&D capability" needed to address USPS needs Ken Thornton general manager of IBM Worldwide Government Industry said in a prepared statement.

NCR's solution meanwhile features the company's Pentium-based retail workstation solution DynaKey display/keypad combination and a presentation scanner for bar code scanning.

Human Factors

DynaKey and the presentation scanner - which can be rotated for a postal clerk's ease of use - are among the NCR products developed after significant input from the company's "human factors" staff which ponders issues such as ergonomics to make using equipment more pleasurable.

"Postal clerks now use a keyboard and constantly look up at the screen to understand if the transaction is proceeding " Berman said. "That leaves zero eye contact with the customer."

USPS's Hunter agreed that such factors were of great importance to the agency which is looking to polish its performance on three fronts: customer satisfaction employee satisfaction and agency financial standing."The whole ergonomics and re-engineering things were important " Hunter said. "This gives us a unique opportunity to re-engineer the activities of our retail clerks and make their transactions easier and more customer friendly. Both companies approached it from this issue but NCR frankly did more work on that early on."

Although considered retail solutions both companies had to customize their offerings for the agency."There is of course a significant amount of weighing and rating of items that had to be considered " Hunter said. "In most retail establishments you bring a product to the counter and it is scanned. In our case the customer has a lot of choices."

While retailers such as Wal-Mart certainly will be watching the contract so will many government agencies. "DOD is interested because of their retail solutions such as the commissaries " Hunter said. The Treasury Department and Social Security Administration are watching as well Hunter said. Of particular interest is USPS' solution for greatly expanding its routed network.