Verifone Takes Offensive With a New POS System

Verifone Inc., coming off a year of management changes and mounting competition, is striking back with a new point of sale terminal system.

The Hewlett-Packard Co. subsidiary, the world's supplier of largest point of sale terminals, said its Omni 3200 is inexpensive, fast, and more user-friendly than predecessors.

Executives at Verifone, based in Santa Clara, Calif., said the Omni 3200 reflects the company's commitment to core businesses, as opposed to the Internet commerce activities that had a higher profile in recent years and are housed in a separate division.

The Omni 3200 includes terminals, software, and a host server. The terminals are priced at around $400 each.

"We are fanatic about the terminal business," said Pierre-Francois Catte, vice president and general manager of Verifone's appliance systems division. "One of the things we want to focus on is the actual needs of the customers."

Verifone is pouring two-thirds of its research dollars into software development for POS terminals, Mr. Catte said.

He described the Omni 3200 as a "durable solution" that "maximizes flexibility and functionality for banks and merchants" and "minimizes the long-term costs of deploying and managing POS payment solutions."

Lynk Systems Inc., an independent sales organization that has tested the product, said it will soon start selling it to merchant clients. Verifone said it has other customers lined up but is not ready to announce them.

As transaction processing grows increasingly complicated, modern terminal systems must be able to handle a many software applications, said Claude Epps, director of payment products at Atlanta-based Lynk.

"We are very pleased that Verifone put an emphasis on lowering the cost of ownership and making the migration to new applications a simple process," Mr. Epps said. "It is important that terminal vendors not lose sight of critical needs in the marketplace-such as cost and compatibility.

The product introduction comes at a time when Verifone's market dominance is under challenge. In the United States, Hypercom Corp. of Phoenix and IVI Checkmate of Atlanta have been gaining on the leader.

Worldwide, Verifone shipped 25% of terminals delivered in 1997-the latest figures available-down from 33% in 1996, according to The Nilson Report, an industry newsletter based in Oxnard, Calif.

In the biggest market-the United States-its market share dropped to 47% of the 1.3 million terminals shipped in 1997, from 57% in 1996.

"The difficulty being out in front is you are always looking over your shoulders," said Stanley Anderson, president of Anderson & Associates, Arvada, Col. "Now is the time for them to move market share."

In 1998, Verifone changed its chief executive officer-Robin Abrams succeeded Hatim Tyabji after he spent 12 years in the job-and several top Verifone executives defected, many to top rival Hypercom. And Ms. Abrams announced her departure Tuesday. (See box below.)

The "considerable disarray in the leadership" contributed to Verifone's market-share decline, said David Robertson, president of The Nilson Report.

He expects some further share erosion when the numbers are tallied for 1998. But "Verifone has a terrific reputation in terms of being able to deliver products," he said.

Mr. Robertson said Hewlett-Packard "prematurely pursued Internet commerce" but with Verifone "could turn it around" by yearend, he said. "The way to do that is with new products."

Verifone said the Omni 3200 was developed in response to feedback from merchants, banks, and processors. The receipt printer is integrated to save valuable counter space. To ease training, the key pad and screen prompts resemble those on an automated teller machine.

Mr. Catte, who joined Verifone from its parent company last May, said the terminal maker has taken other steps to shore up its business, such as farming out more manufacturing. Other savings are anticipated after Hewlett-Packard completes the integration of Verifone's operations, which is expected by May 1.

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