IBM Acquires Retail Self-Checkout Leader, PSI; Acquisition of Productivity Solutions Inc., Strengthens IBM's No. 1 Position in Retail Point-of-Sale.

Business Editors/High-Tech Writers

RALEIGH, N.C.--(BUSINESS WIRE)--Nov. 13, 2003

IBM announced today that it has acquired Productivity Solutions Inc. (PSI), a leader in the fast-growing market of automated self-checkout solutions that are used to speed checkout in retail and grocery stores. The acquisition further strengthens IBM's three-decade leadership in retail store solutions by adding one of the important new consumer-access technologies changing the face of retail.

"Self-checkout is a powerful new technology option for retailers to help them increase the number of checkout lanes, and thus the speed and convenience of checkout, without adding labor costs," said Tom Peterson, general manager, IBM Retail Store Solutions. "In the retail industry, we're in the very early stage of seeing new technologies like self-checkout, kiosks, intelligent shopping carts and other wireless devices fundamentally change how retailers interact with their customers. Helping retailers leverage this powerful new trend is a cornerstone of IBM's retail on demand strategy."

Privately-held PSI, based in Jacksonville, Fla., will be integrated into IBM's Retail Store Solutions division. Financial terms of the deal were not released. PSI employs approximately 140 people, the large majority of whom work in its Jacksonville, Florida, facility.

As retailers seek to cut costs while simultaneously providing new services, choices and convenience for choosy shoppers, new point-of-sale (POS) and store technologies like self-checkout are beginning to be deployed rapidly in supermarkets, mass merchandise and home improvement retailers. Retailers are integrating a variety of these new technologies with existing POS systems and wireless devices to provide faster, more personalized service.

In a study released in June, IHL Consulting Group reported that the installed base of self-checkout systems rose dramatically in 2002, with the number of self-checkout lanes increasing 47 percent over 2001 among North American retailers. IHL estimated that the self-checkout segment in retail technology should surpass $1 billion in overall market value by 2005, and added that grocers who have installed self-checkout are seeing as much as 35 percent of their store volume purchased through self checkout.

Since early 2001, IBM and PSI have been co-marketing PSI's self-checkout solution. That solution has included IBM retail-hardened components and IBM services. PSI's existing customers include BJ's Wholesale Club, Food Lion, Giant Eagle, Giant of Landover, Knowlan's Super Markets, Lowe's Foods, Spartan Stores, Stop & Shop, Weis Markets, Big Y Foods, and Winn Dixie.

"Consumers are telling us that they like self-checkout and value the choice, convenience and control it offers them. Therefore, retailers are looking to rapidly integrate self-checkout into their stores," said Michael Persky, president and chief operating officer, PSI, who will become vice president, self-checkout, for IBM. "IBM is the acknowledged worldwide market leader in retail store systems and PSI is a leader in this rapidly emerging segment of self-checkout. Since IBM and PSI have been working together already, retailers should see this as a logical and powerful next step. Using IBM's global reach, we also will be able to deliver these solutions to retailers around the world."

IBM is the worldwide leader in retail POS, with more than 2 million installed worldwide in retail outlets that range from the largest chain retailers to small restaurants and pubs to the highly publicized Metro AG "Future Store" store-of-the-future project in Germany. Many of the world's best-known large retailers use IBM POS systems. It was 30 years ago -- late August 1973 -- when IBM inaugurated the electronic point-of-sale era with its first POS product.

PSI has been a market leader in the burgeoning self-checkout segment. PSI's modular self-checkout product line, including both conveyor-based lane design and "scan & bag" solutions, is designed to fit all store formats and sizes, regardless of volume. PSI's self- checkout products are a fast, convenient self checkout alternative for all customers, while offering store management the most productive and cost-efficient self-checkout option in the industry.

About IBM

IBM, the world's largest information technology company, provides the retail industry with a full range of e-business solutions, including: point-of-sale systems, other hardware and software technology, consulting focused on business transformation, IT strategy and planning, store operations improvement, and supply chain optimization, and with services, such as outsourcing, managed operations, systems integration, and application development and design. IBM has a list of retail customers in 100 countries worldwide that reads like a "Who's Who" of retailing. For more information on IBM Retail Solutions, please visit http://www.ibm.com/industries/retail