Linux is gaining market share in the retail industry. Use of the open-source operating system to run point-of-sale terminals in North America increased 185% last year, IHL Consulting Group said in a study released Wednesday.

Linux is gaining traction particularly within restaurants and "category killers," megastores such as Home Depot and Toys "R" Us that are thought to drive small, local stores out of business, says IHL, an independent business-consulting firm for IT companies focusing on the retail industry.

Nevertheless, with only 4% of the point-of-sale market, Linux has quite a way to go before it becomes a serious challenger to Microsoft's Windows and IBM's 4690, which last year had 69% and 17% of total shipments, respectively.

While many retailers are looking at Linux as an upgrade path for aging DOS installations, few have made a chainwide decision, the study finds. Because of the economic slowdown, the point-of-sale market in general has slowed, with retailers more likely to spend limited IT funds on scanners and self-checkout systems. Overall, the point-of-sale market in 2002 dropped 2% from the previous year.