The computer retailer has installed SoftwareToGo Machines at 25 stores, allowing customers to place an order and pick it up on a CD at the checkout counter.

InformationWeek Staff, Contributor

April 5, 2004

4 Min Read

PLANO, Texas (AP) -- Planted on a main aisle at a CompUSA store and trimmed in stylish brushed aluminum, the SoftwareToGo machine looks much like a touch-screen ATM. It lets customers search for software titles by name, category or publisher, place an order and then pick it up on a CD at the checkout counter.

Despite its commanding location, shoppers pass by the machine without so much as a glance. A few who tinker with it walk away.

Still, store manager Craig Steinmetz thinks the machine could revolutionize the way people buy software.

No more shelves lined with bulky boxes. Each title is always in stock. The latest upgrades are sent to the machine over the Internet. And Steinmetz thinks it's less vulnerable to thieves, such as the one who recently broke into boxes at his CompUSA store and tried to steal $400 worth of CD-ROMs.

"This could solve a lot of the software industry's problems," Steinmetz said.

CompUSA is willing to find out. It has installed SoftwareToGo machines at about 25 stores in the Dallas, San Francisco, and Seattle areas--and plans to have them in 225 stores nationwide this year.

In a few years, "it'll be the way the majority of software is sold," predicted Bruce Newman, president of the machines' maker, Protocall Technologies Inc. of Commack, N.Y.

CompUSA currently offers about 900 titles, from games to spreadsheets, by more than 200 software publishers and is negotiating for more. There are more than 20 titles from Activision, 10 from Edmark, more than a dozen from Microsoft and Symantec but none from Broderbund, Electronic Arts, Adobe, or Intuit.

"It broadens the number of titles without needing to carry the extra inventory, and it will diversify offerings into things like Spanish-language titles," said Tony Weiss, president and chief operating officer of Dallas-based CompUSA.

The machine displays descriptions of software titles, pictures of their boxes and images of how the programs will look on a computer. When a customer picks up the CD at checkout, it is stamped with the software title and logo, and inserted in a case that includes a printed sleeve and information on how to use the software.

Gail Daikoku, an analyst for technology research firm Gartner G2, says while the machines may free up space, retailers may experience mixed results on profitability.

Tech-savvy customers often buy their software over the Internet or with downloads from a manufacturer's site, especially if they have broadband connections. Other people dread buying software and might be intimidated by the kiosks, Daikoku said.

"Consumers always say in surveys they would use something like this, but retailers haven't always figured out the secret sauce," she said.

Robert Harrison was one of those customers frustrated by the machine.

Harrison was looking for software to make a cleaner, digital version of a 1973 recording he made of a musician friend in concert. A CompUSA store employee demonstrated how to use SoftwareToGo, but Harrison finally gave up and left the store.

"I started it up and looked around and said, well, this is beyond me," said Harrison, an animal-control officer who said he doesn't buy a lot of software. "I have a friend who is into gadgets. I'll tell him to come look at this."

Others, however, found the machine simple to use. Kim Gleason, a former marketing professional, used it to buy a Spanish-instruction CD for her 3-year-old daughter. She said it helped her search for an age-appropriate product.

"I like those interactive things," Gleason said. "Anybody with a minimal comfort level with computers should be fine with it."

CompUSA executives say some of their stores sell about 100 CDs a month from the machines, but others, like Steinmetz's store in this affluent Dallas suburb, sell far fewer.

Newman, the Protocall Technologies president, said shoppers who were surveyed at test stores generally found the machine easy to use but wanted to see more titles.

Newman wouldn't discuss whether CompUSA buys or leases the machines from Protocall, which buys licenses from software publishers to include their titles in SoftwareToGo. When software is sold in CompUSA, the store pays Protocall, with the amount differing by title.

Protocall and CompUSA hope to gain an advantage by selling software not available for download on the Internet, including many Microsoft Corp. products.

David Berett, Microsoft's group manager for retail business development, said the company is interested in every new way of selling software. He said SoftwareToGo could boost the sales of niche products.

Microsoft, however, is keeping some of its marquee titles--such as the Windows operating system and Office software suite--off both the Internet and the SoftwareToGo machines "mostly because of security considerations," Berett said.

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