Microsoft Corp is working on technology that would eliminate cashiers and checkout lines from stores, in a nascent challenge to Amazon.com Inc’s automated grocery shop, six people familiar with the matter said.
The Redmond, Washington-based software giant is developing systems that track what shoppers add to their carts, the people said.
Microsoft has shown sample technology to retailers from around the world and has had talks with Walmart Inc about a potential collaboration, three of the people said.
Microsoft’s technology aims to help retailers keep pace with Amazon Go, a highly automated store that opened to the public in Seattle in January.
Amazon customers scan their smartphones at a turnstile to enter. Cameras and sensors identify what they remove from the shelves. When customers are finished shopping, they simply leave the store and Amazon bills their credit cards on file.
For Microsoft, becoming a strategic ally to retailers has meant big business. In addition to developing retail technologies, it ranks No. 2 behind Amazon in selling cloud services that are key to running e-commerce sites, for instance.
It is not clear how soon Microsoft would bring an automated checkout service to market, if at all, or whether its technology would be the answer retailers are looking for.
However, some see the technology as the next big innovation in shopping, one that Amazon’s competitors cannot afford to ignore.
“This is the future of checking out for convenience and grocery stores,” said Gene Munster, head of research at Loup Ventures in Minneapolis.
The venture capital firm estimates the US market for automated checkout is worth US$50 billion, while being a cashier is one of the most common jobs in the US.
It “does not comment on rumors or speculation,” Microsoft said.
Microsoft’s effort to date has largely fallen under its Business AI, or artificial intelligence, team, one person said.
A group consisting of 10 to 15 people has worked on a host of retail store technologies, and they have presented some of their efforts in front of Microsoft chief executive officer Satya Nadella, the person said.
In a meeting with the team several months ago, Nadella recommended an “intelligent edge” device that could manage connected gadgets such as cameras on site with minimum data transfers to the cloud, which would cut down on costs, the person said.
Making its technology cheap enough so that it does not eviscerate grocers’ already thin profit margins is a major challenge for Microsoft, another person said.
Microsoft already showcases the basics for automated checkout at its Retail Experience Center in Redmond.
Meanwhile, Microsoft’s internal team, including a computer vision specialist hired from Amazon Go, has worked on attaching cameras to shopping carts to track customers’ items. It has also studied novel ways for smartphones to play a role in the shopping experience, people said.
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