Question-and-Answer Session
Operator
Thank you. (Operator Instructions) Your first question comes from Mark Murphy - Piper Jaffray.
Mark Murphy - Piper Jaffray
It's the lightest quarter for you for hardware revenue in about three years and I just wanted to try to dig deeper into the underlying dynamic and what the trend might look like into Q3 and beyond. I understand you commented that your retail vertical performed well, but that the hardware was tied to the retail point of sale systems. I'm not sure I completely understand what happened there, so if you could give more color on that I'd appreciate it.
L. George Klaus
Well, as you know, we have lots of very well-known customers out there that have our hardware installed in their stores and historically in good economic times they're opening up new stores or they're replacing the hardware in their existing stores. And in these economic conditions those retailers, who are fighting to keep their head above water in a lot of cases, have slowed down their CapEx expenditure on replacing some of the existing hardware they have and opening up new stores and, in fact, some of them are actually closing stores. So that is the major impact.
We're still installing hardware in the new accounts; that's not the issue. But the major impact is the large installed base we have who is not upgrading their current hardware or opening new stores.
Mark Murphy - Piper Jaffray
And, George, is the strength in your retail vertical from a license sale perspective? Is that something we should look at as a leading indicator of, you know, the segment that you mentioned as being weak in terms of hardware, is that going to lead what happens on the hardware side or from a bigger picture perspective is there a chance that you would look at this and say you may have an opportunity in the next year or two to actually exist the hardware business?
L. George Klaus
Well, I don't think, first of all, as you know and I've said in the past, the hardware business is something we do as a service to our customer and really, if anything, impacts our margins negatively overall versus if we didn't have the business. But we do it as a service to our retail customers because they like to see us load the software, set up the point of sale equipment and deliver it to the store so that their clerk in the store can just press the buttons and get it to start working.
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