This past month I saw three related things that got me thinking.

1)   At the new burrito place that just opened up near my office (http://trescarnes.com/), instead of a cash register they have an iPad with an adapter to swipe credit cards.

2)   On Amtrak trains, the ticket-takers recently traded their old-fashioned hole-punches for iPhones with a red-laser attachment to scan bar codes.

3)   Most of the black cars from our favorite car service in Brooklyn (http://www.arecibocc.com/) use a credit card iPhone adaptor to accept credit card payment.

All over the place people are using multi-purpose electronic devices (iPhones, iPads, etc..) to do the jobs previously done by purpose-built devices.  Sure, you could say that today a cash register is cheaper than a $500 iPad, but it’s not too hard to imagine a future where less expensive multi-purpose electronic devices become very cheap and replace a wide variety of specialty devices.

In this future, what happens to the company that makes cash registers?  What about the company that makes red-laser scanners?  What about the company that makes credit card processing equipment?

In my opinion, all of the companies that make purpose-built electronic devices are in serious danger.  For some of them, their entire product is becoming just one feature or just one app on a multi-purpose device.

Here are a few of the companies that I think are the most likely to suffer as a result of this revolution:

Garmin/Tomtom – this one is a no-brainer.  It’s only a matter of time before the turn-by-turn directions on smart phones are as good or better than purpose built GPS devices.

Texas Instruments – when I was in middle school, every 8th grader had to buy a TI-83 graphing calculator.  In the future (or perhaps today), 8th graders will simply download a graphic calculator app on their iPads.

NCR – they make a lot of point-of-sale hardware (like cash registers and credit card machines).  Many of these devices are already threatened by multi-purpose hardware.

Cannon – they’ll still have the professional camera market, but the “point and shoot” market will almost entirely disappear.

Flip (Owned by cisco) – it seems like those little handheld camcorders have barely managed to stay ahead of the phone market.  It’s only a matter of time before that market niche disappears all together.

If I were a savvier investor, I would probably act on this theory (and short some of these stocks).  Instead, I’ll probably just revisit this post in a few years and see how my prediction panned out.

Let me know what you think.

The Death of Purpose Built Electronics
Tagged on:         
  • All thanks to the internet, and the ease of updating software.

    A little bit comes from the speed/cost of general purpose computing devices (e.g. Raspberry Pi, iPad) which can do multiple things.

    Still, cash registers and other things may stick around. Custom hardware – and support for it – can provide enough labor-savings to justify more than a difference of a few hundred dollars.

    Cameras, I agree, are going away (see the Nokia Lumia 1020?). For everyday use. But even for casual use, there are real physical boundaries that mean that a good camera does not look like a good phone. You know, you need a large lens to get really good pictures or video. I don’t see phones ever getting there.