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.