Another Apple Disruption

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Apple's (NAS: AAPL) list of industries that it has disrupted keeps growing, even if it sometimes backs into the opportunity. Even the whole idea of third-party developers and the App Store initially was a big fat no-no to Steve Jobs.

What industry is next to shake in its boots at the prospect of an Apple entry?

Cash registers and slow checkout lines are so 20th century. About two years ago, Apple quietly implemented an entirely new point-of-sale system at its own retail stores by arming its employees with iPod touches with a custom fitted shell and proprietary app. The custom shells include a barcode scanner and credit card reader alongside a rechargeable battery.

Apple had ironically relied on a third-party solution running on Microsoft (NAS: MSFT) Windows CE before the switch. Employees had frequently complained that the Windows CE-based handhelds were plagued by constant software crashes, overall sluggishness, and a frequent need to reboot.

The iPod touch-based system has been very successful and should be familiar to anyone who's visited any Apple retail store in the past couple of years. Within weeks of its quiet debut, other retailers had already swarmed Apple with interest in adopting the system. While Apple's official stance has been that it's a proprietary product that isn't for sale, rumors have persisted that Cupertino may commercialize the POS system.

Around that time, Twitter founder Jack Dorsey started Square, which allows small businesses to turn mobile devices into credit card processing POS terminals, providing an alternative.

A recent Wall Street Journal report details how more retailers continue to furnish employees with iPod Touches in order to avoid long lines and more efficiently use space previously occupied by cash registers. NCR (NYS: NCR) , IBM (NYS: IBM) , and Fujitsu are the heavyweights in the cash register business, and the overall market last year was pegged at $7.9 billion, including mobile POS devices.

Urban Outfitters (NAS: URBN) has begun rolling out iPod Touches to its 378 domestic locations. The company's Chief Information and Logistics Officer, Calvin Hollinger, said, "There's no reason why an iPod Touch or an iPad shouldn't replace an actual register." Nordstrom (NYS: JWN) has similarly started deploying thousands of iPod Touches.

Each iPod Touch and scanning case costs roughly $500, which represents roughly an 80% savings up front compared to the price of a register, and the cost of adding a WiFi network to each store is also minimal in comparison.

While there's no word on if Apple is officially commercializing its POS system by providing apps and support, it will definitely move a lot of iPod Touch units one way or another as they become the cash registers of the 21st century.

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At the time this article was published Fool contributor Evan Niu owns shares of Apple, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Microsoft, IBM, and Apple. Motley Fool newsletter services have recommended buying shares of Apple and Microsoft, as well as creating bull call spread positions in Microsoft and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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