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The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
By Andy Obermueller
Intelligence always moves to the edge of the network.
That wasn't always true of the communications business. The only thing "smart" at either end of this network might be one of the callers, and that certainly varied. Phones used to be nothing more than a speaker, a microphone and set of buttons that sent audible tones the system could recognize as numbers.
Mobile payment means every merchant's checkout device you see needs to be replaced, and Verifone, as the the leading provider of hardware for electronic payment processing, stands to benefit.
That has changed.
The infrastructure of the nation's communications system is still home to some impressive technology, but the real genius is at the edge of the network -- that is, the tablet devices and computers we use to process information and in the smartphones we use to communicate.
After all, the smartphones we all have in our purses or pockets contain more capability than the computers NASA had at its disposal when Neil Armstrong was walking on the moon.
The single most important change this network will undergo in the coming years is right at the edge: the integration of electronic commerce functionality into our smartphones.
I write extensively about this in my newsletter,
Game-Changing Stocks. Simply put, I think it's the Next Big Thing.
So far, I've been telling my readers about the consumer side of the market. But what we really need to look at is the company merchants rely on for the state-of-the-art equipment that will allow for seamless smartphone transactions to take place.
That company is
Verifone(PAY - Get Report).
It's the leading provider of hardware for electronic payment processing. And here's the thing: Nearly every one of the devices that you see on the merchant's counter will need to be replaced.
There are two reasons. The first: Customers will be paying with highly secure near-field communication chips instead of handing over their credit or debit cards. But the other trend that's going on at the same time is the mass unplugging of retail point-of-sale terminals.
Well, "unplugging" might be the wrong word. The enterprise system is still there, but increasingly running in the background. The sales clerk is just as likely to process the transaction with a portable device as to ask the customer to walk back to the cash register.