Move over Target, Home Depot (NYSE:HD) has now taken the security breach spotlight away. The home improvement retailer disclosed in September that it was the victim of a massive security breach, even larger than Target's last year.
Home Depot said that 56 million credit and debit cards were compromised over the span of 5 months – more than the 40 million credit and debit cards potentially at risk from Target's breach. It gets worse. Just last week, Home Depot also added that 53 million email addresses were also stolen as part of the episode.
Interestingly, Apple (NASDAQ:AAPL) may become an inadvertent beneficiary in more ways than one.
A token gesture
Home Depot said that hackers were able to access its systems by stealing login credentials for a third-party vendor. They then used this information to inject custom-designed malware into Home Depot's self-checkout systems, which then proceeded to unscrupulously collect payment information.
Sadly, Home Depot is but the latest in a long string of high-profile retailers falling victim to cyber attacks.
One of Apple Pay's key selling features is the added layer of security that is being integrated directly into the service. Since Apple uses a tokenization protocol that masks the underlying credit card number and instead uses a device-specific account number that isn't usable outside of the context of specific transactions, hackers can't use any of the stolen data.
Slowly but surely, the broader industry is hoping to transition toward tokenization for increased security in an age where cyber attacks are all too common. Apple Pay won't be the only service to emphasize security, but it could very well be a catalyst.
Headlines over the latest retailer security breach, and there will surely be another one, will only remind consumers of what Apple Pay brings to the table. Rising Apple Pay awareness adoption will likely lead to rising iPhone sales.
It already is
In fact, Home Depot's unfortunate event is already leading to some sales for Apple. The Wall Street Journal report that the hackers specifically targeted a security vulnerability in Microsoft (NASDAQ:MSFT) Windows. Shortly after the breach started, Microsoft issued a security patch that Home Depot installed, but by then the damage was already done and the hackers had already gained access. It was too late.
As a result, Home Depot's IT department bought "two dozen" iPhones and MacBooks for executives for added security. While 24 units is a financial nonevent for Apple's results, the underlying rationale has broader implications within enterprise security. If corporate IT departments begin to consider Apple's platform as more secure, then Apple could see a tailwind in its enterprise business.
Right now, Apple is primarily focusing its enterprise efforts on mobile devices, as evidenced by its landmark partnership with IBM, but Apple's well-known product halo could then translate into higher Mac sales also. To be clear, Windows is deeply entrenched in corporate systems, but the BYOD trend has also intensified in recent years and IT departments have begun supporting Macs like never before.
Although Apple's OS X is unlikely to ever take over the enterprise, that doesn't mean it can't enjoy some upside at the expense of Microsoft.