The market opportunity in healthcare is huge, and Apple sees healthcare and wellness as a core part of its app, services, and wearables strategies. Now the company is aiming to become your personal health record, jumping into research, medical devices, and more.
As Apple CEO Tim Cook has said, the healthcare market makes the smartphone market look small. In fact, with over $7 trillion in health spending per year, it’s already almost 10% of global GDP.
With the release of the Apple Health Record and Apple Watch with a single-lead ECG, it’s evident that Apple has officially entered the healthcare space
The company hopes to build the first healthcare platform friendly to third parties, with the personal health record at the center.
In this report, we analyze Apple’s ongoing impact on clinical research and studies, its strategy in building a personal health record, and where the company’s going next in healthcare.
Table of Contents
- Why Apple is moving into healthcare
- Apple’s edge in health
- Apple Health and the Personal Health Record
- Apple’s ResearchKit and CareKit
- The phone, watch, and medical device innovation
- The phone as a medical device
- Third-party device manufacturers
- Apple’s medical devices
- The medical device trend and distribution strategy
- Looking ahead — Apple health services
Why Apple is moving into healthcareThere a few major reasons for Apple’s moves into the highly regulated world of healthcare.
Tech giants, for one, are becoming more competitive with one another, encroaching on territories Apple has historically dominated: Google is making phones, Amazon is focusing on home hardware, the wearables market is saturated, and so on.
As tech giants continue to move into Apple’s territory, healthcare can help the company differentiate its products and further reach its core goals, which include:
- Selling more high-margin hardware
- Increasing switching costs from its ecosystem
- Expanding its service offerings (Apple Cloud, App Store, etc.)
Keeping people in its ecosystem is also how Apple has managed to create an attractive third-party developer ecosystem in its app store. The lack of an existing third-party developer ecosystem for healthcare data is an open opportunity for Apple.
FHIR creates standards for different data elements so that developers can build application programming interfaces (APIs) that can be used to access datasets from different systems. Apple is part of the group pushing this standard forward.
Finally, Apple can use healthcare as a means to distribute its products into the hands of demographics that it has traditionally had a tough time penetrating: the low-income and elderly populations. Considering these groups are disproportionately more likely to be sick, Apple can position itself as a tool to improve outcomes and distribute via family members or insurance carriers (which we’ll dive into later in this piece).
Apple’s edge in healthWhile healthcare might seem like an area outside of Apple’s expertise, it has many advantages relevant to the space, its brand being one of the biggest.
Various existing healthcare players have notoriously terrible brand and customer experience, which has been Apple’s focus as a company.
As healthcare moves to a more proactive model, which requires reaching out to patients, having a strong brand is a major component. Apple’s attention on user privacy is notable here, especially compared to other tech giants entering the healthcare space.
Its strong brand has led to direct relationships with iPhone users, giving Apple a distribution and size advantage. When Apple released the Health app, it immediately got into the hands of its users. This also gives Apple leverage when negotiating or talking to existing players in the system, compared to a startup which doesn’t have that same size.
Apple has the aggregate leverage of its entire user base to negotiate with — as of December 2016, there were 85.8M iPhone owners older than 13 in the US alone. (For comparison, UnitedHealthcare has ~50M medical enrollees.)
The Apple brand includes an ecosystem of products that work seamlessly with each other. This makes consumers invest more of their time, data, and preferences into Apple products — which makes them indispensable....MUCH MORE
If buying an Apple product, for example, yields a smoother user journey and connects other existing data from a user’s Apple account, then there’s more of an incentive to buy Apple. Few healthcare incumbents can tap into any similar ecosystem effect.
The company’s control over both software and hardware is ultimately what gives Apple such a strong brand and consumer experience. Apple is bolstering its software offering as a whole through a number of recent acquisitions of artificial intelligence companies, including Silk Labs (CB Insights clients can see the full list of deals here)...