That there is polarization of views about Apple’s future is an understatement. One view is that this is a hardware company that rises or falls on the niftiness of its latest hardware wrinkles. Our view, however, is quite different. We have viewed Apple as a company that does a masterful job of wrapping hardware with software, and, increasingly, with services as well.
Readers should take note of an article that appeared on SeekingAlpha, which described Apple’s process of building value as based on skill at “integration” (“Apple’s Value Creation Going Forward” 2/16/14.) This is similar to our view.
In January we posted, regarding the industry “iWatch” speculation, that what we termed “Apple’s leading-edge integration approach” would lead it to a wearable wrist-based product that was basically an “iWatch Over You.” This product would incorporate various sensor capabilities, leading Apple in the direction of the mHealth market.
With this in mind, we noted the report that a group of senior Apple executives met with the head of the FDA, Dr. Margaret Hamburg in early December 2013. Per USA Today, the attendees included Apple’s senior vice president of Operations and vice president of Software Technology, as well as Dr. Michael O’Reilly, formerly of Masimo Corp. The FDA was represented by the official who drafted the FDA’s mobile medical app guidance and the director of FDA’s Center for Devices and Radiological Health.
This meeting was clearly not the typical “meet and greet” but rather dealt specifically with “mobile medical applications.”
In our view, this meeting is a natural step, at a most senior level of Apple, in evaluating the major issues, including regulatory criteria and options, for their “iWatch over you” strategy.
While it is possible, given Apple’s resources, for it to be developing actual health products, we would offer a more likely scenario.
An iWatch and the M7 co-processor (see our commentary “Apple’s M7 Co-Processor – A Deeper Look At Apple’s Strategy”) are ideal platforms for extending enhanced awareness of not only a user’s activity, but also “situation” or “context” in an ever-expanding set of dimensions.
In meeting with the FDA to explore the agency’s device criteria, Apple has to be aware of the regulator’s classification schema, with its three levels or Classes. These involve increasing amount of controls, with Class III requiring pre-market approval by the agency for a device.
This FDA gateway role is augmented by the rules of other agencies such as HIPAA, from HHS (Department of Health and Human Services) and may include others as well.
If Apple’s goals are to get to market with the most speed and flexibility, yet with an offering maintaining the Apple panache, then avoiding heavy regulatory rigor and auditing (e.g., FDA classifications II and III as well as HIPAA) would suggest that a cloud based platform strategy, using an enhanced SDK for health apps is the most promising approach.
The dots that we are connecting consist of: 1) the M7 family of co-processors to have a set APIs for developers of health apps, (continuing our low battery drain theme); 2) a device, iWatch Over You, for bio-sensing; 3) iPhone/iPad for aggregation and access management (including RF and mesh networking – as a proxy server for ZigBee networks); and 4) using a replica of Passbook for medical data (a secure personal vault), thereby assisting developers in complying with regulations on data security.
There will undoubtedly be more dots to connect in months to come.
The news that Google’s X team with their contact lens chip for glucose testing have been meeting with the FDA is only confirmation that there is more mobile cloud news coming from the health area.
We also note that Apple, in pursuing the health field, is pursuing a market that is accustomed to premium pricing models.