We’ve tracked both Apple’s and IBM’s progress into the Mobile Cloud Era through a series of articles this year. Now we have their marketing agreement (announced in July.) So here’s our take.
First of all, the Apple-IBM deal reinforces our belief that one of the major areas of interest for Apple is developing an integrated device/software/service strategy to attack the mobile healthcare market in a systematic manner. (See our article: “Apple’s mHealth Strategy: We Connect the Dots,” 2/24/14.)
Further supporting this conclusion is the announcement that Apple’s new HealthKit platform, and Health app, will be incorporated in iOS 8. HealthKit is a platform designed to bring together comprehensive information about the user’s health and fitness.
To enable this integration of information the HealthKit allows information to be drawn in from various health and fitness apps.
IBM has also been very active in the healthcare information sphere. And both parties have been working closely with Epic, one of the leading providers of EHR (electronic health records) and other software for medical institutions and practices. IBM is reportedly a partner in over 80% of the Epic systems and Epic is a key partner in development of Apple’s HealthKit SDK for iOS 8.
One of the next steps is clearly to attempt to integrate legacy EHR systems with HealthKit, which could solve one of the biggest stumbling blocks for mHealth. Our recent article, “Key Issues in mHealth + Telehealth,” (8/7/14) noted that mHealth was progressing only slowly with major medical institutions, with EHR/EMR (EMR – electronic medical records) legacy systems being perceived as a major issue. As one of the most progressive institutions in mHealth, Cleveland Clinic, stated, their mission was to “liberate data from EMRs.”
Apple’s strategy in joining forces with IBM may be based more on Apple’s being the key integrator through their device-centric iCloud product suites with SDKs which solve the critical EHR/EMR roadblocks, thereby providing a fertile platform for mHealth developers and being part of Apple’s iWatch Over You concept. (See our article, 1/4/14.) This is likely to be a bigger business than simply Big Data.
Apple is reportedly already in talks with AllScripts, another leading EHR provider, as well as numerous hospitals (as reported by iHealthBeat, 8/13/14.)
If we are correct, IBM will be essentially a giant developer – and, we presume, Apple will get a percent of revenue.
Apple is constantly trying to promote a vast system of developers – as seeds to its integrated device/software/service strategy.
How important is health vertical to Apple-IBM deal? The answer is, Very Important. And while due respect was paid by Apple to IBM’s Watson technology, we do not believe this was a driving factor in the deal. Of much more importance in our view is IBM’s role as a developer and its outstanding capabilities as a distributor to the GEM (government, education, major accounts) – including healthcare – sphere of accounts.
IBM obviously has a gaping weakness in devices, which solidifies the fit in this partnership, which must, by its sheer size and scope, be fraught with complexities and possible routes to failure, as well as being characterized by stunning opportunities. (For a decidedly skeptical view of the deal, see FORBES, “Apple-IBM Alliance Is Already Threatened By Startups” 7/22/14.)
As we have stated over the past several months, we believe it is clear that Apple has embraced the mHealth area as a key area for major growth potential. We believe the company is now working through the elements of defining a business model. The IBM deal affords Apple a set of roles that permit it to continue to have the retail consumer market, maintain their margins and probably is the best approach to stay on the lighter side of regulation in the healthcare field.
Lurking in the background could be the greatest strategic change of all for Apple: GOING VERTICAL.
Apple has been a mass market, non-freemium, brand, focused not on verticals, i.e. industry groups, but on maintaining a transcending, techno-elitist brand, which has orthogonally moved across the enterprise and personal cloud segments.
After implementing the global multiple-device per user strategy, Apple may be looking at adding a vertical segmentation software-plus-services strategy, beginning with the IBM deal. This may very well be non-cross elastic with existing Apple products and services.
IBM is creating iOS, industry specific apps, serviced by Apple. It is interesting to note that IBM will start their ‘Mobile First” application rollout in October which should be close to the anticipated iOS 8 debut in September. It is interesting to conjecture as to the role of these apps with respect to the SoftLayer cloud migration that IBM has just completed and its linkage with the basic iCloud services that come with every Apple device.
This also has implications for the App Store, as the IBM iOS apps can certainly be the start of the verticalization of the App Store, beginning in a public, or mass, segmentation versus private. i.e.enterprise (IBM, etc.) partitioning.
The reason for IBM doing this is clear: They have had no revenue growth! We have covered CEO Ginni Rometty’s heralded Mobile and Big Data initiative. (See: “IBM – Watson: Emerging As A Mobile Cloud Player” 3/25/14). We have some clear ideas as to what IBM is looking for as market feedstocks for their big data computing engines, having featured stories about each of the three Watson Mobile Developer Challenge Winners (Red Ant, 7/23/14; Majestyk Apps, 7/2/14; GenieMD 6/20/14).
In the case of Apple, if successful their iSmart device and cloud platform can handle an array of verticals; after Healthcare there is, Banking/Financial, Travel/Transportation, Home, Industrial…….
The coming roll-out in October will be a bellwether set of events.