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Health care is notoriously complicated. But it's also a mega-market rife with waste and inefficiencies. That makes it hard for big tech companies to ignore.
In the past five years, Apple, Amazon, Alphabet, Microsoft and Salesforce have all made big moves into the sector, as evidenced by a string of recent hires, product announcements and acquisitions. Apple CEO Tim Cook summed up big tech's attitude to health care in a recent interview when asked about whether the company's focus on health stemmed from altruism, capitalism or both: "We’re extremely interested in this area — and yes, it is a business opportunity."
Tech companies such as IBM, Microsoft and Alphabet have tried to fix health care before and failed. As Seattle-based health investor Dave Chase notes, some of these efforts, like Google's ill-fated Google Health, failed to get off the ground, despite an investment of millions of dollars in talent and resources.
But Chase says these companies appear to be learning from their mistakes. Instead of going broad, tech execs are focusing on the corners of the market where they can do well. "It's a misnomer to think of health care as a multitrillion-[dollar] market," he says. "Really, it's a thousands of billion-dollar markets requiring a range of go-to-market approaches."
These days, tech companies are playing much more to their strengths.
Just look at Alphabet. Instead of going it alone, Verily, its life sciences group, is partnering with health-care companies for a wide variety of R&D projects. It benefits from the expertise of companies including Johnson & Johnson and Sanofi in areas such as regulation, while it stays focused on the engineering, design and product development.
Likewise, Google's "brain" group is using its expertise in machine learning to analyze and aggregate medical data on behalf of big hospitals, rather than attempting to create a consumer product like Google Health.
Apple's health group is succeeding by leaning into its expertise in design and consumer trust. The Apple Watch is helping consumers stay healthy by getting them to set and stick to regular exercise goals. It's come up with a way for people to use the iPhone to compile and store their medical records — the kind of information that plays perfectly into Apple's emphasis on consumer privacy and its disinterest in targeted advertising. It's also working on delivering better primary care for its own employees, through an independent group called AC Wellness.
What isn't it doing? Anything that is heavily regulated, like medical devices or pharmaceutical sales, where Apple has little relevant experience. Cook has made clear in interviews that he doesn't want the Watch to become a regulated medical product.
Amazon is perhaps the clearest case study in sticking with what it knows: supply chain, logistics and customer experience. Its first moves in health care in the past year have revolved around selling medical supplies and equipment through Amazon Business, and cloud services to health customers through AWS. In June, it acquired PillPack, which gives it a shortcut into selling pharmaceuticals to Amazon Prime members.
"There was this hubris before that we're not seeing as much now," says Chase. "Now these companies are taking the time to understand health's idiosyncrasies without being shackled by them."