Health services: the new revenue stream for Apple

Last September 10th, Apple presented its novelties. Everybody paid a great deal of attention to the new iPhone 11, despite the fact that Apple also presented other highly relevant services. Shouldn’t we pay more attention to the latest services presented? In recent years lots of experts have criticized Apple for being less innovative and not being able to deliver disruptive products. Is this true or will disruption come via its new services? From health related services, more precisely?

When companies reach the point where current product portfolio growth becomes more complicated, servitization becomes a clear growth driver.

As we explained in our Connociam Basics article, Servitisation is a strategic innovation process in which companies offer services to support their products in order to gain competitive advantage.

Apple is already using this approach. Its core business is and will continue to be products. However, it is no secret that iPhone sales have slowed down. If we consider that their share accounts for 65% of total company revenues, then we can understand that a 5% decrease in iPhone sales is quite crucial. On the other hand, Apple’s services division sales have set a record, rising to 11.5$ billion. This includes Apple Music, iCloud, Apple TV, the new Apple Card, Apple News + or the Apple Arcade. And now, Apple just announced that it is entering the world of health with its Apple Watch series 5.

Although Apple’s latest presentation of its hardware offerings, and more specifically its new iPhone 11 has received widespread media coverage, its launch of a new Research app has gone less noticed. This app enables the transfer of data collected by the manufacturer’s hardware, especially by the iWatch, in order to participate in medical studies, for the moment only in the United States. Three of these studies have already been published, partnering with institutions such as the University of Michigan, the World Health Organization, Harvard School of Public Health, the NIH, the American Heart Association and the Brigham and Women’s Hospital.

Apple has long been involved in health issues with its hardware – iPhone and iWatch – and with its Health App. What is striking now is that a company from outside the health sector is placing lots of priority on it. Data is becoming the new health revenue stream and Apple wants to take advantage of this.

New technologies are revolutionizing everything, and the health field is no exception. What is now known as “Healthtech”, data management applied to healthcare, is becoming one of the fastest growing fields. It can be used for prevention, diagnosis and treatment, especially by combining Big Data, AI and IOT. As an example, we see lots of presentations of new mobile apps and “wearable” devices that patients can regularly use for monitoring and preventing.

The concept of health is changing. In a few years time we will become used to having hospital appointments only for serious emergencies whereas routine consultations will be carried out from our homes.

The main challenge of these projects is access to information and the quality of this information. For this reason, Apple, with its new research application, wants to collect data to make the most of the available technologies.

Will traditional health companies be seriously challenged by technology and data players? Is Apple willing to become a relevant player in this field of health?

Lots of relevant business challenges for a sector that will change dramatically in coming years.