Apple eyes healthcare as growth engine

On Monday, shares of Apple returned to the US$200 level for the first time since November last year, after Morgan Stanley predicted that the technology giant could become an important player in the healthcare sector and generate more than US$300 billion in sales from healthcare-related products and services by 2027.

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The US investment bank said in a research report that Apple’s healthcare-related sales will top US$15 billion by 2021, citing the popularity of the Apple Watch and its health-related features such as the ability to monitor the user’s pulse rate and number of steps taken.

The high end of Morgan Stanley’s estimate is US$313 billion by 2027. That’s a very high figure considering that the company’s total revenue last year was US$266 billion.

Apple has been offering healthcare-related apps on its iPhone and Apple Watch over the past few year in a bid to encourage users to lead a healthy life. The app records the user’s exercises and similar activities, including the so-called three-ring model. (The user is challenged to close the three rings, which means achieving the set targets in terms of minutes devoted to exercise, minutes when the user is standing up, and the number of steps taken everyday.)

While sales of iPhone products have been slowing in the past few years, wearables offer a new growth engine for Apple. The Apple Watch, in particular, looks very promising. Series 4, the latest, has an electrocardiogram app that enables users to check their heart function by touching the device with their fingers for 30 seconds. The ECG app indicates whether your heart rhythm is normal or irregular, which is a sign of atrial fibrillation.

The company is producing more apps to make the Apple Watch more useful for its health-conscious users. They now include calories count, fall detection and emergency SOS apps.

Apple does not specify the sales figures for Apple Watch since its debut in 2005. But according to Strategy Analytics, its share of the smartwatch market has slipped to 51 percent from 67 percent a year ago.

Some 9.2 million units of Apple Watch were shipped in the fourth quarter, an increase of 18 percent from the same quarter in 2017. Apple shipped 22.5 million units for the whole of 2018.

Samsung, on the other hand, leap-frogged both FitBit and Garmin to regain the №2 spot. It shipped 2.4 million units, or a market share of 13 percent, up from 5 percent a year ago.

Apple appears seriously focused on the digital health segment. New Apple Watch features such as the ECG app will allow sales to grow at a healthy pace.

The company, in fact, wants consumers to become more health-conscious through the use of the Apple Watch and the accompanying health apps. And once they become accustomed to using these two products, it would be difficult for them to switch to other brands.

But the most valuable among the Apple Watch apps is its ability to store the user’s personal health data. Morgan Stanley believes that this could turn into a real business if Apple starts pulling the data together and selling the reports to health systems.

To maintain the trust of consumers, Apple would have to effectively pitch it as a way for hospitals and other healthcare institutions to gain insights into the health profile of broad sections of the population while protecting the data of individual users.

In fact, the Apple Health app can integrate a user’s electronic health records through a standardized application programming interface. Such integration, together with the health data collected on the user’s iPhone, can help doctors to better understand a patient’s health and medical condition.

As competition in the hardware segment escalates, Apple appears to be taking the right path by tapping into the healthcare market with the integration of its hardware and software products, while exploring new sources of revenue.

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A columnist in political development in Greater China region, technology and gadgets, media industry, parenting and other interesting topics.

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