Watching Apple’s 2014 Worldwide Developer Conference, held this week, was a bit like getting a sneak peek into a general’s preparations for battle. As Apple versus Google (and Microsoft, and even Amazon) progresses from a cold war to a warmer one, it’s become routine to view every strategic release made by Apple through the New Tech World Order lens. Apple doesn’t just want to win; it wants to smite Google into oblivion in the process, yada yada. But that’s old news.
Digital health is shaping up to be one of these battlegrounds. As iOS and Android battle for market share and App Store dominance, I’ve been eagerly waiting to see how their two approaches will differ when it comes to what role your phone should play in your health. We’ve seen a few false starts already (Google Health comes to mind), but in 2014 it feels like the real deal has finally arrived: activity tracking has gone mainstream through FitBit, Jawbone UP and the Nike Fuelband, digital health records are becoming a reality, and we’ve seen some real innovation in medically useful smartphone applications from companies like Propeller Health and Glooko. But until this week, we didn’t really know how Apple was going to fit into all of this. Well, now we do.
By releasing the Health app and the accompanying HealthKit for developers as a part of the upcoming iOS8 release (in partnership with the Mayo clinic!), Apple is offering one convenient place for all of your health metrics to show up on a single dashboard. HealthKit lets all of your connected devices port data into one place, so you don’t have to go through ten different apps at once to get a full picture of your health and wellness at any given time. Furthermore, HealthKit can gather data from other health and fitness apps post-analysis, putting everything in one convenient place for you. Sounds great, right? Well, I’ll say this- it looks great for users, and it sure is great for Apple. But it’s incredibly threatening and scary for startups like Backtrack. This is a very, very aggressive move.
Why is HealthKit so threatening? Well, you have to consider why many startups with great products and great traction fail anyway. In the short term, a company needs to solve someone’s problem and provide a product or service somebody wants- that’s all well and good. But in the long term, you also need something that the big giants can’t simply copy. That something can be a dedicated user base, or maybe it could be a key piece of intellectual property. But you can’t build a useful tool and not anticipate being copied. There is a quote from Tim Chang a while ago that I really like: “The most successful wearable companies will really be software and services firms, with a hardware entry point.” One reason why is that it’s harder to copy a service with users than it is to copy a device. Look at Pebble: a year ago, Pebble was the toast of the tech world. They’d just raised a boatload of money through a phenomenally successful crowdfunding campaign, and their Steel smartwatch was a thing of beauty. Fast forward not even a year: I hate to say it, but most people don’t really care that much about Pebble anymore; we’re fighting over Galaxy Gear versus an Apple iWatch that doesn’t even exist yet. Pebble offered a beautiful piece of hardware, but didn’t really offer any service that the big boys couldn’t recreate with their vastly superior resources, user base and verticals. Unless they pull off something huge, they’re fighting a very uphill battle from here on out.
So let’s say you’re setting out to build a mobile health startup. You’ve built a sensor that measures X, an app that analyzes X, and a clever way for health care professionals to use this information to treat patients better. Great! So, what’s your plan for three years from now, when X sensors become a cheap commodity? If you’re generating most of your value through your software and service functions, then congratulations, you might still be in business. But if your revenue model depends on profit margins from selling X sensors, you’re in trouble. Now here’s why you should be worried: Apple has arrived at the mobile health party and announced, ‘Hey! Thanks so much for taking the trouble to measure X and analyze it for us. Just so you know, we’re going to be stepping in and providing the service to manage the user’s health care. Don’t worry; it’s best for the consumer if their health dashboard service stays all in one place, carefully cultivated by us. That way, we can make sure their user experience stays as amazingly awesome as possible. Keep up the good work measuring X for us!’
Make no mistake: what Apple is doing is devilishly smart. By piping all of your health data into a single, Cupertino-controlled user interface, Apple is effectively stealing the most valuable component of your earnings potential- the user and health care facing service element- while simultaneously removing your ability to differentiate on anything other than the hardware and back-end data analysis, all in the name of ‘keeping the customer experience insanely great’ in typical Apple fashion. There’s no doubt that Apple wins; and to be honest, in the short term the end user will probably benefit as well. But for startups trying to innovate in the digital health space, it’s a scary new world. Every new company with a good idea will become rapidly under siege at both the bottom and top ends of the stack: the Samsungs of the world will copy your X sensor (don’t think for a minute that your hastily-filed patent application will save you here), while Apple cannibalizes the top of your stack and seizes the most value-adding steps for itself. Furthermore, if it turns out customers really like the Health App’s convenient all-in-one interface, then it pushes developers to continue writing for iOS, since that’s where the valuable users are. That’s rough.
We’ll have to wait and see how Google responds. It’s possible that the best move here is to stick to their guns, and say, ‘You know what, Android has always been about being free, open and messy compared to Apple’s manicured but sealed off garden. We’re going to keep it that way for health apps, and let startups solve problems and add value on their terms.’ I’d love for Google to continue in that direction. But until they show their hand, I can’t help but applaud Apple for a very shrewd move on their part. For the time being, as D’Angelo Barksdale said on The Wire,
The King stay the King.