What's really behind Microsoft's healthcare push?

What's really behind Microsoft's healthcare push?

Summary: Microsoft treats healthcare like any of its other big vertical markets which it targets, with one major difference: The company also wants to be a player in this space itself.

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TOPICS: Health
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Microsoft actively targets more than a dozen major vertical markets when designing and developing products. Financial services, education, government, hospitality, manufacturing -- all the usual suspects are represented.

Then there's healthcare.

Microsoft treats healthcare like any of its other big verticals, with one major difference: The company also wants to be a player in this space itself.

On February 26, Microsoft announced intentions to purchase Medstory, a privately-held medical Web-search vendor, for an undisclosed sum. Last July, Microsoft purchased "health-intelligence" vendor Azyxxi.

Do you see the company buying any firms in the financial services arena? Hospitality? Insurance? No. I also don't notice Microsoft elevating to the corporate VP level vertically-focused individuals -- other than Peter Neupert, the company's Corporate VP for Health Strategy. (Neupert's unit currently has more than 600 staffers.)

I also continue to hear rumors that Microsoft is readying Windows-Live-like services specific to the healthcare market, aimed at both individuals and businesses. Word is tht Microsoft's Health Strategy group has been building "Windows Live Healthcare" offerings, some of which could be free and ad-supported, and others of which could be paid and subscription-based. If and when Microsoft does launch a Live Healthcare service, it would mark the first time Microsoft has discussed a vertical Windows Live service.

During a recent strategic update call with Wall Street analysts and shareholders, Microsoft CEO Steve Ballmer hinted, yet again, about Microsoft's plans to provide healthcare services. When itemizing future growth opportunities for Microsoft, Ballmer said:

"Last but certainly not least is the efforts we're making in healthcare. Some of you probably don't even have it on your radar screen, but I'm kind of jazzed up about what we're doing there. ... I think this is going to be an area of explosion in healthcare IT. We bought a company last year called Azyxxi. We are going to make some announcements on the consumer side of health IT, if you will. Those products are coming along. We've got a lot of great hospitals interested in our products. And I think it's probably longer term and less visible, but is an important area certainly that I track quite closely."

On February 26, Microsoft published a Q&A with Neupert that touched on the public reasons why Microsoft is pushing so hard in healthcare. Neupert said:

"At Microsoft, we have the ability to develop cost-effective technology for digital health that can mobilize data and connect people in ways that few others can. With our tremendous consumer reach, our proven software platform and our broad ecosystem of partners, we have a head start in being able to transform health through technology. People across the healthcare system need access to the right information at the right time, to make the best possible decisions and software solutions can enable that kind of transformation."

But Neupert's response still doesn't answer the question to which I keep returning: Why is Microsoft so intent on playing in this one particular vertical? Could it be the result of Microsoft Chairman Bill Gates' well known (and well-applauded) interest in world health? Other possible reasons?

Topic: Health

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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23 comments
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  • That's an easy one

    America's population is aging in historic proportions. Healthcare is going to be a very busy area for the next 20-30 years. Why wouldn't a company want to make sure they're in position to get a piece of the profits pie?
    ejhonda
  • Healthcare technology is profitable.

    I am misunderstanding why there is even a question about why the largest SW maker in the world would be interested in getting into healthcare. They still do have stockholders and still have to bring value to their customers. Its about maximizing profitability. Sometimes the simplest answer really IS the obvious answer!
    andrej770
    • If it's so profitable and such a great idea...

      Why hasn't any other major software vendor done it? CA isn't in health software. Nor is Symantec. Nor IBM, Google, etc. So if it's just a matter of being a good business, why isn't every software vendor doing it?

      Just wondering...
      Mary Jo Foley
      • Risk/Benefit ratio

        [i]Why hasn't any other major software vendor done it?[/i]

        The others don't have business models predicated on their ability to exclude competition. For them, the odds of pulling it off (especially in the face of Microsoft's ability to come in third and take over) simply isn't worth the investment.

        As is rather well known in venture capital circles, going into a business where Microsoft has started marking the trees is suicidal.
        Yagotta B. Kidding
        • So then the Linux Desktop is a...

          suicide mission? Tell that to the hundreds of distros and commercial vendors pushing Linux and the fact that Dell is creeping closer and closer to offering Linux. Tell that to Apple who see their marketshare increasing over time. The fact they got in the x86 market late didn't help, nor did their years of pigeon holing themselves as a niche PC offering. Tell that to Google who arrived on the web long after win98 integrated web controls into every screen. You are just talking crazy BS now, or you've not informed all of the companies that continue to prosper despite Microsofts high marketshare. But I can't really recall their competition on the x86 platform, even when they were very small and just starting. Even then they had the power to take the x86 market, some secret power and connections to keep all other, to this point, unknown x86 players from entering that market? They kept Apple from porting to x86 and competing for OEM deals? Can you give some specifics? I'd like to know esp. since Apple and SUN were handed taxpayer research, risc processors, an highly funded integration of security and tcp/ip and much much more for nothing. Apple was too stupid to recognize the value of using tcp/ip for far too long....MS's fault again? <br>
          The fact of the matter is Google barely has a few enterprise appls that are getting crushed by Microsoft innovation, let alone ready to build a complex healthcare network of very integrated and sophisticated pieces that are heavily regulated precluding the storage of data offsite for the most part. IBM doesn't build really good software but is in the healthcare industry quite heavily, so I'm not sure why that question is raised. What's symantec have to do with building Enterprise healthcare systems. <br>
          Microsoft is a software vendor with the expertise and server linup that could be designed to work for healthcare. They've had biztalk plugins for HL7 and that are big enough and have the resources for a foray into this areas as more than a "clearinhouse" player or ANSI X12 parsing and facilitation for payers, providers etc. <br><br>
          you talk like there are no other companies or organizations out there to win market, and do what it takes. <br>
          How about Mosaic Killer.....aka Mozilla. Yep, the Mosaic killer, the Netscape mascot. Guess what comes around goes around and IE and i believe Safari are based on Mosaic. Payback is hell I guess. Frankly I'd be worried entering any Market Google was in as well, but there are hundreds if noth thousand of companies taking that risk. Even when Google uses a long established domain, then tries to sue the original owner. Now that is a monopoly manuveur. Or Apple sueing Mom and Pop stores that happen to have the letters "pod" in their name, which isn't even trademarked. That is pure evil. Or open source that has been on a smear campaign to push their standards worldwide, beseaching governments and of course getting U.S. government aide to this day since *nix was sponsored by the Feds and then with anti trust law exempt, pushed out to private companies to take it and run with the technology that American taxpayers had paid multiple billions for and still do every payday. The *nix tax. Believe it or not, it's been more crushing than the so called "microsoft tax" which is somehow to mean people can't choose Apple computers or Linux computers if they desire. pfft!! <br>
          Get real. A monopoly not on PCs. No...that wouldn't work, less the government state Apple was no viable, or Sun workstations were not viable or other risc based machines of the time. No, they invented a new area of law, so narrowly defined that it only included, SURPRISE, the x86 platform. hmmmm. Okie dokie. Those proceeding found MS guilty of something, God knows what was real about it, but a lto of time has pased, there are over 100 vendors competing for the x86 space now including Apple, so there is no excuse.<br>
          But MS would find your ideas flattering that they can win in any Market they stake out. You better sell your apple stock then cause according to your logic it won't be long before the Zune desimates the ipod into oblivion. Yeah, you are so objective and bursting with happy news. How about your home, do you refuse to use any "big" oil derived fuel for your home or car? Do you avoid all large corporate products that have had anti trust attached to them like MS? That would mean you don't use IBM or *nix products since Unix was born under our country's largest, perhaps, monopoly from monopoly funds. You certainly could not bring yourself to use a product that was an offshoot of a monopoly's OS, refined and modernized by the government with tax dollars, could you?
          xuniL_z
          • Well put

            It's so easy to see for people without hate in their eyes.
            NonZealot
      • For one

        There are a number of very well established vendors with end to end healthcare systems to unseat. The market is saturated. These systems integrate everything from registration on through all clinicals to patient accounting, fiscal and ESS/DSS.
        I think another thing Microsoft could be thinking about is that most of the healthcare systems like the one I mention here run on top of Windows only. This one vendor alone, although one of the largest for mid-size healthcare orgs., accounts for close to 300,000 windows server licenses worldwide. It's not really a windows sale, but customers are buying the required system for the healthcare systems. Not sure of the arrangements, any movement within this market, but a port to linux by several of the market leaders could be a substantial blow to MS server sales.
        xuniL_z
      • IBM may not make healthcare *software*, but they do heathcare consulting

        IBM bought the company HealthLink a couple years ago. HealthLink was a consulting company that helped health care organizations implement health care software.

        Not quite the same as making the software themselves, but IBM is definitely into the healthcare vertical.
        PB_z
    • Especially when the software is made to self-implode.

      And, yeah, why is Microsoft keen on doing this? Should they be trusted? And isn't the computer realm enough for them on their own? (and their trampling into the antivirus market only proves they should stick to operating systems, where they stumble yet survive time and time again...)
      HypnoToad72
      • Are you saying.....

        Google should just stick to the search engine? <br>
        GM should just stick to automobiles? <br>
        GE should just stick to lightbulbs? <br>
        Apple should just stick to high priced hardware? <br>
        IBM should be selling hardware only? <br>
        Venture capitalists should only be allowed to back one company in one market segment at a time? <br>
        come on. Microsoft can do whatever it sees fit to expand the company and grow wealth for it's investors. Like any other company in the history of free enterprise. <br>
        Linux should stick to embedded devices and forget about the desktop and servers and applications and browsers and office suites etc etc? <br>
        Can any of these listed, which is a tiny sample, be trusted? No more than Microsoft to be sure.
        <br>
        Mozilla = Mosaic + Killa<br>
        Google = Death to Microsoft <br>
        Mozilla + Google = latest partnership of technology killers.
        xuniL_z
  • Other reasons

    Come on, MJ -- it's not that hard to figure out. MS and Intel (for instance) are pushing hard for "personal healthcare records" that contain a patient's entire health history.

    If MS owns the data, they have a lockin that makes everything until now look like chump change.

    Want to make an appointment with your doctor? You'll need MS software. Hospitals won't run without MS software. Etc. With lives at stake, MS will be in a position to dictate any terms they like.
    Yagotta B. Kidding
    • You can't be serious

      The real reason is to keep a company like Google from selling your medical history to doctors and ad agencies, drug companies and insurance companies.

      A little note to the individual stating "for a nominal, monthly fee we will keep your private medical information out of our highly acclaimed search database..."
      John Zern
      • Ah, that's it!

        [i]The real reason is to keep a company like Google from selling your medical history to doctors and ad agencies, drug companies and insurance companies.[/i]

        Ah! I never realized that Microsoft was prepared to sacrifice its corporate life to save us from Google's dastardly scheme.

        So all we have to do is entrust our medical records to Microsoft and we'll be safe. I wish I'd thought of that.
        Yagotta B. Kidding
        • Actually. I was making a joke out of your statement

          [i]Want to make an appointment with your doctor? You'll need MS software. Hospitals won't run without MS software. Etc. With lives at stake, MS will be in a position to dictate any terms they like[/i]

          Riiiiiight. Microsoft will put all our lives at stake, just to make a couple of dollars. And I can see the next Administration in Office all for it. Yeah. Sure.
          John Zern
    • 'dictate terms'. Now that's freedom!!

      :D (Sorry, it's just that widdle cynic in me spouting gibberish once again... :D )
      HypnoToad72
  • There is no doubt

    there will be one of those crackpot postings here about how MS wants to control yet another market, hold patient's lives hostage, forcing everyone to convert to MS technology blah blah. That kind of meritless reply is going to be found in every story regarding Microsoft. <br>
    But as someone already pointed out, the population is aging fast and healthcare is growing in leaps and bounds in terms of it's emergin needs for more and more technology. It's a mammoth market that any software company with the means would be making a mistake to not try to get involved. Even non profit hospitals are run as a business(of course) and are looking for the same competitive advantages like any other business. The healthcare solutions of today, however, are in need of a major rewrite in many sectors. I'm familiar with one of the top 3 systems for mid sized healthcare organizations and know something about the other 2. They are based on decades old engines and even though they've managed to get these systems to the EMR level, which is almost commonplace now, they are so monolithic in nature and not built on object oriented design. In many cases the UI is still character based and those systems are still selling in large volumes. It's incredible. There is a need for newer technology in this market and Microsoft can provide that. They've got a great HL7 interpreter/parser and have been working around the edges of healthcare for some time. I"m glad to see they are getting seriously involved.
    xuniL_z
  • Neupert already told you why.

    "At Microsoft, we have the ability to develop cost-effective technology for digital health that can mobilize data and connect people in ways that few others can. With our tremendous consumer reach, our proven software platform and our broad ecosystem of partners, we have a head start in being able to transform health through technology. People across the healthcare system need access to the right information at the right time, to make the best possible decisions and software solutions can enable that kind of transformation."

    Translation:
    Once we get a few big organizations to go ahead and use our software, the inherent vendor lock-in that our software provides means that others will be forced to use (as in buy) our software to be able to share data. Currently almost no place uses any of our software for patient records, and there's just way too much money on the table for us to ignore this sad state of affairs. Imagine, doctors are faxing patient information directly to each other without paying us. That's just not right.
    Letophoro
    • Doesn't Linux and Apple have Vendor lock-ins

      Everytime I hear the term "Vendor Lock In" I think of Apple, Linux, MS, Sun, ect.

      How is it you're "locked in" to MS software, But not anyone elses?
      John Zern
      • Who owns your data?

        [i]How is it you're "locked in" to MS software, But not anyone elses?[/i]

        The others use open data formats and multi-platform software; at least in the case of Linux systems you can even get the source code.

        MS? Rather a different story.
        Yagotta B. Kidding
        • Really?

          [i]multi-platform software[/i]

          I didn't realize that iLife worked on Windows. For that matter, I didn't realize that OSX worked on a Dell. Apple open? Nope, try again!
          NonZealot