What's really behind Microsoft's healthcare push?

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.
Written by Mary Jo Foley, Senior Contributing Editor

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?

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