McKesson and Cerner should be up for sale soon
But based on how technology moves, how it has always evolved in the past, it's time for McKesson and Cerner to start thinking about an exit strategy.
The reason is that both companies are health IT specialists. They have grown up entirely within this vertical market. And history shows that when a vertical becomes mainstream the computing majors dominate.
By computing majors we're talking here of Microsoft, IBM, HP and maybe Dell. Maybe Oracle, now that it's selling Sun servers. Apple will also serve its niche -- integrators will be adding iPads and iPhones to the mix.
In Wall Street terms McKesson and Cerner are quite different. Analysts are positive on McKesson, and stock traders give it a high relative performance within its group. Cerner draws a low relative performance.
In the end this matters less than which majors might be a good fit.
- McKesson prides itself on high ethical standards and management of pharmaceutical supply chains.
- Cerner is going through management upheaval and recent top hires indicate it sees opportunity in Europe.
The fact of the stimulus makes this a good time to act. Both companies can expect an injection of profit from that sweet, sweet stimulus cash. But that's a short-term boost. Longer term stability requires a global push.
This is where a partner could prove vital. Few people in India or South Africa know the McKesson or Cerner brands. But they do know IBM and Microsoft, even Siemens and GE.
The problem for both is that IBM seems interested in going its own way. Its last acquisition in the space was a small one. Given a choice between making and buying, IBM looks more like a maker.
HP's strategy, by contrast, is mainly focused on hardware, networking and services. McKesson might make a good fit.
Cerner's path is less clear to me. Every possible partner has been building an Electronic Health Record (EHR) capability and calling on both hospitals and clinics for some time. So its need for a merger may be more urgent. Oracle might want to take a flyer on it. But the price would have to be right.
The when and the how of any of this is above my pay grade. I have no insider knowledge. I'm speculating based entirely on nearly 30 years studying how the computing industry evolves, having witnessed the creation and absorption of many niches over that time.
So take it for what it's worth.