Why I wouldn’t invest in consumer health hardware

Yesterday’s post on Apple’s health strategy solidified a suspicion I’ve been harboring for awhile, which is that the future is going to be rough for connected health and fitness devices — Peloton, Eight Sleep, Withings, Mirror, WHOOP, etc.

To be clear, this could take a long time, and connected health devices could be great businesses in the meantime. But I think the long term is bleak.

Here’s why:

Somebody, most likely Apple, is going to build the OS of health data, and once they do, the health device makers will have no choice but to integrate with it. This will modularize them, the same way Facebook and Google modularized publishers. 

How does this happen? The OS will define some sort of standard data format, and the device makers will be forced to conform to that standard if they want to reach end users. For example Apple defines a variety of standard health characteristics (blood type, DOB, “fitzpatrick skin type”), activity types (step count, swimming stroke count, flights climbed), and vital signs (heart rate, oxygen saturation, body temp) in their health API. If you’re creating a device and have a slightly different way of doing things for some reason, well, too bad. Now you’ve got to choose between distribution and optimization.

This is the interesting thing about the “finding power” framework. It posits that for every interface between two layers of the value chain, one side must be suboptimized and conformable (in this case, the health devices) in order to allow the other side to be optimized and integrated (in this case, the health OS that I imagine Apple is building). 

The reason the OS has all the power is because they control the critical choke point that determines the overall system performance for the end user. In simpler terms: I’m betting that people care about the things the OS can do more than the things each individual medical device maker can do.

Currently all these devices operate almost entirely independent of each other, and their data lives in silos. What will most people value more — incremental improvement on the devices we currently have, or all the data from these devices feeding into a unified space where our healthcare providers can use it to offer better care? I think the latter.