Could the Hospital Be the iPad’s Next Big Market?

Physicians in increasing numbers have been using Apple’s tablet for a range of applications

   

TechCrunch reported last week on interesting results for a survey conducted among European doctors showing more than 25% own an iPad and use it professionally.

The online study, conducted by Manhattan Research in Q4 2011, asked 1,207 physicians in the U.K., France, Germany, Spain, and Italy about their iPad use. Among the respondents, 26% said they own an iPad and spend 27% of their professional online time using the device. In comparison, they use PCs for 55% of their online time.

While the iPad was developed as an all-purpose device, one of the purposes that the tablet may be ideally suited for is medical applications. With the right software, an iPad becomes a connected, mobile medical reference device, patient-record access point, and/or an educational tool. It’s relatively light, boasts long battery life, and boots up instantly. An iPad also is cheap compared to most medical equipment.

An always-on-call assistant

Even though its potential for medical applications may not have been on the radar when Apple (NASDAQ:AAPL) released the iPad in 2010, don’t think the company hasn’t recognized that there’s potential to tap into a very lucrative market. Heading up Apple’s push is Afshad Mistri, medical market manager for Apple. Besides promoting iPads during presentations with medical professionals, Mistri has overseen the launch of a special section of Apple’s iTunes App Store that offers apps created specifically for healthcare. This “Apps for Healthcare Professionals” store is divided into functional sections: Reference, Education, EMT & Patient Monitoring, Imaging, Point of Care and Personal Care.

According to a 2011 Wired article on the use of iPads in hospitals, one key obstacle to Apple is government regulation. As a general-use device, the iPad should be acceptable for use in a hospital setting, but if it crosses a line into competing as a medical device, the U.S. Food and Drug Administration (FDA) could subject the tablet to regulatory approval—and that could get messy. Another concern about iPads is the prospect of private patient data being available on a mobile device that could be misplaced, stolen, or hacked.

Adoption takes its own path

It seems as though medical professionals have been moving ahead with plans to adopt iPads on their own, regardless of Apple’s efforts or potential concerns about who should or shouldn’t regulate the devices for medical use. As the European survey shows, doctors are already using iPads in large numbers. A hospital in Ottawa, Canada’s capital, purchased 1,800 iPads in early 2011 and then bumped that number up to 3,000. It now employs a team of 70 app developers. With over nearly one million doctors in the U.S., Apple has a significant opportunity to sell iPads. And that’s dwarfed by the number of other healthcare professionals who might benefit from a tablet, including nurses, technicians and paramedics.

It isn’t just the iPad maker that stands to make money; medical apps on the App Store tend to command a premium. While there are some free apps available, many of these are made available by the makers of expensive scanning and diagnostic equipment, such as Siemens (NYSE:SI) and General Electric (NYSE:GE), providing iPad integration with their products.

When it comes to paid apps, it isn’t unusual to see price points of $10, $20, and even hundreds of dollars (compared to an average paid app price of $1.44). Companies selling protective cases or sterilization products are in a position to cash in on a medical tablet craze as well. If iPads are to be used in medical settings, keeping the devices clean and sterile is going to be a concern and will require specialized products that don’t void the warranty.

What about tablets running Google‘s (NASDAQ:GOOG) Android operating system? While the iPad has stolen most of the media attention, Android tablet makers are trying to capitalize on the medical market as well. Cisco (NASDAQ:CSCO) has tablets being used on a trial basis in San Diego, for example. However, Apple is clearly leading this race, just as it continues to be the dominant seller of consumer tablets. Manufacturers of specialized medical equipment don’t need to worry about a possible Apple invasion of their turf (although iPad app integration would likely become a selling feature), but companies that sell PC-based software for medical professionals should keep a close eye on the situation as it develops.

As of this writing, Brad Moon did not own a position in any of the stocks named here.


Article printed from InvestorPlace Media, http://investorplace.com/2012/02/could-the-hospital-be-the-ipads-next-big-market-appl-si-csco/.

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