Inside Apple’s Next Game-changing Innovation (Hint: It’s Not The iPhone 6)

The fall season and tech giant Apple  (NASDAQ: AAPL  ) go hand-in-hand. Seasonal fruit jokes aside, Apple's gained a reputation for using the autumn months to introduce its highly anticipated products just ahead of the holiday shopping season to resounding success.

Source: Apple

This fall will be no different.

Apple's iPhone 6 is primed to be a financial game-changer for the world's largest publicly traded company, and Apple's next-gen iPad will hopefully provide the company's slumping tablet business with a much needed boost as well.

However, with a lot of the hubbub dedicated to the refresh of Apple's current product portfolio, another key upcoming innovation from Apple seems to be getting lost in the shuffle -- the Health app and the HealthKit developer API. This is unfortunate since HealthKit could ultimately have the greatest impact of all Apple's new launched products this fall.

Apple's behind-the-scenes moves
Although you haven't necessarily heard too much about it, Apple has been working assiduously with partners and potential partners from diverse areas of the health care industry in an attempt to gain support and receive feedback prior to Health's expected debut in the iPhone 6 next month.

According to a recent report from Reuters, Apple has largely concentrated on industry leaders including health providers like Mount Sinai and Johns Hopkins and electronic records companies such as Allscrpits and Epic Systems. Apple has already secured partnerships with other leaders at the budding intersection between health care and technology, including Nike and Mayo Clinic and is likely pursuing additional partnership at present. However, the general point in all this remains the same--Apple appears to be putting the full weight of its corporate clout behind its HealthKit initiative. Its an iPhone versus, say, a Mobile.Me in Apple parlance; a top priority. Apple wants to make HealthKit a winner, a task that will be by no means easy.

Plenty of well-funded, technologically sophisticated companies have tried to open up the health care industry in the past (Healtheon, anybody?). Two of the key problems any company hoping to revolutionize the health care industry en masse will need to overcome are market fragmentation and privacy concerns. HealthKit, like the App Store before it, is intended to serve as the key glue that ends health care data fragmentation. The product itself is the solution in this case, a space that's proven extremely lucrative for Apple in the past.

Apple HealthKit Logo. Source: Apple

However, the privacy concerns will be far more nebulous an issue for Apple to navigate. As you can imagine, the transmission of health care data that Apple intends to hasten with Health/HealthKit is a highly regulated area of technology. Apple is fast at work in meeting with various stakeholders, but with as many as six different government agencies handling oversight of health care data by one estimate, Apple appears in for a challenge; a solvable one, but an immense one at that.

How Apple stands to gain
The first and most easily visible advantage to making Health/Healthkit a winner would be the clear financial benefit that HealthKit and any other associated devices (cough, iWatch) would produce for Apple. Although hard to pin down, if Apple can create unique, value-adding hardware around HealthKit, it stands to make a pretty penny. I'm of the belief that Apple will indeed produce an iWatch at some point in the coming months, but that's for another article.

The second advantage a successful mass adoption of HealthKit would

Source: Apple

produce for Apple would be a further solidification of its already incredibly sticky ecosystem. By creating a digital hub for health care technology, Apple would create another set of massive network effects by enabling developers to reach consumers en masse once again. We've seen this time and again in technology, network effects matter. However, in positioning itself as the trusted technological handler of your health information, Apple would create another key reason for consumers to keep buying Apple devices.

The final benefit would be more symbolic, but still material in my mind, and that's Apple proving to the public and investing community that it can still innovate. Although it's highly anecdotal, I have a lot of conversations with people about the investing merits of Apple (sadly or otherwise, you be the judge). However, almost to a person, every conversation raises this issue in some way, shape, or form. By shooting the lights out with HealthKit and establishing it as the de facto platform for health care technology, Apple and CEO Tim Cook will have largely exercised the ghost of founder Steve Jobs.

Hurry up and wait
Ultimately, I'm optimistic that Apple has a winner in the works with Health and HealthKit. Between Apple's deep expertise in hardware, software, and softer skill like branding, I can think of few companies that are better suited to shake-up the health care industry in a big way. And with probably less than a month to go before HealthKit makes its official debut, I'm certainly watching with apt attention, and you should be too.

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  • Report this Comment On August 18, 2014, at 7:51 AM, MShamis wrote:

    Apple never ceases to amaze me. I don’t think they are losing their strength of innovation any time soon. I agree with Andrew Tonner that this HealthKit can help move Apple shares in the positive direction. Plus, I checked him out on TipRanks and can see he has a 68% success rate in recommending Apple stocks. Pretty good. As an Apple stock owner, I’m excited to see how Apple’s latest release announcements will affect its shares.

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Andrew Tonner

Andrew Tonner is a tech specialist for The Motley Fool. He is a graduate of The University of Arizona with a degree in Finance.

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