Thoughts on the Apple Watch Series 4; Or, What Even Is a Watch?

“#1 watch in the world.” That’s how Tim Cook opened the Apple Watch portion of the September 2018 Apple Keynote. At 2017’s Keynote, Cook explicitly mentioned that Apple was actually the largest watch brand in terms of revenue – not just units sold – surely sending chills down the spines of Rolex and other Swiss watch execs in the old boys club.

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Top 5 watch brands, by revenue

What Even Is a Watch?

Since Apple introduced the iPhone in 2007 and became the most ubiquitous product since the Furby, there’s been a common chorus: “why do I need a watch, my phone tells time just fine?” There’s some truth to this sentiment: if we were really wearing watches primarily for their functionality, we’d all be wearing minimalist, time-only, quartz-powered pieces that cost a couple bucks to manufacture in China (oh wait, there’s one company that built a nice business selling just that, and another that was just acquired for some $100 million). But the truth is we wear watches for a variety of reasons: what they say about us (e.g. wearing a Daniel Wellington says something like “I’m a minimally aware millenial that makes most of my purchasing decisions so that I look more like a well-crafted Instagram post”), an aesthetic we’re trying to communicate to others, or an appreciation for the movement and craftsmanship that goes into a well-made mechanical piece. A watch is so much more than its functionality; it’s an item we wear daily that subtly communicates status and taste. In the old days, people bought divers to be like Cousteau, Daytonas to look like Newman, Explorers to feel like Hillary.

But in a modern world increasingly defined by the “consumerist church” of SoulCycle and Lululemon, spending time and money on your own health and fitness is the most ostentatious display of wealth. Instead of wanting to be divers, drivers or climbers, we simply want to get a bike for the 8 a.m. SoulCycle, with a watch to match that lifestyle.

Apple Watch: Flawed Genius

Any watch collector will tell you: “90% (or some arbitrary, but high percentage) of a vintage watch’s value is in the dial.” Is it an original dial? How’s the patina? This is the crux of the problem for the Apple Watch: the attribute that most limits its functionality and elegance is the lack of an always-on dial. If you’re in a meeting, you have to deliberately turn your wrist towards you to wake the screen. But by then, your boss is looking at you with that “oh is this fucking boring to you?” face.

And we can’t yet have an always on dial because of battery-life limitations. Further, there is an old-world charm to having something on your wrist that doesn’t require a battery, that relies on mechanical power alone (like the good old days!). In a world where we feel little connection to our electronics products – manufactured in a Chinese factory thousands of miles away – you can almost feel the master watchmaker toiling away on the hundreds of tiny pieces inside your mechanical watch, made to last for hundreds of years, and not until the next upgrade cycle.

Perhaps more than anyone, Apple’s designers understand the appeal of a watch. Jony Ive is a watch guy. Steve Jobs was intrigued by Patek Phillipe. In fact, the Apple Watch does contain many subtle nods to haute horology: one of my favorite is the smooth-moving seconds hand, emblematic of a mechanical watch (as opposed to the jumping seconds hand of a quartz watch). Even referring to the buttons on your Apple Watch screen as “complications” is a fun nod to horology. Ives has claimed an affection for the Patek Phillipe’s luxury sportswatch, the Nautilus; perhaps coincidentally, many of the Apple Watch’s faces mimic the hands of a Nautilus (which itself imitates the Audemars Piguet Royal Oak). And honestly, this homage makes sense. To me, the Apple Watch plays the role of “sports watch” in my rotation. I wear it to the gym (wear it has complications no $30,000 watch can match), or out when I know I’ll be having a particularly active day.

On another note, the Apple Watch re-introduced me to the idea of wrist-as-retail space. I wasn’t wearing a watch everyday until I finally bought a Series 3. Not long after, I had re-immersed myself into the world of mechanical watches. I can’t imagine I’m the only person under the age of 40 for whom this is the case. All we’ve known is a world dominated by battery-powered commodity watches; for some reason, the Apple Watch made me realize that a watch could be something more.

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I’ve often thought the hands of many Apple Watch faces and those of luxury sports watches bear a striking resemblance.

Health: The New Grand Complication

Which brings us to the Apple Watch. While the first three series of the Watch seemed to wander through the abyss looking for an actual purpose, the Apple Watch Series 4 has finally found its true calling: health and fitness. In 2014, Apple introduced the Watch by highlighting its various functionalities, without focus on any particular one. Four years later, Apple’s focus is decidedly on the Watch’s fitness capabilities (just look at the main page for Apple Watch). Additionally, Apple has clearly been putting its R&D money where its marketing mouth is: two of the Watch’s biggest technological leaps – the ECG and fall detection – are health focused.

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Above: Apple Watch, 2014 Keynote | Below: Apple Watch, 2018 Keynote

In a world where watches tell the world (and ourselves) what type of life we lead, wearing an Apple Watch says something like “I can afford to spend $35 on a SoulCycle class; yes, that’s why I look so damn good in these $110 yoga pants”. And if it’s good enough for Kobe to wear to the Oscars, shouldn’t it be good enough for you? As Kanye himself recently rapped “hospital band a hundred bands, fuck a watch”. This from a guy whose 2011 album Watch the Throne is dripping with references to Hublot, Audemars Piguet and Rolex (mostly from noted watch aficionado Jay-Z, granted).

Taking care of one’s self is the newest status symbol, and the Apple Watch might just be the best way to communicate to others that you live a life worthy of such status. Sure, Apple has always made beautifully designed, elegant products – and the Apple Watch is now designed about as good as it can be – but much of an Apple product’s value is also tied up in the intangible status one gains by owning an Apple product. Usually, it’s a symbol that you own the nicest product in that given category (as John Gruber deftly put it in his review). The Apple Watch though, is something slightly different: it’s a symbol that you’re living the nicest life possible. You’ve got time and money to spend on your own health and fitness, which, in the end, is the ultimate luxury. Yes, more than that New Patek, Mr. Uzi Vert.

So yes, an Apple Watch might technically not be a watch. Call it a small computer on your wrist or whatever. But you’re not wearing that $200,000 Patek just to tell time either (look at you, Uzi).

Apple, Not Amazon, Will Be the Tech Giant to Disrupt Healthcare

Apple has redefined industry after industry with superior UX; healthcare is next.

Amidst all the hype about Amazon’s announcement that it will create an independent healthcare company with a couple pals, news of Apple’s recent lurch into the health industry was widely drowned out. With the release of the latest iPhone iOS beta (11.3), Apple announced improvements to Health Records which promise to make healthcare data more consumer-centric:

The updated Health Records section within the Health app brings together hospitals, clinics and the existing Health app to make it easy for consumers to see their available medical data from multiple providers whenever they choose….

In the past, patients’ medical records were held in multiple locations, requiring patients to log into each care provider’s website and piece together the information manually. Apple worked with the healthcare community (emphasis mine) to take a consumer-friendly approach, creating Health Records based on FHIR.

Amazon’s announcement came with scant details, while Apple’s announcement accompanied the actual beta release of the announced feature. Such is the current Amazon hype cycle though: Should Jeff Bezos so much as look in an industry’s direction, stocks tumble a few percent.

Look, I can use Yahoo Finance to show how stocks go down when AMZN says something! Here, United Healthcare (insurer), Anthem (insurer), Aetna (insurer) and CVS (Rx/ wannabe insurer) all take a dive.

Continue reading Apple, Not Amazon, Will Be the Tech Giant to Disrupt Healthcare

What Do Amazon’s Patents Tell Us about Its Healthcare Ambitions?

Amazon is already one of the most advanced tech companies in the world. How will it bring this technology to healthcare?

There has been much speculation about what Amazon’s announcement that it’s creating an independent healthcare company with Berkshire Hathaway and JPMorgan may mean. Of course, I’ve been one of those prognosticators, speculating that it’s a long-term play to build an Amazon Health Marketplace. But, Amazon is already one of the most advanced technology companies in the world; I thought I’d look at some of its existing patents and see if the company had visions of using them in healthcare. As it turns out, Amazon has a number of patents and technologies that might be deployed to make the healthcare system a more efficient experience. There are more to be added as I comb through the USPTO database, but here’s a sampling of the things Amazon is already thinking about:

Automatic exchange of data with doctors

In 2016, Amazon was granted a patent for “a wireless device management environment… based on a determination of communication events.” Noting that wireless devices collect a variety of information and data, the patent claims a system allowing for the exchange of this data in a number of settings, but provides healthcare as an example:

“In [an] illustrative example, assume that the data processing component has determined that the wireless device is within proximity to a hospital or clinic. In conjunction with user calendaring information indicative of a calendar event corresponding to a doctor’s appointment, the data processing component can determine the communication event and begin the information exchange prior to the user arriving at the doctor’s office and powering down the wireless device”

In other words, imagine walking into a hospital or clinic, and your phone and Fitbit immediately start exchanging with your doctor all the information they’ve collected since your last visit (steps, sleep, heart rate, etc.).

Advanced location tracking

Amazon has patented a method for switching between various methods of location tracking to pinpoint user location and provide exact directions in, for example, a hospital.

Another patent, granted in 2014, recognizes that mobile phones have multiple methods for tracking location. By being able to switch between these various methods, the phone can more accurately pinpoint a user’s location and provide directions. For example upon detecting a trigger (e.g., detecting a QR code or detecting an access point signal), a device can switch from using GPS to a second type of positioning element (e.g., using accelerometers, QR codes, etc.) in determining the user’s current location. By using the appropriate type of positioning element for each environment, the device may determine the user’s current location more accurately. The device may provide an overlay (e.g., arrows) for displaying the directions over images captured from the user’s surroundings to provide a more realistic and intuitive experience for the user. Again, Amazon gives hospitals as a preeminent application of this technology:

“In one example, a remote server may push a hospital map and additional information regarding the hospital to a user upon the user making a doctor’s appointment.”

With gigantic hospitals often spanning multiple city blocks, wayfinding is a major challenge, and Amazon may offer a unique solution to provide patients digital guidance to their appointments.

Inventory and bed management

Imagine the wheeled object is an automated mobile unit, and the large square item it docks to is a patient bed. The mobile unit can dock to the patient bed and move it as needed.

Another patent claims a “method and system for transporting inventory items.” The patent essentially claims an inventory management system centered around a “mobile drive unit” (the wheeled item in the drawing) that can assist in automatically managing and transporting inventory in a variety of settings.

While the patent provides many examples where this may be used — airport luggage, custom-order manufacturing, and of course, ecommerce warehouses — it also gives hospital beds (with patients) as an example:

“inventory items may represent people. For example, in a hospital setting, inventory items may represent beds containing particular patients. Thus, [the] inventory system may be configured to provide a safe, effective system for moving hospital beds that limits the potential for injury to patients and reduces the possibility of mistakes arising from human error.”

Amazon has notorious integrated human and robot workers in its warehouses, so maybe its not long until they attempt to do the same in hospitals.

The list goes on

There are many more examples, for instance a patent “limiting the effects of faults in a data center,” which has immediate application in hospitals where “downtime may result in significant disruption and, in some cases, adversely affect health and safety. I’ll add more examples later, but wanted to illustrate how Amazon already has some of the technology the healthcare industry has long needed.

Amazon Health: Enrollment 1 Million

Amazon’s healthcare marketplace is a long-term play, but just the disruption healthcare needs

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On January 22, Amazon opened Amazon Go, its cashier-less convenience store concept, to the public. Pictures of the store show a small, 7-Eleven-like space filled with grab-and-go items, meal kits, and even alcohol. Almost as soon as news of its opening spread, speculation of Amazon’s plans for the technology behind Amazon Go spread as well. Will they license the technology to others? (eh, maybe) Bring it to Whole Foods? (eventually) Build Amazon Go stores across the United States? (yep).

Over the past couple years, Amazon has shown a strong desire to create a more robust physical presence. Providing Amazon Hubs in large apartment complexes, placing Amazon Lockers everywhere, buying Whole Foods (and placing Amazon Lockers in them), building Amazon pickup stores and bookstores — it all seemed part of some grand plan to dominate physical retail the way the giant has come to dominate ecommerce.

The opening of Amazon Go to the public, in addition to Amazon’s announcement that it plans to create an independent healthcare company along with fellow corporate giants Berkshire Hathaway and JPMorgan Chase, begins to illustrate a unifying theory motivating Amazon’s varying investments in physical assets. First, it’s another concerted move by Amazon to bring its digital network into the physical world, meeting the customer where he/she is. Next, it’s an effort to squeeze every ounce of productivity out of its consumers.

First, Amazon has repeatedly demonstrated it isn’t afraid to make investments in the sometimes messy physical world. Building data centers and distribution centers, buying grocery stores, trucks and planes — these moves have demonstrated that Amazon has a desire to build a completely integrated digital and physical platform. Whether in ecommerce and logistics or in cloud computing, Amazon brings together all the necessary components — digital and physical — for customers to easily come onto their platform and begin buying, developing, or selling (ecommerce, AWS, and logistics, respectively).

Next, Amazon is notoriously a glutton for productivity. There are three ways to improve productivity: (1) shift work to lower skilled labor, (2) replace labor with technology, or (3) shift work to customers. In its logistics chain, Amazon has obviously pursued the first two: it notoriously has legions of relatively low-wage package pickers in distribution centers that work alongside robots (from Amazon’s purchase of Kiva Systems in 2012). Amazon Go obviously achieves the second goal, replacing the marginal cost of convenience store labor with the high fixed costs associated with building out the software, cameras and everything else that went into the store. But, as Amazon Go stores spread across the country, they will also pursue the third method of improving productivity, shifting work to consumers.

“The healthcare system is complex, and we enter into this challenge open-eyed about the degree of difficulty.” –Jeff Bezos, CEO of Everything

Amazon Go will shift logistics work from Amazon to customers in a noticeable way. From two-day Prime shipping to same-day or two hour Prime Now shipping (to those who don’t have Prime, but come on, who doesn’t have Prime?), customers on Amazon have a variety of delivery options. Our need-it-now culture drives widespread inefficiency in the backend logistics serving up quickly delivered La Croix, gadgets or whatever else (not to mention the potential environmental impact of all this inefficiency). Amazon Go solves for this problem by giving consumers the option to walk down the street and quickly pick up an item, instead of ordering it on Amazon. In the long term, Amazon Go stores can take the strain off serving millions of logistics network endpoints, moving consumers to simply pick up items from down the street. This achieves the productivity goal of shifting work to customers, without customers even realizing it: the Amazon Go experience is so effortless and enjoyable, who wouldn’t want to pick up a meal kit and some chapstick from it? Whole Foods, Lockers, Pickup and Go stores — while on their face they seem to increase the number of nodes in Amazon’s logistics network, they actually decrease the nodes served, as customers shift to buying or picking up down the street instead of in their mailbox.

This brings us to the Amazon/Berkshire/JPM healthcare announcement. While scant on details, it promises to use technology to simplify care. It will initially cover the more than 1 million employees of the three companies, but with companies as ambitious as this, the goal is obviously to reach much larger scale. Much like Amazon Go stores, an Amazon healthcare marketplace will make it easier for employers and employees to shop for a variety of healthcare goods and services. While this shifts the work and choice to consumers, it also incentivizes them to make the more efficient decision for the system as a whole, just as having an Amazon Go store down the street can incentivize a consumer to do the “last mile” logistics work on his/her own and walk to the store.

Recall how Amazon Go started: For the past year, it’s been open to Amazon employees only as the company presumably worked out the kinks and got the technology just right. They’ve done the same with AWS (Amazon developers were the first and largest users of the AWS developer platform, providing almost instant scale for the project), logistics (Amazon eventually opened its logistics platform to third party suppliers, making it so anyone can sell on its website), etc. etc. And so it will be with healthcare.

Earlier, I mentioned that Amazon is perhaps the only company in the world with an integrated digital and physical platform. Nowhere is this model more critical to success than in healthcare. While there has been much hype about virtual care and advances in telemedicine, most people still prefer to visit a minute clinic or doctor for most of their healthcare needs.

When Amazon built the Amazon Marketplace, it didn’t immediately open it up to third-party suppliers. First, it simply sold millions of books that no physical store could possible inventory. Eventually, Amazon allowed third parties to sell on its platform, granting them access to the millions of loyal customers Amazon had captured by that point. These suppliers were able to compete on price to deliver consumers an ever-growing list of goods and services, allowing Amazon to become The Everything Store. Amazon even took over the physical distribution of goods for these third parties, building the warehouses and logistics network necessary to serve customers across the country.

Note that this approach to building a marketplace of consumer goods took decades. Not until the past couple years has the power and scale of Amazon truly become part of the public conversation. Building a similar healthcare marketplace will take even longer. The players are larger and often monopolistic. There are about three pharmacy benefits managers (PBMs), three insurers, two drug distributors in the U.S., two hospital suppliers, and local markets are often dominated by one or two health systems. Amazon will start slow, allowing employees to shop for just a few healthcare goods or services on its new healthcare marketplace (think of a good or service like books in the 1990s). It will slowly bring more employers and employees onto the marketplace before eventually opening up this infrastructure to healthcare suppliers of all types, allowing them to compete on price for any healthcare good or service under the sun. One of the biggest issues facing the healthcare industry is the lack of cost and quality transparency: Amazon’s healthcare marketplace, with its price and review tools right on the webpage, will bring immediate transparency to healthcare.

And now that Amazon has brought third parties onto its Marketplace, it often integrates backward, cutting out the third-party entirely by going directly to the manufacturer and playing hardball to get the product produced even more cheaply. Could it eventually do the same with healthcare? My instinct was to say yes, but if one looks at the many holdings of Berkshire Hathaway, it becomes apparent that a number of these holdings make perfect candidates for offering products or services on the Amazon healthcare marketplace. From Johnson & Johnson’s prescription drugs and consumer health products to DaVita’s dialysis services, these healthcare suppliers would be thrilled to offer services on the new marketplace, with access to the millions of employees Amazon will undoubtedly attract. Perhaps the perceived threat of Amazon attempting to integrate backwards and cutout the supplier will be incentive enough for these companies to keep prices low. In the long run, the Amazon healthcare marketplace will create an almost perfectly competitive market for suppliers, driving costs down for employers and squeezing profits for drug makers, insurance companies, and anyone else selling to employees, the way it has done for consumer goods. On the financial front, it’s always good to have JPMorgan on your side, seemingly buying into the long, long-term vision that is the Amazon healthcare marketplace.

As an aside, we haven’t even gotten to the massive data analytics and integration capabilities AWS can bring to a broken, fragmented electronic health records (EHR) system. In November, Amazon announced a partnership with Cerner to improve population health efforts by allowing for more advanced data collection and analytics. In addition, there are a plethora of new and exciting healthcare technologies and startups, from companies large and small. But, without an ability to easily integrate into an EHR, these technologies often have a hard time gaining traction with insurers or providers. AWS can change all this with developer-friendly APIs and protocols, providing increased integration and interoperability.

As always with Amazon, the possibilities are almost limitless. Healthcare has been one of the industries most resistant to technological change, with perverse incentives driving poor decision making at almost every level of the system. I’ll write more about this as details arise, but it’s an exciting development and should spur more investment in the already booming world of healthcare technology.

Oh, and we haven’t even talked about Alexa and her potential to revolutionize healthcare yet. Stay tuned.

Photo by Piotr Cichosz on Unsplash