Yesterday’s post by Sean Nolan, Microsoft’s Distinguished Engineer who runs R&D for the Health Solutions Group, seems to affirm the conjecture that HealthVault will provide a means for Microsoft to retain key technical talent as it forms a joint venture with GE Healthcare:
At the end of the day — I want to assure you that Microsoft — and I — remain 100% committed to the HealthVault business. I believe that together we’re creating a health system for the 21st century, and I’m proud to be sharing that journey with you. Our new venture with GE will simply add to our ability to deliver.
It’s no surprise that Sean is in the lifeboat. Microsoft generally doesn’t send DEs packing.
What I find surprising is the assertion that HealthVault is a business. Technology? Yes. Product? Okay. Ecosystem? Check.
Businesses generally have a business model, one that generates revenue, and hopefully profit. Microsoft has tried a number of different business models with HealthVault:
- An ad-funded model. Couldn’t attract enough eyeballs to make this work. (Update and correction: Thanks to Sean for reminding me in his comment below that this model was for MedStory, a separate health search business that was folded into Bing after HSG originally acquired it. HealthVault does not and has never attempted to monetize its users via advertising.)
- Selling the HealthVault platform to telecom companies to develop healthcare apps for their own subscribers. Didn’t scale beyond a couple of customers in Canada and Europe.
- Selling HealthVault connectivity to Amalga customers through HealthVault Community Connect. The economics of Amalga’s long install process killed this one.
None of these attempts at a business model produced much revenue or any profit.
The problem is that Microsoft is not very good at business model innovation. The company generally tries to follow a sustaining innovation approach of extending existing business models with incremental features and new product releases. When it builds new businesses, it is most successful when it can copy the business model of a competitor. Neither of these options apply to HealthVault. The product has struggled largely because the company was unable to craft a unique business model tailored to its value proposition, preferring instead to follow an existing model from either inside or outside the company.
The most ironic thing about Sean’s note to HealthVault partners is his invocation of Clay Christensen’s work. If Microsoft understood anything at all about disruptive innovation, it would understand that great technology in a legacy business model is sustaining, not disruptive innovation.