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Your microwave may soon be letting you know when you need to order more popcorn. With the introduction this fall of a $60 microwave with an embedded connection to Echo and its Alexa voice recognition technology, Amazon took another step toward immersing Echo users in an ecosystem in which their every request is monitored, responded to, and if possible, converted to a sale.
In the internet economy, an ecosystem is a contained system of consumers, products, and suppliers, with embedded triggers for interaction among them. It works like a pinball machine. Within the closed system of the machine, the pinball, once launched, darts from bumper to bumper, rolls down chutes, falls into holes and pops out, rewarding the player with blinking lights, bright sounds, and points. Some of the movement is created by the user’s skill with flippers, but much of it is created by the internal workings of the game.
The most desirable pinball machines, the ones that draw the most people to launch that pinball, are the ones with the most immersive experience and the best rewards: the brightest lights, the most exciting movements, the most invigorating sounds, the longest play time, and the most points. The goal of the machine is not to facilitate any one instance of a ball setting off a light or sound, but to use many of these instances to draw more players to the machine.
Similarly, the goal of a business ecosystem is not any individual sale, but to create traffic. More traffic translates into more interactions, more information, more loyalty, more sales, and more opportunities for creative integration into people’s lives.
Amazon is not interested in making money on microwaves. The company will gladly take a loss by selling a $60 microwave if that will bring more people into its ecosystem. Neither is Amazon interested in selling popcorn. That is just one more bright light to make the ecosystem appealing. The key is to establish a solid framework for the ecosystem; with that, it can be added to at will.
Ecosystems and the Internet Economy
The ability to create and grow ecosystems is a fundamental principle for success in the internet economy. The imperative to create an immersive ecosystem, where the consumer can interact independent of location or a particular device, has led to the tech giants’ expansion into retail stores, automobiles, and the consumer’s home, making the line between digital and physical environments increasingly irrelevant.
The Amazon ecosystem has become almost unimaginably pervasive. The broadest framework of the Amazon ecosystem is Prime. As of June 2018, Amazon had 95 million Prime members nationwide. The company has raised the Prime membership price in the U.S. only twice since the program began in 2005, but has worked overtime to enrich benefits, from free streaming video to two-hour grocery delivery from Whole Foods Markets.
Amazon also has developed highly innovative ways to enter and engage with its ecosystem. Amazon Echo can now connect with more than 20,000 smart home devices from 3,500 different brands. Echo also is being built into center console displays of new Toyotas, BMWs, and Audis, or you can buy Alexa Auto for $50 to bring Alexa into your vehicle.
Amazon is not the only game in the arcade. Its main rivals, Apple and Alphabet, also have developed ecosystems anchored by operating systems that bring seemingly limitless applications to their smartphones. Their initial strategy was to build an ecosystem around the device that travels with you throughout the day. They also have developed voice recognition technology (Siri and the Google Assistant) and are expanding the hardware options through which consumers can access their ecosystems. Google, in particular, has made significant inroads with its Google Home device.
All three companies have managed to expand their ecosystems far beyond what any of them could do alone by making participation by third-party vendors inexpensive and easy. For a few dollars, Amazon offers manufacturers of electronics and home appliances a small chip that they can build into their products to connect with Alexa. Apple and Alphabet have long provided open access to their operating systems to developers that want to develop apps for download or sale in the Apple or Android app stores. These same operating systems are now providing options for third parties to link with devices that are moving the companies’ ecosystems into consumers’ homes.
All of this means that consumers are growing accustomed to finding more and more of what they want within their chosen ecosystem, and more and more ways to access what they want immediately, wherever they are.
Healthcare on the Table
In The Who’s “Pinball Wizard,” Tommy can “beat my best.” As the tech giants eye healthcare, their skill in growing ecosystems that attract and retain consumers with seamless access to an increasingly vast range of services should give healthcare leaders pause.
It is no secret that the tech giants are very interested in healthcare. Both Apple and Amazon are reportedly developing new models for healthcare clinics, starting with their employee populations. Amazon has acquired online pharmacy PillPack, and its joint venture with Berkshire Hathaway and JPMorgan Chase to reduce healthcare costs for the three companies’ 1.2 million combined employees has drawn constant coverage since it was announced.
Apple introduced significant upgrades to its Apple Watch in September that turn the watch into a health monitoring device, complete with an electrocardiogram monitor app that has received FDA approval. And Alphabet recently convened its first healthcare conference for the various units across the company working on healthcare solutions in artificial intelligence, in-home monitoring, wearable devices, and anti-aging research—evidence of its intent to take a more focused approach to the healthcare space.
David Feinberg recently announced that he is leaving his position as CEO of Geisinger Health System to lead Google’s healthcare initiatives. A few weeks before the announcement, responding to the question of what kept him up at night as a health system CEO, he said: the fear that Google and Apple would “eat our lunch” at serving patients and being responsive to their needs.
As consumers grow more familiar with and more immersed in the tech giants’ ecosystems, finding healthcare as another service available to them within the ecosystem would feel completely natural. And if the tech companies offer healthcare with the same engaging experience that they offer for other services, accessing healthcare services within the consumer’s chosen ecosystem could be as seamless as streaming a video or ordering more popcorn for the microwave are today.
Healthcare organizations have never faced competitors quite like Amazon, Alphabet, and Apple. One thing is certain: They play a mean pinball.