Will Digital Health Be The Next Big Thing For Nokia?
In a recent interview to Fortune, Ramzi Haidamus, the President of Nokia Technologies, mentioned that the company is focusing its research on the field of digital health. Nokia Technologies is the innovation arm of Nokia (NYSE:NOK) and teh effort is nascent as the company has yet to launch a product in this market. Yet he believes that digital health comes naturally to the company, since it is known for its high reliability. Since exiting the mobile phone business, Nokia’s innovations have been in the virtual reality space and recently the company launched its OZO high end virtual reality camera. However, digital health seems to be the next area of focus for Nokia. And it is a high growth market that is expected to grow at a CAGR of more than 20% in the next five years.
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Digital Health Solutions Can Unlock $300 to $ 450 Billion In Value By 2018
According to a McKinsey report published in April 2015, tablet and smartphone markets are on track to expand 1.1 and 1.3 times respectively by 2018 and the number of connected devices associated with the Internet of Things (IoT) will likely quadruple. The value created by this expansion will be in hundreds of billions of dollars by 2018 and IoT will unlock the most value in the healthcare space. Consumers are increasingly seeking mobile and digital channels in healthcare and this industry is at the inflection point in terms of consumer and provider adoption. While Nokia has not launched any product in this segment yet, reports suggest that the company might launch smart wearables related to health and well-being. According to International Data Corporation (IDC) the worldwide wearable device market will reach a total of 111.1 million units shipped in 2016, a growth of nearly 45% compared to 2015. By 2019 the forecast of total shipments is nearly 215 million units, resulting into a CAGR (compounded annual growth rate) of 28% in the next four years.
Competition in the smart wearables market is intense with players such as Fitbit, Apple and Chinese vendor Xiaomi grabbing the top three positions in market share for 3Q 2015 with a combined share of nearly 60%. However, several small players jointly command more than 30% share in this market and with its brand reputation and superior technology Nokia should be able to capture a sizeable market share in the smart wearables segment.
While the digital health segment is a huge growth opportunity for Nokia, product innovation and differentiation will be key for the company to succeed in this market. If Nokia’s research in this space can reveal products with features ahead of competition, digital health can be a growth driver for the company in future.
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