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INDUSTRIES CONVERGE?
SEPTEMBER 17, 2014
Adrian Slywotzky
Oliver Wyman
Value Migration
Value Migration
$ BB
$ BB
US Steel Nucor
US Airways Southwest Airlines
Sears Walmart
Compaq Dell
Motorola Nokia
4
Net Profit (1995 $BB)
-2
-4
-6
-8
-10
-12
'71 '73 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07
PCs Agriculture
15%
GM
10%
Profitability
Ford
5%
Chrysler
0%
0% 10% 20% 30% 40% 50%
Market share
15%
10%
Profitability
Chrysler
5%
Ford GM
0%
0% 10% 20% 30% 40%
Market share
15%
10%
Profitability
5%
GM
Chrysler
Ford
0%
0% 10% 20% 30%
Market share
15%
10%
5%
Profitability
0%
-5%
Ford
-10%
Chrysler
-15%
GM
-20%
-25%
0% 10% 20% 30%
Market share
Today Next
Customer selection
Profit model
Strategic control
Scope/alliances
Telco
Media/content/advertising
Consumer electronics
Fight with Go to Search Pick three Go home Fight Watch Forget to Return
spouse store and again return five days
what movie search pick one later, pay
to see whats late fee,
you that trailer get mad
decide I saw?
Netflix in 1999
Netflix now
Stream content
instantly
Without Bloomberg:
Data
Multiple
Multiple A la carte Many screens Incomplete comparison/
connections/
logins pricing and computers information download
subscriptions
problems
With Bloomberg
Easy to
Single
Sleek dual- manipulate:
comprehensive
screen terminal access and
platform
downloading
6.5
4.0
1.9
2005 2014
E-book
Apple
IBM
Samsung
$400
$350
$300
$250
$ BB
$200
$150
$100
$50
$0
1998 2000 2002 2004 2006 2008 2010 2012 2014
$400
$350 Apple
$300
$250
$ BB
$200
$150
$100
$50
Sony
$
1999 2001 2003 2005 2007 2009 2011
180
160
140
120
100
80
60
40
20
0
1978 1980 1982 1984 1986 1988 1990 1992 1994
$250
200
150
$ BB
100
50
$0
1978 1984 1990 1996 2002 2008 2014
$1,750
1,500
1,250
1,000
$ BB
750
500
250
$0
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Tech
Media
XX
Oliver Wyman | 20140917-Medifuture-Tampa-AJS.ppt
The Second Half of the Game
King Kong vs. Godzilla
Four chains to eight
Tech
Telco
Tech
Media
Telco Consumer
electronics
Tech
Media Retail
Education
Consumer
electronics
Financial services
Healthcare
Cross-chain competition
Hassle map
Capacity dislocations
Compete/collaborate ratio
Business design
90 7x growth 89 2.0
over 5 years
80
1.8
70 1.6
Number of rounds
$1,542M
0 $0
2009 2010 2011 2012 2013
200 201 201 201 201
9 0 1 2 3
Source: Crunchbase data referenced at http://techcrunch.com/2014/01/15/vcs-investing-to- Source: Thomson Reuters and Crunchbase for 2008 2010 data, Rock Health and
heal-u-s-healthcare/ Crunchbase for 2011 2013; includes top Rock Health digital health
Note: Healthcare software and apps company early stage funding. innovators and selected innovators identified by OW
Note: Only deals >$2M.
Q: What is retail?
A: $900 BN looking for growth
Diagnostics
Simple
coordination
(with PCPs)
Telehealth
Wellness
programs
distribution
Kiosk/
information
Acute
episodic,
flu shots
Tech/Telco
They love hassle maps
Healthcare
Retail
They love high costs
Dan
Joe
Fee-for-service
Day 1 Day 7 Day 13 Day 14 Days 1419 Day 19+?
Difficulty
Cough up Call 911 &
Ventilator, Permanent Impaired quality of life
Fluid breathing, drugs, damage,
build up onset of
frothy emergency
cardiac on oxygen Cost: $25,000
sputum room
edema catheter indefinitely? +$200/mo for oxygen
Hospital
CareMore
Day 1 Day 1 Day 1 Day 1 Day 7
Steps on
CareMore Quality of life
Fluid nurse calls, Sees NP, Crisis maintained
wireless
build up makes appt, new Rx passes
scale, +3lbs Cost: $600
sends car
CareMore Clinic
$112K
90 days
Diagnostic Pre-op Recovery
Consultation Procedure post-op
tests prep days follow-through
30,000 700
27,820
606
600
25,000
Clinicians 500
20,000
400
15,000
300
10,000
200
5,739
5,000
100
Sites
0 0
Q4 2010 Q4 2011 Q4 2012 Q4 2013
Dec Dec Dec Dec Dec May
08 09 10 11 12 13
Note: Clinicians include physicians, physicians assistants, and nurse practitioners Source: Leavitt Partners Center for Accountable Care Intelligence
Source: http://www.ncqa.org/Portals/0/Public%20Policy/2013%20PDFS/
pcmh%202011%20fact%20sheet.pdf
Collaboration
should begin
Industry
profit
margin Collaboration
begins
Compete Collaborate
100 0
70 30 What should be my
compete/collaborate
60 40 ratio?
50 50
Tech/Telco
Healthcare
Retail
Today Next
Customer selection
Profit model
Strategic control
Scope/alliances
Asset Margins
Type Growth
intensity
Hospitals $0.70 5%
Asset
Type Margins Growth
intensity
Hospitals $0.70 5%
The CONSUMER
LEADERSHIP
IBM Samsung
LEADERSHIP
Bloomberg iXpenseit
Get updated information for stocks Create expense reports
and markets and summaries
LinkedIn OmniFocus
Access your professional Track tasks by project, place,
network and contacts person, or date
iShare Streamtime
Connect to Microsoft Track customer information
SharePoint Server
WebMD
Map My Run
RunKeeper
CVS Caremark
ZocDoc
Healthline
Vitals
SparkPeople
My Pregnancy Today
Fitbit
HealthTap
Rite Aid
First Aid by
American Red Cross
Nike+ Running
Restaurant Nutrition
Scale
Momentum
Critical mass/company
Consumer relevance
Silicon speed
Telehealth
Self-directed consumers
Internal competition
Cross-chain competition
Hospital systems
Medical groups
Insurers
New/independent
Retailers
care teams