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Google Retooling in Pursuit of $423 Billion Opportunity

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Geisinger CEO to lead Google Health

Last month, Alphabet’s (GOOGL) Google set up a new healthcare unit, Google Health, which unifies its various digital health initiatives. Included in the Google Health unit is a healthcare-focused team that previously operated under Google’s British artificial intelligence subsidiary, DeepMind.

Google has tapped healthcare veteran David Feinberg, CEO of Geisinger Health System, to head Google Health. Feinberg is expected to join Google on January 3.

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Google pursuing differentiation

With the new Google Health unit, Google is focused on creating digital products and services that can be sold to hospitals and doctors. It’s an approach that could differentiate Google from competitors such as Amazon (AMZN) and Fitbit (FIT), which are also pursuing healthcare revenue. Amazon has teamed up with Berkshire Hathaway (BRK) and JPMorgan Chase (JPM) on an employee medical insurance program that would serve them as well as other companies that might be interested, and Fitbit builds wellness gadgets that consumers can buy for themselves or companies can purchase for their employees to encourage healthy lifestyles among their workforce.

A $423 billion revenue opportunity

The commercial opportunity ahead for Google Health looks attractive. According to Zion Market Research, the global digital health market is on its way to generate $423.1 billion in annual revenue by 2024. The market was estimated to be worth $122.7 billion in 2017.

For Google, setting up a unit that combines its separate health initiatives could accelerate the commercialization of its digital health products, which could diversify revenue sources for Google and its parent, Alphabet. Google, Alphabet’s largest subsidiary, generated $33.6 billion in revenue from its advertising and non-advertising operations in the third quarter.

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