Apple May Have Something Entirely New Up Its Sleeves
Updated from 9:33 a.m. to include comments from Jim Cramer in the fifth paragraph.
Steve Jobs may not have left Apple (AAPL) - Get Report with a product pipeline, but it's clear the world's largest company by market cap has more than a few health-related aces up its sleeve.
While it's unclear what new products Apple may be developing, Creative Strategies President Tim Bajarin says health is likely the theme considering that its become a key part of its mobile platform, tying it closely with the iPhone and the Apple Watch.
"If Apple sees a hole in the health area that could benefit from a product they create that can tap into their hardware and device ecosystem, it makes sense for them to create that device," Bajarin said in an e-mail.
Despite the obvious health implications of the Apple Watch, CEO Timothy D. Cook told The Telegraph that it won't seek Food and Drug Administration approval for the wrist-held computer though it may do so for other products. "I wouldn't mind putting something adjacent to the watch through it, but not the watch, because it would hold us back from innovating too much, the cycles are too long," Cook said. "But you can begin to envision other things that might be adjacent to it -- maybe an app, maybe something else."
"My view on Apple is unchanged," said TheStreet'sJim Cramer, portfolio manager of the Action Alerts PLUS Charitable Trust Portfolio. "Everyone seems to want to trade the stock and they should just own it as it is inexpensive and a great call on new products down the pipe."
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As Apple has increased its research & development spending (it spent $8.1 billion in fiscal 2015, up from $6 billion in fiscal 2014 according to the company's most recent 10-K filing), it is clearly moving beyond smartphones, tablets and computers.
For starters, Apple has also been steadily increasing its supply-chain commitments over the years, suggesting it's not sitting back on its laurels.
Assuming Apple wanted to seek FDA regulation on an adjacent product to the Watch, it could be something used to diagnose or treat a specific disease. The Cupertino, Calif.-based company would not be able to make a medical claim about benefits and risks without getting FDA approval first.
Jackdaw Research Chief Analyst Jan Dawson said it may be another wearable device, specific for treating a certain disease.
"I would think that the adjacent' device Tim Cook referred to would be another wearable device, one which can perhaps measure vital signs and digest the associated data in such a way that it would help to either diagnose or treat a condition," Dawson said via email. "In addition, given Apple's ResearchKit initiative, it's easy to imagine that Apple might want to partner with medical device makers to integrate their functionality into the Apple Watch or other related products going forward to aid in diagnosis and treatment. That might require some sort of additional device, either an alternative to the Apple Watch or an accessory to it, to integrate with other medical devices."
Apple couldn't be reached for comment for this story.
Health has become an important part of the company's future, most notably the Apple Watch. On the company's fiscal fourth quarter earnings call, Cook highlighted that he heard from customers who credit the Apple Watch "with saving their lives and customers are finding new applications all the time in their day to day activities."
Apart from the Apple Watch, there is significantly more the company is doing when it comes to health.
As part of iOS 8, Apple introduced its first foray into the arena with its Health app, which puts fitness, nutrition, sleep and other vital information in one place. Doctors are able to access the information if given consent from patients. Last year, Apple announced HealthKit, an open source software framework designed for medical and health research. There are now more than 1,600 HealthKit enabled solutions as of the end of fiscal 2015, according to Cook, suggesting medical researchers are increasingly seeing a purpose for the software framework.
In March, Apple took it a step further, introducing ResearchKit. In October, Apple announced new research studies on autism, epilepsy and melanoma, in addition to the work already underway for asthma, diabetes and Parkinson's disease.
Apple has also been busy expanding its partnerships, most notably having partnered with IBM's (IBM) - Get Report Watson Health Cloud.
In March of this year, Cramer anointed Apple a "healthcare company in tech's clothing."