A day late and dollar short

A day late and dollar short

It has been widely said that imitation is the sincerest form of flattery, well if that’s true Medtronic (NYSE:MDT) has just paid Dexcom (NASDAQ:DXCM) one huge compliment.  At the recent Health 2.0 conference in beautiful Santa Clara, California Medtronic unveiled their smartphone enabled continuous glucose monitor, something that Dexcom did long ago.  According to a story published on the mobilhealthnews web site the device is about to begin clinical trials.

What Diabetic Investor finds so amusing here, other than the fact that Medtronic is once again behind the curve, is the device will only work with …wait for it … an iOS app. Now we all know that the new iPhone 6 and 6 plus are selling like hot cakes and the new Apple operating system iOS8 is supposed to be whiz bang. Yet we also know there are some major issues with the new iPhones and the new operating system, but never mind that as with any new technology glitches aren’t uncommon and we’re pretty sure Apple will get it right. Nope what’s truly amusing here is that Medtronic has just limited the market for this way cool yet to be approved by the FDA device to less than 50% of the smartphone market.

Now Medtronic isn’t the only diabetes device company to fall In love with the way cool iPhone and believe that Apple will soon rule the world, Johnson and Johnson (NYSE:JNJ) recently introduced an updated version of their VerioIQ conventional blood glucose monitor, the Sync which – wait for it- sends a patients readings to an app which –wait for it – only works with the way cool iPhone.

Listen Diabetic Investor is not anti-Apple and actually welcomes this tech behemoth to the wacky world of diabetes. There is no question that this company which was once on the verge of dying, yes young ones this almost did happen, has transformed mobile communications and mobile computing. That Apple is well known for their superior, innovative design.  Yet we also know that Apple no longer dominates the smartphone world and that Android from another tech behemoth Google now holds that position. It’s no accident that Google also is entering the wacky world of diabetes, but we digress.

Why the big deal here, after all while the use of CGM systems are increasing only a fraction of patients use these devices.  So how many Apple using Medtronic CGM patients can there be. Or put more simply is this market actually large enough to be a profitable business.  Excuse the play on words but that’s not the point or put another way it’s exactly the point.

As we consistently state the world of diabetes management is changing and soon interconnected diabetes management will become the norm not the exception. This is the reason companies like Medtronic, Dexcom, JNJ and many others are developing diabetes devices that seamlessly integrate with a smartphone. The only problem here is that the vast majority of this development work has centered on the way cool very popular yet not market leading Apple technology. These companies are ignoring more than half the market by not developing systems that are platform neutral, systems which will work with both Apple and Android.

Diabetic Investor has asked many in the industry why, since they are spending the money anyway, they don’t develop systems which are platform neutral. After all this seems to make sense from a cost perspective, FDA perspective and most importantly a business perspective. Diabetic Investor isn’t aware of too many businesses which thrive by ignoring more than half the market. This would be like these same companies saying we don’t want to distribute our products through Walgreens or CVS, and instead make Rite Aid our primary focus. It’s not just crazy thinking, its stupid thinking.

Nor do we buy the argument that iOS is easier to work with as it’s just Apple, while Android is used by Samsung, HTC, LG, etc. We have reached out to several app developers about this very issue and while iOS may be easier than Android, there isn’t that much difference. Even if there was these companies could use something called common sense, yes we know this asking a lot, and develop apps that work with the most popular Android smartphones.

To Diabetic Investor this lack of vision is the reason why newbies, large and small, have a chance in this market. The big boys and girls in this market cannot see the forest through the trees. They believe that Apple is the only system used and that Android doesn’t exist. They ignore what’s going on before their own eyes either because they are too cheap, too stupid or both.  Keep in mind that many of these geniuses believed that they would sell more meters if they came in pretty colors. Need we say more?

Diabetic Investor has always held Dexcom in high regard not just because the company has been under the solid and experienced leadership of departing CEO Terry Gregg. We hold this company in high regard because they get it. They understand that patients, physicians and educators want systems that actually work. They see where the future of diabetes management is going and they are not hitching their wagon to Apple alone. They understand in the new world of diabetes management being platform specific is not just stupid but very bad for business.

And while it may drive those folks on the left coast; that pray at the Apple alter, believe that everyone uses an iPhone and those who don’t should be shunned or put in some type of therapy; crazy diabetes is a business. That companies like Apple, Google, Samsung and the like aren’t entering this wacky world for the greater good or some crazy kumbaya moment, they are looking to make money, lots of it. It’s time companies like Medtronic and JNJ get with the program as they risk seeing their billion dollar franchises become million dollar ones.