Think People
While Amazon’s earnings may not have lived up to expectations they have once again rocked someone’s world and this time it’s our wacky world. Yesterday the company made the deep dive into the diabetes pool with some conventional meters. The meters aren’t overly special, nor do they do anything that different from the horde of way cool whiz bang clouded enabled systems that do everything but clean your kitchen.
Now with the meter costing $23.15 and test strips $10.99 – the price for Prime members – no one including Amazon is making a boatload of money here, well not yet anyway. But if you will excuse the expression that isn’t the point. Once again everyone else is looking at what’s directly in front of them and cannot look into the future, a future where Amazon will be a major player in diabetes.
As we noted yesterday Amazon has massive scale combined with logistics expertise. There isn’t one diabetes product, drug or device, they cannot deliver directly to the patient. In the future snarky Alexa will not just automatically re-order test strips, she’ll refill prescriptions and send information to the patients’ health team.
Alexa will also have lots of help, as it’s just a matter of time before the Dexcom G6 or Libre also start talking with Alexa. Throw in any of the way cool “smart” insulin pens who will also talk with Alexa and you have all the makings of a Tyler. Who says that Dexcom or Abbott or both won’t start using Amazon to fulfill orders. Who says that a company like Companion Medical who makes a way cool whiz bang “smart” pen won’t either?
Amazon is correctly entering diabetes the easiest way they can, also the category with the least amount of risk. Amazon isn’t stupid they know BGM is dying a slow and painful death, but they also know it will be a profitable death march. Folks there is a reason Platinum paid $2 billion for LifeScan and then leveraged the purchase to the hilt. Even as shell of its former glory LifeScan still throws off nearly $500 MILLION in free cash. HELLO
Amazon does not yet have the scale LifeScan does, but they have a broader plan to expand their diabetes offerings. Will they reach LifeScan size, in BGM no, but in terms of number of patients with diabetes we think its possible. Perhaps the best way to think about this first product is like a test drive, a way to work out the kinks and learn about the market.
The reality here is everyone is looking at this from the perspective of what it means for BGM when we could care less about BGM. There is a much bigger prize here and Amazon has the money, scale and brand name to make it happen. If everyone else cannot see this well that’s just too bad and it won’t be the first time.
As Momma Kliff used to say you can spend all your time staring at what’s directly in front of you or you can use your eyes and look ahead look beyond the horizon look to the future. Amazon has been a transformative some would say a destructive force because they aren’t looking at what’s happening today, they are planning for 5 years from today. Given their success our money is on the folks from the great northwest. They may not get it right all the time, but they will get it right.
