Last week Dell sent a lightning bolt through the cloud with its announced intent to acquire InSiteOne, the granddaddy of cloud utilization for image disaster recovery. Having had a few days to contemplate the move, here are some thoughts on the implications for the healthcare image management market.
Market Synergies
Dell has been on a rip as of late in terms of positioning itself in the healthcare market. The company has always been aggressive in terms of the hardware market. Show me a hospital that doesn’t have some Dell servers or desktops in its inventory! But with acquisitions of JJ Wild and Perot Systems, and the absorption of the mass exodus of IBM’s health imaging team, Dell seems to be broadening its horizons in healthcare.
From HIMSS, I commented in a prior blog on the brilliant move to provide EMR managed services through the combination of Dell platforms and Perot services. Dell has also been aggressive in terms of developing enterprise image management solutions by capitalizing on other Dell acquisitions. The purchase of InSiteOne is one more “arrow” in Dell’s image management quiver.
It is unclear to me just how Dell intends to blend InSiteOne into the mix, as it already had established relationships with other companies, frequently teaming with TeraMedica and Acuo Technologies for enterprise applications.
And what’s in it for InSiteOne? Having lived through a similar situation with a company intent on making business process outsourcing a major business line, but recognizing it just didn’t have the capital to do it, perhaps InSiteOne realized that it would be difficult to compete in a market of “big boys” with deep pockets. Joining Dell immediately enhances the InSiteOne data center footprint, and allows it to grow. The jury is still out as to the implications for expanding InSiteOne into enterprise imaging. Its core business of disaster recovery services remarketed through other vendors may now be impacted, while at the same time development of enterprise-scale applications may impact Dell’s relationships with other vendors.
Industry Trend?
Has Dell directly or inadvertently set off an industry consolidation trend? How will the likes of EMC, IBM, HP and others react? Dell has set a precedent, and now it will be interesting to see if others follow. And what are the implications for healthcare providers? Less competition could drive up the cost of applications, while on the other hand business synergies among industry players could make for stronger product solutions and encourage healthcare providers to invest.
I recall a prior engagement where a large medical center was seriously considering a small player in the enterprise imaging space, but backed away out of concerns as to whether they would be in business in two years, or would have been swallowed up by some large company that eventually decided to no longer support the application. So there may be strength in a consolidation. Alternatively, was Dell just looking to acquire a huge installed base upon which to build?
Business Impact?
On the downside, Dell may have to watch its backside. Healthcare technology vendors that today use Dell products as part of their offerings may suddenly decide they are aiding and abetting a competitor on the enterprise image management front. I saw this happen twice with IBM’s forays into the dictation market. IBM had great products in VoiceType and MedSpeak/Radiology, but opted out of the business based on its size and the very fact that it put it in competition with some of its best applications providers. The real question is … are these equipment sales anywhere close to what Dell can realize by becoming a major force in the enterprise platform and services market?
What of InSiteOne customers? How will a non-Dell hospital react to having to interact with Dell instead of InSiteOne? Will they perceive this as Dell getting a foot in the door to leverage them for additional business?
These are interesting times. Sit back and enjoy the ride. It sure it will be interesting to see how this evolves.
