Microsoft Abandons Hope of Making Profits on its HealthVault Personal Health Record Product in US

There was a very interesting story in the Financial Times of London today reporting that Microsoft has decided that its highly-touted personal health record product called HealthVault can't make a profit in the US. The reason given is that the complexity and fragmentation of the US healthcare information market apparently makes making a profit impossible.

Microsoft launched the open-source, cloud-computing HealthVault system with high-hopes in late 2007. According to the HealthVault web site:

"HealthVault offers you a way to store health information from many sources in one location, so that it's always organized and available to you online."

"HealthVault is working with doctors, hospitals, employers, pharmacies, insurance providers and manufacturers of health devices - blood pressure monitors, heart rate monitors and more - to make it easy for you to add information electronically to your HealthVault record."

HealthVault is free to users. At the time of HealthVault's launch, Microsoft said it would make money by encouraging increased search activity. Peter Neupert, corporate vice-president for health explained at the launch:

"The way we make money is by encouraging online activity, and through our search application. We know that search is a big business, it's an important tool, it's where consumers are today. And by growing the overall search market, and delivering more value to consumers, and delivering a better end-to-end search experience, that's where we can make our money to support this effort."

Microsoft thought it could generate sufficient money to cover costs and then some from ads placed next to HealthVault search results. Obviously, that hasn't happened.

The FT article says Microsoft "has decided not to charge users directly for HealthVault in the US. Mr Neupert said the company had also resolved not to pursue sales from advertising or other revenue sources via third parties within the country." He also told the FT that HealthVault would now be used to simply " 'increase the brand relationship' by raising its [Microsoft's] image with customers as 'important, critical and trusted'. "

The FT says that, "HealthVault is generating revenues in some other countries, with Microsoft receiving financial sponsorship in Germany, Canada and Wuxi province in China. It continues to look for funding in other countries and regions to generate income."

The FT did not say, however, that Microsoft was making any profits in those countries.

Microsoft would not say how many HealthVault users there are in the US. It only said that the number was "far more" than the tens of thousands.

I wonder how Google is making out with its free Google Health offering?

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