Business Case: HoloLens for Health

In a semester project in the study course E-Health of the University of Applied Sciences Flensburg the business case “HoloLens for Health” was determined by a study group with my participation and the market potential for the innovative product in the American health market was calculated.

Team-Pitch against Apple, Google, IBM

Other teams had a similar task and were to research innovative products for the healthcare sector from Apple, Google and IBM and present the business case.In the end, all teams competed in a virtual pitch with the business administration professor as investor.

Our team dealt with Microsoft Health and had chosen this innovative product HoloLens (Version 1), which enthused everyone. The manufacturing costs were determined based on a detailed calculation of the hardware components. Based on the known purchase price and after determining the market potential in the US health care market, the potential profit was determined.

The business case HoloLens was presented in pitch in direct comparison to the other teams.

Results for the US market

In the virtual reality (VR) and mixed reality (MR) sector, a sales potential of USD 5.1 to 12 billion has been identified in the US healthcare market up to 2025. As a result, we saw up to 3.4 million potential users for the HoloLens. In addition, Microsoft also offers the HoloLens for other industries with high potential also:

• 14.8 billion USD – Video Games/Entertainment
• 5.1 billion USD – Healthcare
• 4.7 billion USD – Engineering
• 4.1 billion USD – Live Events
• 2.6 billion USD – Real Estate
• 1.4 billion USD – Military
• 0.7 billion USD – Education

Further Potential exists in other industries also.

In the virtual reality (VR) and mixed reality (MR) sector, a sales potential of USD 5.1 to 12 billion has been identified in the US healthcare market up to 2025. The potential profit was determined on the basis of the known purchase price and after determining the market potential in the US health care market. The business case against the other teams was presented in a pitch.

We saw 16 million potential users in medical training centers, as the product can significantly increase the efficiency of teaching. We also estimated 83,000 users in hospitals in the USA. There is also a demand of about 10 million HoloLens glasses in the care sector, where the glasses can be used to display health data. This presupposes that an Electronic Health Record (EHR) exists there, in Germany electronic patient files (ePA).

As a result, a potential profit of USD 2.191 billion was calculated with the distribution of the forecast volume in the US-Heath market.

Valuation from today’s perspective in 2020

From discussions with the responsible product manager at Microsoft, I learned that our forecast at that time has not (yet) been met. In addition, sales in the USA – but also in Germany – have so far fallen short of Microsoft’s expectations and also of our forecasts.

This is not due to Microsoft’s hardware, but to a lack of applications in the medical sector. PHILIPS is one of the few companies offering the HoloLens-2 with innovative software for medical professionals:

The calculations show the potential of the innovative product Microsoft HoloLens. However, these are not so easy to lift in practice. This is not due to the high acquisition costs, as these are already affordable for ambitious private users.

The German health care system has fallen back more than 10 years behind other comparable European countries. I am currently determining the potential of HoloLens-2 in the German health care sector using the calculation scheme from the study project and I am looking forward to the results.

I would like to work for an innovative company that has recognized and is taking advantage of the opportunities in this market. By the way, our study group received the best grade 1.0 for the housework and the pitch.

This is not so easy with the responsible professor. Isn’t it, Prof. Dr. Bosco Lehr?

Best regards
Thomas Huelse

Quellen

• Term paper of the course: “Business Administration in Health Care” in winter semester 2016/17 by Prof. Bosco Lehr
• Philips showcases unique augmented reality concept for image-guided minimally invasive therapies developed with Microsoft, Feb 24, 2019
• Interview Microsoft Product Marketing Manager/-in HoloLens