The market for wireless solutions in health care is anticipated to reach $1.7 billion by 2014. This growing market will benefit companies that are involved in manufacturing network and wireless equipment. The first name that comes to anyone’s mind when looking for wireless and network solution providers is Cisco (NASDAQ:CSCO). Cisco, with a rich product portfolio of wireless and network equipment, is looking to cash in on this market in the future. By the end of year 2015, it is anticipated that 500 million people will be using wireless health and wellness applications.
The New Opening
Due to an inadequate network infrastructure U.S. hospitals encounter a loss of $8.3 billion as productivity losses. The key factors that contribute to this loss are inefficient email systems and lack of Wi-Fi connectivity. The lack of Wi-Fi corridors restricts the efficient usage of various health care and electronic health record apps. The security of the network is also an important constraint with numerous hand held devices (smart phones and tablets) connected over a Wi-Fi in hospitals. More and more doctors, nurses and health care professionals are using these devices.
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The FDA is showing a high concern for security of networks in hospitals for various security issues arising from malware and cyber attacks. The FDA has started recommending every hospital to audit various security measures to safeguard the records of the patients and also the various medical devices connected over the network.
This also creates new opening for Cisco's BioMed Network Admission Control (NAC) and can leverage Cisco’s top line and bottom line of the balance sheet.
Cisco is an established and trusted brand name as world’s largest networking equipment manufacturer. Cisco is focused on the growing demand of cyber security and network solutions. This was illustrated with the $2.7 billion acquisition of Sourcefire to shore up its cyber security product portfolio. This will go on to prove a big asset for Cisco in the future as Sourceforce had a strong foothold in the cyber security network market.
Furthermore, Cisco also provides Electronic Health Records integration through partnership with Allscripts. This synergistic Cisco-Allscripts tie up will be beneficial for both Allsripts & Cisco to achieve deeper penetrations.
Cisco’s Medical Grade Network provides a better and more secured network infrastructure to the hospitals. This provides a seamless connectivity of multiple devices and clinical staff in the hospitals and provides video streaming technology for remote diagnosis and treatments.
This move of Cisco can leverage its top and bottom line to record growth in the future. As heard on Cisco's recent earnings call, it recorded decline in revenue. The company recorded revenue of $11.2 billion, down by 7.8% year over year and 7.4% sequentially. Product sales contributed 75.5% to the total revenue which was down by 10.7% while services witnessed a growth by 2.7% Cisco’s focus on health care and wellness market will certainly offset the decline and will be an impetus for growth of its products sales and services in the future.
Cisco’s Internet of Everything (IoE) can also be a boon for the wellness and health care segment. Internet of everything is a raw niche market; not only hospitals, but various industries will also adapt to IoE to increase productivity in a secured network environment. The market for IoE is estimated to reach $19 trillion in the next few years. Cisco’s IoE coupled with its health care will be creating new waves for the high tech hospitals and industries in the next few years.
Cisco WebEx for wellness and health care will further assist hospitals by facilitating communications and collaboration of the workforce irrespective of the geographical location and facilities. This reduces costs associated with medical education and application training, so health care organizations can improve resources for patients, communities and medical professionals by incorporating Cisco’s WebEx solutions.
Cisco might be facing a rough path with its current revenue streams, but investors should always consider that the focal point of Cisco has been the internet of everything, a trillion-dollar market and health care network. Looking into the product portfolio of Cisco, it is certain to benefit from this new gigantic market. Cisco is already being preferred for data centers and cloud, which again will have a positive impact on its balance sheet in the near future.