Here's what to make of Amazon's potential connected health play (AMZN)

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Amazon has a secret team called 1492 is exploring opportunities for the company in digital health, according to CNBC.

While there's no evidence that the team is currently exploring connected health devices, it's possible it could eventually do so.

This is an approach that other large tech companies are also taking — earlier this year CNBC also reported that Apple had a similar group working on non-invasive blood glucose monitoring. Amazon evidently wants to shield its efforts from public attention; it has removed all mentions of 1492 from its careers site and all employees working in the group have removed it from their Linkedin profiles.

Amazon's potential advantages in the connected health device market likely outnumber it's disadvantages.

It has the scale. Amazon has transformed from a US-centric business into a truly global powerhouse — about one-third of the firm's e-commerce sales come from outside the US, while its Amazon Web Services cloud business is the global market leader in the public cloud space. That means it has existing relationships with clients (many of whom are likely in the healthcare industry) as well warehouses and fulfillment centers around the globe that could help it scale up a hypothetical connected health device group.
It has the underlying technologies. Since Amazon released the original Echo in 2014, it's been focused on improving the artificial intelligence (AI) that underpins the device. And it has open-sourced the Lex AI that powers the Alexa voice assistant. Since connected medical devices and robotics likely also can be powered by similar software, it's possible Amazon could leverage that technology to move into connected health devices.
But based on what we know right now, there's still a lot of work the company needs to do if it wants to enter the market. While the Echo has become immensely popular with consumers since it was first released, the Alexa voice assistant still can't answer more complex questions from users, according to several recent reviews. That means the devices likely aren't yet ideal to be placed in doctors offices or other settings where they'd need to answer complex questions about patients' health, for instance.

Amazon has a potentially lucrative opportunity. Right now digital health solutions and connected health devices aren't that common — many hospitals and doctors offices still rely on decades-old machines, computers, and other technologies to power their businesses. But that's about to change — the global healthcare sector will invest $410 billion in software, hardware, and services in 2021, up from about $59 billion currently, according to Grand View Research. That means that if Amazon gets into the connected health device market soon, it's likely going to be a lucrative move since it can get a slice of the market as it scales rapidly.

Peter Newman, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on digital disruption in health care that:

Explains the role of digital technology in medicine, and how it is and will continue to disrupt health care.
Provides an overview of disruption in clinical care, the health records space, and care in everyday life.
Analyzes how the growth of digital health technologies will save time and reduce costs for the health care sector.

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