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 A growing number of physicians believe that the interoperability of medical devices — their ability to communicate with each other — could make hospitals safer and more efficient,” reported MIT Technology Review in a July 2008 article surveying the state of interoperability in the increasingly high-tech world of hospital care. Interoperability could help realize the full potential of many of the new devices now finding their way into ICUs and operating rooms, and could also help reduce the distressingly high rate of errors in hospital care.

Cited as an example was the Center for Integration of Medicine and Innovative Technology (CIMIT)'s Medical Device Interoperability Program, based at Massachusetts General Hospital. CIMIT has developed two demonstration projects that illustrate the idea of the "plug and play" operating room. One project is an integrated ventilator that tackles the job of taking an x-ray of a patient on a ventilator without having to turn the ventilator off while the image is taken, as is common today. The integrated ventilator reduces risk by "simply not having to turn off the ventilator at all," says Peter Szolovits, a professor of computer science at MIT who studies medical data integration.

Taking a different approach to the problem is Cambridge Consultants, which in March announced the release of a new platform for wireless device connectivity… said to make almost any medical device wireless for less than $10 of extra manufacturing cost, according to the MedGadget blog. The platform can be used with multiple devices, providing a connection to online records through a monitoring station, home PC or set-top box, and can even be used to transmit data via mobile phone for health and fitness applications on the move.

The iPhone 3G hogged its share of the spotlight over the weekend. The “twice the speed, half the price” phone sold upwards 1 million units over the weekend. But while most of the spotlight was focused on the new phone itself (and the difficulties experienced during the launch), I believe time will show the iPhone App Store — a iTunes-integrated online store that allows consumers to easily install a seemingly endless variety of games, utilities and other applications — was the Apple release most deserving of the weekend spotlight.

The new features (3G antenna, standard headphone jack, etc.) are improvements, don’t get me wrong. But they are the sort of sustaining improvements that customers expect, and they don’t exactly break new ground. I doubt whether these features alone can propel the iPhone to the level of success that Apple’s other “i” product has achieved. (If they could, you’d see a lot more buzz about the LG Dare and the Samsung Instinct).

It is the App Store that adds features in a disruptive way that other phones can’t match. With it, the Apple finally gives consumers a way to conveniently add third-party programs to their phones. (I’ve used both Palm OS and Windows mobile devices and can testify that until now this has been neither a quick nor a convenient process). In the same way that the iTunes music store made the iPod much more than another digital music player by allowing the consumer to easily buy, organize, sync and play music, the App Store makes the iPhone more than another smartphone. It turns it into a computer in your pocket, ready to be customized with the applications that you want.

How significant will the effect of the App Store be? Well, if the history of the iPod before and after iTunes is any guide, the effect will be enormous.

Prior to the release of iTunes in April, 2004, no more than 1 million iPods has been sold during any quarter. After it was released for Windows in October of 2004 (it was a Mac only release for the first few months), at least 4 million iPods (and as many as 22 million!) have been sold every quarter.

Of course, there are differences. Consumers already had well-established habits relating to buying and listening to music that the iPod + iTunes could build on. Similar habits relating to the use of third-party applications on mobile devices may not be as prevalent. And this time, the competition isn’t as far behind. Google is hard at work pushing its own mobile platform, Android, with headset makers and application developers (and might even be developing a Google phone). Also, incumbents like Nokia, which acquired Symbian recently, aren’t sitting still either. Both may be able to offer consumers devices that are as flexible and application ready as the iPhone in the near term.

In the face of these challenges, it will be interesting to see whether Apple will be able to repeat the success of the iPod. It is doing plenty right. But will it be enough?

VS.

An announcement from Research in Motion last week put two distinct mobile device strategies in stark relief: while RIM is opening up its beloved software to other device makers, Apple continues to play the proprietary game. Which of these two strategies makes the most sense, given current market conditions?

The value chain evolution theory, described in chapter 5 of The Innovators Solution, postulates that integrated solutions are best for developing markets in which new technologies are just getting started. Since there is so much uncertainty afoot, it makes sense for one company to oversee multiple parts of an offering in order to ensure consistent quality and a simple, easy to use interface. Think of how in the early days of computing a company like IBM built the entire mainframe from componentry to software. Since the industry was in its infancy and relatively little was understood about it, the world-class scientists at IBM needed to collaborate on all aspects of product design in order to deliver a top-notch, fully reliable product. IBM leveraged its expertise to achieve 70% share in the mainframe market throughout the 60s and 70s.

However, as markets mature the game changes. Once in the market, technologies become less novel and less mysterious, leading to the emergence of industry standards. As a result, expertise begins to commoditize and value chains modularize. Astute entrants, then, can begin to pick off attractive niches with focused business models that offer improved performance along certain, prized dimensions such as cost, reliability, or convenience. They carve out valuable spaces for themselves while advancing the industry as a whole. As computing matured and the mainframe gave way to the minicomputer to the PC, the industry fragmented: hardware companies like Compaq emerged to assemble the machines, chip companies like Intel provided the processors, and software companies like Microsoft programmed the operating system and various other software applications. Before too long, as Innosight founder Clayton Christensen likes to point out, there was Michael Dell assembling a computer in his dorm room. A task that had previously required a massive company employing the worlds top computer scientists could now be accomplished by an enterprising college kid. Whats more, combine Intels engineers and Dells savvy business processes and you get a more powerful and more affordable computer than any integrated provider could offer.

So whats the lesson for Apple and RIM? Apple, which essentially invented the PC and many vital software applications, fell from grace through the 80s because it tried to hold onto its proprietary, integrated architecture and refused to license its operating system. Controlling its value chain from hardware to components to software had enabled Apple to put together a consistently delightful product, but as the WinTel and Dell value network developed and matured the company got left in the dust.

Fortunately for MacHeads, long-term Apple stock holders, and portable music appreciators, Steve Jobs and his merry band had enough in the tank to regroup and reinvent another, adjacent industry with their iPod. And how did they do it? By integrating. They brought together the device the iPod and the software iTunes in a novel, simple to use, convenient, and highly effective way. An integrated provider, remember, can master the kinks of a new and emerging market to provide the reliability and performance that customers need. Similarly, RIM was famously integrated. Its handy devices did not rely on the buggy Symbian or Microsoft OS, but operated on proprietary, delightful software, and the Blackberry came to dominate the wireless handheld device market.

So that brings us up to the present. As has been widely predicted, handheld devices iPods, PDAs, cell phones are rapidly converging. Your Blackberry now checks email, makes calls, takes pictures and plays MP3s and your iPod will soon become your iPhone. Technological advances and emerging industry standards are driving the convergence. More and more people are leaving their iPods at home, since their homely standard-issue Verizon phone plays songs, and who has room in their pocket for two devices?

And yet, Apple continues to insist on proprietary, integrated architecture: iTunes only works with iPods. For how much longer will people stick to iTunes, as their iPod becomes less essential and competing services Napster, Yahoo Music, Real Music, eMusic get better and better? All the consumer insight and design savvy in the world may not be enough to ward off the multiplying hordes of competitors at different, now modular, parts of the value chain (Christensen has been warning about this for some time now, on this blog and in Business Week).

RIM, on the other hand, has boldly stepped out of the integration trap. By making their email service available to users of other devices, they are seeking to become the "Intel Inside of device software, rather than the Apple Computer of PCs. As markets modularize, this seems to be the wiser strategy.