The key to understanding VMware (NYSE:VMW) and the Pivotal Initiative is that its cloud won't be based on the unstructured data that makes Amazon.Com (NASDAQ:AMZN) so compelling, but instead will be based on structured data and the Internet of Things.
Well, structured data and security. Structured data, security and a deep-pockets partner in General Electric (NYSE:GE). Structured data, security, a deep-pockets partner in General Electric and an understanding of industrial markets. (Bet you didn't expect a kind of Spanish Inquisition.)
Much of this is explained in a CenturyLink (NYSE:CTL) advertorial now playing at another site. Healthcare must embrace cloud computing, writes Scott Good, because it's the only infrastructure that can get the industry where it needs to be by 2015, into a place where everyone has a complete Electronic Health Record.
The real key to healthcare and the cloud is that the cloud can provide enormous benefits in terms of analyzing the data that results from having an EHR, and in extending that EHR to devices worn by patients both inside and outside a hospital.
VMware has put out a white paper on its efforts in cloud-based healthcare but the real key here remains GE.
GE is a leading supplier of hospital equipment. Hospital equipment produces an enormous quantity of data. GE has been delivering this data to hospital computing systems, including its own EHR system, called Centricity, for years.
Along with other analysts I had expected that, when GE decided to get serious about a health cloud, it would be working with Microsoft (MSFT) with its Azure cloud platform. The two merged EHR systems in 2011. Instead, it has apparently decided to go with VMware and Pivotal.
So far GE has committed only $105 million in cash to the Pivotal venture, which will enable the construction of a functional cloud system using structured data. But GE and VMware are already publicizing their connection's ties to healthcare and Centricity.
A larger "win" for VMware could come as the cloud it's building is extended to devices, including devices worn by patients. There have been enormous problems in extending the use of devices, owing to the fact that, once they're actually relied upon for a diagnostic purpose, the individual device has to be approved for use by the FDA. This process is expensive and time-consuming. But it could be speeded up considerably if the network, and processing, were both approved ahead of time. This deal enables that.
The Internet of Things is going to be bigger than the Internet of anything else, in terms of its data load. Healthcare is going to be a big part of that. VMware has just put itself in pole position for that opportunity, ahead of other cloud providers.
Disclosure: I am long GE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.