Ecosystem of health-focused apps & accessories will further strengthen Apple, UBS says

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Following a deluge of health and fitness devices announced at CES, one analyst has said he believes Apple's Health application and HealthKit tools for developers will help foster a diverse ecosystem that will further differentiate the iPhone from competing platforms.

Analyst Steven Milunovich of UBS issued a note to investors on Monday, a copy of which was provided to AppleInsider, in which he praised the strength of what he calls the "Applesphere." That wide range of apps and accessories that connect to Apple's ecosystem is only expected to grow further, he said, thanks to the healthcare industry.

The analyst envisions future devices in the form of necklaces that can monitor heart function, and headbands that can track brain waves. He cited future iPhone attachments that could allow lab tests of blood, liver, kidney, urine, breath and sweat.

On the application side, Milunovich sees FDA-approved software that could allow for users to diagnose their own ear, eye, throat, lung and heart issues. And he also expects routine video consultations from mobile devices following communication of health-related findings to caregivers.

"We expect that health apps will provide brand and device differentiation for Apple in coming years, though it will take time given hurdles such as FDA approvals," Milunovich said.

The analyst sees opportunities for Apple to monetize this growing ecosystem, through Made for iPhone certified accessories, paid applications, and Apple Pay support. But to Milunovich, the key factor here is platform differentiation, giving iOS a leg up on competing devices running operating systems like Google's Android.

"Apple offers access to sophisticated users through one contact point," he said. "It all adds up to what Tim Cook calls a mega-ecosystem across multiple consumer use cases, or what we call the Applesphere."

UBS has maintained its "buy" rating for shares of AAPL, with a 12-month price target of $125.

The launch of iOS 8 last fall marked the official beginning of Apple's push into the health and fitness space. HealthKit is a series of tools for developers allowing them to share data with other apps and services, while the corresponding Health app lets users track their nutrition, activity, calories burned and far more all in one centralized location.

Already there are a wide variety of applications and accessories that are compatible with HealthKit, tracking everything from weight and activity to blood glucose and blood alcohol content.

But with iOS 8 and HealthKit only on the market for a few months, the accompanying ecosystem is expected to grow substantially. Most notably set to enter the fray is Apple's own wearable device, the Apple Watch, which will track fitness, activity, heart rate and more when it launches early this year.


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