Microsoft and Walgreens announced a seven-year strategic partnership today that will see Walgreens move all of its cloud computing assets to the Microsoft Azure platform, as well as roll out 380K Microsoft 365 seats to Walgreens employees. This is a major win for Microsoft in terms of cloud and Windows seats, but the deal is even more interesting when we read between the lines.

The health care delivery model is changing dramatically and both Walgreens and Microsoft want to be at the front of the coming wave. Walgreens sees its massive brick and mortar presence around the world as a way to expand into first class primary care options for a variety of customers and create a major new revenue stream. Yes, it currently provides some limited services like flu shots on a walk-in basis and has some limited partnerships at a few locations with urgent care providers. But to become a major emergency or primary care clinic provider, it needs to incorporate its own larger, more professional staff of doctors and nurses, and scaling this to each location is not feasible in terms of cost and the ability to hire enough staff.

Cloud-based services — such as telemedicine, with a centralized professional medical staff working with remote diagnostic sensing equipment, video teleconferencing, and AR/VR — can deliver a high level skillset across many locations, obviating the need for dedicated on-site teams. Leveraging remotely located but telemedicine-connected medical professionals would allow Walgreens to become more efficient in its operations and would be massively scalable over the high speed networks currently available and/or coming soon with wireless 5G connections. Finally, this approach would let Walgreens deploy many more specialized services than would be possible if each location required its own dedicated medical staff.

For its part, Microsoft wants to be the go-to for all things cloud, but it also wants to apply its skills in providing cloud-based intelligence to a variety of problems. It is investing heavily if AI and mixed reality solutions, and health care is an area of AI and AR/VR research that holds great promise by assisting in diagnosis and determining basic patient care scenarios. The health care field is ripe for innovation and while Microsoft can provide a lot of the needed technology, it needs an outlet for the technology that is customer facing and widely available. Microsoft can’t easily build out such a delivery system. Walgreens, with its massive presence, provides that capability.

This is not something we’ll see in the next several months. This is a longer term play that could take several years to fully materialize, and it will be dictated by local regulations and will need approval from a variety of government agencies. But with the current massive rollout of standalone health care storefronts that deliver urgent care on a walk-in basis (currently about 7,600 locations in the US, according to the Urgent Care Association of America citing figures as of June 2017, and $18 billion in revenues, growing 5-6 percent per year), this is a major opportunity for Walgreens and Microsoft to capture a major piece of the marketplace.

It remains to be seen how well the partnership will play out, but this does give Microsoft a preemptive first strike, with Amazon AWS and Google also wanting to capture a piece of this emerging market (I wonder if Walgreens competitors will soon make their own strategic partnership announcements in this space).

Bottom Line: This is potentially a win-win scenario. Walgreens gets a partner that can create and deploy much-needed advanced technology for the new health care delivery models. And Microsoft gets a partner that already has massive presence and scale to touch a vast number of potential customers. If they pull this off, it could dramatically change the way we obtain health care. And no doubt the health insurance industry will be watching this closely and probably participating as well. I expect this strategic partnership and follow-on initiatives from competitors to radically affect primary care delivery as they create a far more scalable, personalized, and easily available service – and potentially more affordable, too.

Jack Gold is the founder and principal analyst at J.Gold Associates, an IT analyst firm based in Northborough, MA., providing research and analysis of the many aspects of business and consumer computing, and emerging technologies. Follow him on Twitter @jckgld or LinkedIn at

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