Dell Inc. (DELL) recently said it would venture into the electronic medical records system business, which is used by doctors and hospitals. The device helps in storing medical records in a way that makes it easy to track the clinical history of patients from anywhere in the world without storing hard copies.

We believe the time is ideal for companies like Dell to enter this space as the federal government has granted around $19 billion in incentives to medical practitioners and hospitals. Electronic record-keeping software has huge prospects as most doctors currently use hard copies of medical records and the market is more or less recession proof.

Only 10% of American health care providers have adopted a full fledged electronic medical record system, so there is substantial growth potential in the segment. Dell is planning to combine its hardware with third-party software and provide services such as need assessment, system configuration, workflow process drawing and providing training and support to medical practitioners and hospitals.

Despite being a technical giant, Dell is likely to face stiff competition from bigger players like Google Inc. (GOOG) and Microsoft Corp. (MSFT). These companies have already launched personal health records storage systems to help patients store their own health data.

Thus, while this is a good business opportunity for Dell, it has to overcome many obstacles to be successful in the field. We believe healthcare professionals are increasingly adopting the concept of a paperless office and recognizing the benefits of cost efficient storage and greater accessibility of medical records.

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