Already a Bloomberg.com user?
Sign in with the same account.
The La Canada Unified School District in Southern California gets more than its share of future rocket scientists, thanks to its proximity to the world-famous NASA Jet Propulsion Laboratory. While the influential district's 4,300 kids may be getting a good education, they won't get it on Apples. "We're strictly a Windows district," says Bob Brauneisen, LCUSD's technology director.
Would he consider switching back to Apple PCs, which the district used until three years ago? Absolutely not. "In my opinion Apple has abandoned the education market," complains Brauneisen. "Their products are geared more toward the retail market with very little thought to the needs of the educational community."
DRYING UP. Ouch. Unfortunately for Apple, La Canada is hardly alone. Apple's once-dominant share of the $7 billion annual K-12 educational computing market continues to shrivel. Its share of new-computer purchases by schools has fallen from 37% in the 1999-2000 school year to 30% in 2000-01 and to 26% in 2001-02, according to Quality Education Data, a Denver-based company that tracks educational technology spending.
Those numbers sound better than the market-share stats put out by Dell Computer, Apple's fiercest competitor in the education marketplace. Dell claims that for this school year, it has garnered 34% to 35% of new purchases, with Apple plumbing the bottom at 14% to 15%.
Even if one goes by QED's more optimistic numbers, it's clear that Apple is struggling to maintain its installed base in education. Fred Anderson, Apple's chief financial officer, conceded during the company's July 16 earnings call for the third fiscal quarter (ended June 29) that shipments to educational customers were "soft." They fell 7% below Apple's target and 17% below the same quarter in 2001.
LISA'S DAD RETURNS. Now, Apple is striving to fight back. In May it introduced the eMac, a souped-up version of the original iMac with a standard built-in monitor targeted at the education market and priced to compete with Windows PCs. In June, Apple CEO Steve Jobs brought back an old cohort, John Couch, to run the educational division. Couch oversaw the development of Apple's innovative but ultimately unsuccessful "Lisa" project in the late 1970s and the early 1980s.
With the consumer and graphics markets struggling, it's crucial for Apple that it loses no more ground in the education market. So the question is: Will Jobs's new moves help Apple go back to the head of the class?
Not without difficulty. Teachers still love Apple computers, and the Mac brand's recognition is strong. But across the country, according to the QED survey, 90% of districts now have PCs installed vs. the 64% that have Macs (many districts use both).
LOCKED IN. That's particularly troubling because once a district, such as La Canada, eschews Macs, it's extremely difficult to win back the business. School districts "tend to be reasonably conservative, and they don't switch" easily, says Jim McVety, a senior analyst at education market research firm EDUVentures in Boston.
The five-year service and maintenance contracts that schools extract from PC makers lock in districts to non-Apple suppliers even more closely. On top of that, teachers, traditionally the biggest Mac fans, are losing influence over computing purchases. As districts negotiate larger purchases, information-technology staffers play a bigger role. More often than not, they come from the Windows world.
Moreover, those IT staffers now think about how to build districtwide networks linking databases, office functions, purchasing programs -- and classroom desktops. Recently, that dynamic has favored Windows machines, which run many managerial software packages that Macs don't.
WIRELESS EDGE? For example, La Canada's Brauneisen uses Novell Netware to manage and configure all the machines in the district. And Novell has traditionally not had strong software for Macs. Apple executives chose not to comment for this story. But "you have a lot of districts that converted from Apple to Windows because they had a lot of administrative and office needs that weren't being fulfilled by Macs," says McVety.
That's not to say Apple doesn't have some strengths to build on. It took an early lead in wireless by selling iBooks laptops designed to obviate the need for expensive cabling. That has won Apple some big-dollar contracts, including one from the state of Maine to equip every seventh and eight grader with a wireless-enabled iBook.
"The word on the street among large districts is that wireless solutions from Apple are inexpensive and very appealing. That's an enormous thing for schools because they have an aging infrastructure," says Jeanne Hayes, president of QED. The new version of Apple's OS X operating system, known as Jaguar, promises to allow Macs and Windows boxes to connect more easily on networks, and that could also help persuade administrators that the two systems can co-exist more easily.
COUNTERATTACK. The recently introduced eMac could also make Apple more competitive in schools. Starting at around $1,100, they're an answer to criticisms that Apple was no longer designing products for the education market. Some educators even worried that the aesthetically pleasing flat-panel iMacs might not prove as durable as the chunkier old-style iMacs, the predecessor of the eMac. Apple claims that eMacs are priced competitively with comparable PC setups. "They've lost recognition as the preeminent education computing provider, and the eMac is an effort to regain that," says McVety.
One of Couch's jobs is to hammer home that message. He'll have to hurry, as the buying window for the 2002 school year is just about closed. If Apple fails to halt its school slide, that could be bad news. "They are heavily reliant on education sales," points out David Daoud, a senior analyst with tech tracker IDC. By some calculations, Apple will get one-quarter of its projected $5.7 billion in annual revenues from schools.
It's troubling that Apple couldn't deliver the goods in the third fiscal quarter, which Daoud says was unexpectedly strong for the overall education market. Jobs & Co. is now regrouping its sales force, and with the newly released eMacs it could be poised to regain some ground. But it'll take more than anything Apple has tried so far to persuade the Bob Brauneisens of the world to embrace Macs again. By Alex Salkever