Apple's School Days Are Numbered


By Charles Haddad Mom and dad have spoken, and what they say is this: Why should my child work on a Mac in class when most people use PCs at home and in the office? I've heard this lament time and again in my son's schools over the years. To listen to these parents, you'd think the schools were forcing children to use a history book that says the world is flat.

Such complaints speak loudly to Apple's (AAPL) fall from grace in education. Oh, sure, it's O.K. for parents to think different -- as long as it's the same different as everyone else. Now, Apple's real battle to regain lost market share in education is about behavior, not pricing.

Today, PCs have little price advantage over Macs. Apple's eMac, designed as a low-cost model for school systems, costs $50 more, at most, than a comparable low-end PC. Big deal. Several independent studies have shown that a network of Macs is still the least expensive to run and maintain. And Macs remain nothing if not durable. Here and there you'll still find an original Mac -- not to mention a few Apple IIs -- hard at work in classrooms.

PRICE IS RIGHT. Despite such advantages, innovator Apple continues to lose market share in the education field. Today, Macs represent a third of all computers in elementary schools, down from half just five years ago, according to market researcher Quality Education Data. The decline in high schools is even more pronounced, with Macs representing only 15% of the installed base. "Apple is fighting a desperate battle against Windows PCs in schools," says Charles Wolfe, a principal at investment firm Needham & Co., which also owns Apple stock.

Why haven't steep price cuts stemmed Apple's market fall? It all comes back to what I call the lemming effect -- the willingness of people to follow blindly along, never questioning as they march in step with everyone else. Don't get me wrong: Conformity isn't all bad, especially when it comes to computers. A decade ago, most workplaces were a mess of different models, few of which could work together, let alone speak to one another.

That led to the rise of today's modern info-tech manager. His or her mission was to impose uniformity, ensuring that every computer bowed to the all-powerful network. But the downside of conformity was loss of choice and individuality.

Now, schools have hired the same sort of IT managers, and there's no mystery about how they'll achieve that uniformity. Nursed on Wintel, they're pushing PCs. It's not really about price, despite some IT managers' false claims. The truth is, they want what they know, what they're comfortable with. And parents all follow the leader and take the same path. It's all vaguely reminiscent of those Apple ads from the 1980s, depicting human drones in shades of gray marching together, watching Big Brother on the big screen -- until one hurls a hammer at the screen.

FAIR OR FOUL. The trouble for Apple: It has nobody to hurl the hammer. Teachers have long favored Macs, which they found easy to use and maintain. In fact, many still do. They find Macs remain superior to PCs for video editing, which is becoming increasingly incorporated into schoolwork. But more and more often these days, teachers are no longer allowed to make the purchasing decisions.

Today, Apple's enemies in education are school superintendents, not Dell (DELL) or Microsoft (MSFT). And they make no bones about their vision for the future. Hear what Art Rainwater, superintendent of the Madison (Wis) school district, told the local Capital Times. He conceded that Macs outperform PCs, but he didn't care. "We want a single platform," he said. "We're trying to get there using the carrot, or blackmail, or rewards, or whatever you call it."

Apple isn't surrendering. In fact, it's fighting back harder than ever, adopting the tactics of its opponents and going after whole school systems. Maine is probably its biggest success story to date -- in January, 2002, it persuaded a former governor to order iBook portables for every school in the state. Even here, though, Apple has hit snags. Initially, the plan was to begin with 7th and 8th graders, then branch out to other grades, but the expansion appears to have petered out.

HANGING TOUGH. Nor is Apple shy about slashing prices. In July, it announced another round of cuts to schools and colleges, shaving the cost of some models by up to 15%. Earlier, it had given away free promotional copies of its new OS X operating system to teachers, trying to hook them on Apple's latest technology. Promotions and price cuts seem to be working -- to some extent. Apple CFO Fred Anderson said recently that education sales have gone up 5% in the past year.

Apple's allies on the faculty are also waging a rearguard action. Drama teacher Rebecca Jallings at Madison West High School, for one, is fighting Rainwater's effort to strip her classroom of Macs. She told the Capital Times that she finds them the best machines by far for editing video, an important tool in her acting class. "I don't need a computer specialist from downtown to tell me what I need," a defiant Jallings told the newspaper.

Alas, despite Apple's best efforts, enthusiasts such as Jallings probably can only slow the erosion, with Apple assuming the niche role it has in so many other markets. But they can't turn the tide. The lemmings, I'm afraid, have won the day in education. Haddad, Atlanta-based correspondent for BusinessWeek, is a long-time Apple Computer buff. Follow his weekly Byte of the Apple column, only on BusinessWeek Online


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