Monday, February 6, 2012

Apple Takes Lead in Digital Learning and Online Education

School-age children are quickly moving away from the traditional ways of learning, involving the use of paper, pencil and printed textbooks.....

The age of digital learning is upon us.

At the forefront of this new era is a company known to every investor – Apple (Nasdaq: AAPL).

The company recently announced its long-anticipated entry into the digital textbook market. It did so by unveiling a new “bookstore” for its iPad tablet, a new application for sharing university courses, online classes and a free publishing tool to help authors create interactive courses.

This is the company's first launch of a new product line since the death of Steve Jobs and therefore quite important.

The potential to improve students' results is significant. After all, children today have grown up with technology all around them all their lives.

The CEO of Discovery Education, a subsidiary of Discovery Communications (Nasdaq: DISCA), had some valuable insight on this subject. He said, “When they [students] go to schools and are asked to 'power down' and put technology away, you're not engaging them and you're going to lose them.”

Apple has wisely joined with partners in the educational publishing field to help sell their product. Some of the partners include well known names such as McGraw-Hill (NYSE: MHP) and Pearson ADR (NYSE: PSO).

These publishers and others unveiled a limited number of digital textbooks that are priced at $14.99 or less. Apple will take a 30% cut of the sales from these textbooks sold over its new iBooks 2 app.

This is a steep cut for Apple but its partners believe Apple can give the industry, with 1.4 billion students enrolled worldwide, just the rocket boost it needs.

Sales in the global textbook market are expected to reach $19.4 billion by 2013. The share of that market taken by digital textbooks is forecast to jump from just 3.4% in 2010 to 18.3% next year, especially if iBooks is a success.

Publishers are hoping iBooks succeed because they will also benefit from the switch to digital textbooks since they would no longer be burdened by the costs of printing and distribution of a traditional textbook.

Of course, it will not be entirely smooth sailing for Apple in this market.

Holding it back will be the price of its iPad - $499. Many schools simply cannot afford to buy iPads for use by their students and Apple made no mention in its presentation of offering schools a discount on its iPads. Currently, there are 1.5 million iPads being used by schools for educational purposes.

This may open the door to this market for lower-cost rivals such as the Kindle Fire from (Nasdaq: AMZN) which sells for only $199. The same publishers who are working with Apple have stated they are also involved in projects with Amazon and other tablet makers.

The educational market is relatively small for Apple, but its rapid growth offers Apple a wonderful opportunity to continue growing the company after the death of Steve Jobs.

But it is unlikely that iBooks will dominate the market as Apple does with music. The real winners here in the long term will be the publishers like Pearson, McGraw Hill and others.


  1. Yes but ibooks can only be viewed on ipads. kindle fire or nook or android tablets can't access apples ibooks oh what a shame whose tablet is the most expensive, whose tablet is locked down where do schools get the money, and of course the kids will have to have one at home as well.

  2. It looks as if the age of having students come and learn inside brick and mortar buildings to conduct their education may in the not to distance furture be a thing of the past.

  3. Now this is a great area. Education online what will happen to the brick and mortar schools of higher learning.