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The A-B-Cs of K-12 Software

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The A-B-Cs of K-12 Software SMALLER SCALE HAS MORE SPACING INSIDE LOGOMARK LARGE SCALE HAS LESS SPACING INSIDE LOGOMARK 707271 43A89A 54575A 84A1C4 6DBEBD ECDC98 112/114/113 5/154/135 95/96/98 132/161/196 109/190/189 236/220/152 424 3282 425 659 5493 461 The A-B-Cs of K-12 Software Commissioned by Intel Education, User Experience Group For Internal Training Only May Innovations 2015 | Prepared by Clarity INTEL EDUCATION SOFTWARE SOLUTIONS For Internal Training Only Executive Summary OUT OF GREAT CHALLENGE COMES GREAT OPPORTUNITY High fixed costs, limited access, differentiated learning styles, often inefficient infrastructures, and the questioned relevance of print content are just some of the challenges facing traditional education today. Technology, however, is poised to combat these issues head-on; bringing increased efficiency, increased access, lower costs, more personalized content, adaptive delivery, and more easily measurable outcomes. This marriage of education and technology has, unsurprisingly, created an enormous opportunity for large corporations and start-ups alike. Flybridge Capital wrote of the investment potential in the education ecosystem, noting that the $1 trillion education market continues to be aggressively explored and attacked by entrepreneurs, with funding increasing substantially since Q1 2010.1 According to the report, the world’s 740 million students are using ed-tech products and services in five major categories, including: Aggregators and Vertical Search (companies that provide access to content); Content Providers (the creators and producers of educational content); 21st Century Skills and Comprehension (career advancement content and tools to help teach and learn); Textbook and Textbook Services (physical delivery products); and Devices (digital delivery products).2 Schools are using ed-tech products and services in two core areas: Back Office (staffing and professional assessment, finance, and learning management systems) and Front Office (recruiting and enrollment, online distribution, learning content and credentialing). Meanwhile, some 30 million teachers worldwide are purchasing ed-tech products and services in three core areas: Classroom Management and Administration; Student Analytics/Reporting; and Curriculum. And not only is there need, there is the means: nearly 90% of the districts surveyed in MDR/EdNET Insight’s “State of the K-12 Market 2014” report “expect their 2014-2015 technology budgets in hardware, software, teacher training, and technical support to stay the same or increase.” One of four districts also expects their instructional budgets for math, English, science and social studies content to increase (up from 16% in the previous year).3 1 http://edtechtimes.com/2014/05/15/hack-frack-education/ 2 http://prezi.com/xguky7u7aur6/ed-tech-market-map/ 3 https://www.edsurge.com/n/2015-01-20-mdr-s-sunny-forecast-for-school-spending-budgets-in-2015 For Internal Use 1001 SE Water Avenue Suite 400 Portland, Oregon 97214 503 248–4300 clarity-innovations.com Table of Contents 2 INTEL EDUCATION SOFTWARE SOLUTIONS For Internal Training Only BUSINESS MODELS ARE BOOMING For ed-tech solutions and product providers, this manifests into a number of possible business models, with each of them posing their own positives and challenges. Selling to Schools (Positives: Large market size, large contract sizes, long-term commitments, and sticky customers. Challenges: Long, difficult sales cycle, users vs. customers, procurement process, and customized needs). Direct to Consumer (Positives: No bureaucracy, easier sale, and the needs of the user and customer are aligned. Challenges: Smaller overall market size, lower price point = more customers, and retention). Resellers or Channel Partners (Positives: Increased reach, large contract sizes, upfront payments, leveraging of existing relationships, and the bypassing of bureaucracy. Challenges: Revenue share, lower margins, limited feedback mechanisms, and little control over customer relationships/support). Freemium: A model where a solution may be free to teachers and students, cost a little money for a department or school, and more money for an institution or district. (Positives: Less bureaucracy, users often become advocates, flexibility, and demonstration of traction. Negatives: Balance between free and premium, ambiguity as to whether free users can be converted, and time spent on non-paying customers). ASSESSMENT ALSO PASSES THE TEST Data from the Software & Information Industry Association’s (SIIA) annual vendor survey shows that the PreK-12 testing and assessment market has grown 57% over the past three years. Sales of these products totaled almost $2.5 billion in 2012-13, making them “the largest single category of education technology sales,” according to the Executive Summary. Among the drivers of this growth is Common Core testing and increasing demand for better digital formative assessments.4 4 https://www.edsurge.com/n/2014-12-02-prek-12-testing-and-assessment-market-nears-2-5-billion For Internal Use 1001 SE Water Avenue Suite 400 Portland, Oregon 97214 503 248–4300 clarity-innovations.com Table of Contents 3 INTEL EDUCATION SOFTWARE SOLUTIONS For Internal Training Only THERE’S NO PLACE LIKE CHROME One huge ed-tech success story is the phenomenal rise of Chromebooks. Schools that have successfully integrated Chromebooks into their classrooms tend to share that the devices fill three big needs: they’re easy for students and teachers to use, they’re easy to share, and they’re easy to manage. According to IDC’s latest report on tablets and laptops in K-12 education, Chromebooks are the best-selling device in the U.S. this year. And they’re continuing to grow in popularity — in districts like Montgomery County, MD (more than 50,000 devices), Charlotte-Mecklenberg, NC (32,000 devices) and Cherry Creek, CO (26,000 devices), who have all begun using Chromebooks in 2014.5 Google solutions such as Google Play for Education, Classroom and Google Apps for Education have similarly enjoyed a huge market uptick, with GAE, for instance, now being used by 40 million students and teachers around the world. THE FUTURE OF THE FUTURE Even with these business models in place and strong market needs, there is still considerable unpredictability and volatility in the sector. These factors give large, established market players a considerable advantage over smaller companies. Their size, stability and market share will allow them to better weather fluctuations in the market, yet this could also undermine efforts to innovate in the long- term. Big players in ed-tech can afford to react quickly to the market, meaning, they don’t necessarily need to take the risks a smaller company might in anticipating the future of the education sector. This is probably why big companies are snatching up smaller ones at an unprecedented rate. According to investment banking advisory firm Berkery Noyes, the number of education mergers and acquisitions deals in 2014 increased 9 percent from 2013 (from 298 to 325); the value of those deals, however, jumped 25 percent from $9.12 billion to $11.4 billion. “The focus on education access, data analytics, and outcomes-driven technology products and services continues to shape the industry,” said Peter Yoon, Managing Director at Berkery Noyes.6 All this said, it seems that the key to providing relevant and innovative learning products and solutions lies in — ironically — learning itself: an unwavering focus and dedication to truly understand the needs of users, evolving accordingly (and anticipatively) then delivering with skill and precision. 5 http://googleblog.blogspot.com/2014/11/with-chromebooks-students-find-new-ways.html 6 https://www.edsurge.com/n/2015-01-27-berkery-noyes-2012-2014-education-m-as-worth-28-1-billion For Internal Use 1001 SE Water Avenue Suite 400 Portland, Oregon 97214 503 248–4300 clarity-innovations.com Table of Contents 4 INTEL EDUCATION SOFTWARE SOLUTIONS For Internal Training Only Education Software Solutions Matrix COMPANY SOLUTION(S) STRENGTHS WEAKNESSES OPPORTUNITIES THREATS Amazon E-books and their Extensive e-book library, E-readers not powerful Beginning to address Complex process for mass interactive features, affordability, management enough for classroom use, education market, needs ordering devices and Whispercast management software distribution of connected to address PD needs of difficulty of connecting software, Education App devices, apparent low schools, app development existing devices Store priority of education as devices become more market prevalent in schools Amplify Classroom management Complete solution that Android market in US The solution is very Not a well-known tools, real-time assessment allows teachers to take has not caught on, comprehensive and company that started out tools, lesson planning control of their classroom unknown company having includes many features on the wrong foot with tools, curated app store, issues penetrating the that teachers want (eyes malfunctioning devices. MDM solution education market, early on teacher, app blocker). Their price point is higher issues damaged image of Ability to incorporate than many new Android company Google Apps for Education devices that come with and robust Android app Google Play for Education. store. Apple iBooks, iTunes U, iWorks, Strong brand awareness in Lack of multi-user sign in Apple brand loyalty There are many new GarageBand, iPhoto, education, many classroom ability, high price point, lower-cost devices on the iMovie, MDM framework,
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