When Apple made the iBooks Author / iBooks2 / iTunesU app announcement on January 19th, there were many arguments for and against their implied educational market strategy. In the educational technology community, two of the most intense arguments why Apple’s move was faulty, or even harmful, came down to the cost and availability of iPads in education. The source of the problems was that Apple made their products wholly dependent on iPad usage.
- The iPad costs ~$500 or more, making the cost benefits of $15 textbooks almost a moot point – with a higher cost of ownership than even traditional paper textbooks.
- For real pedagogical benefits, all students in a course or program would need to have an iPad – since most students don’t have these tablets, the only way to solve would be one-to-one school purchases for students.
There are other arguments to be made against Apple’s strategy, but I want to focus on these two inter-related problems.
With the disclosure of two remarkable facts and one price break during the new iPad announcement, it is becoming apparent that Apple is playing the long game with their educational strategy, planning to address the problems of cost and availability over time rather than trying to win the argument with today’s numbers. Watch the trends, not the snapshot of today.
We’ve been used to PC and internet availability for so long that we generally accept that educational tools relying on the PC are valid for classroom or online usage (not in all cases, but it is a realistic assumption in most cases that PCs and internet are available). In Apple’s view, the PC as an end market is already being replaced by mobile devices, particularly the iPad. PCs and PC culture are slowly getting phased out. Laptops are tools to augment the ecosystem and value of the device – a means to an end.
Consider these two facts based on this week’s announcement.
Business Insider: Apple sold 15.4 million iPads last quarter. That’s more than any PC maker’s TOTAL PC sales during the same quarter.
Beta News: Last year’s iOS device sales reached 172 million, Apple revealed today during a special media event for the third generation iPad. CEO Tim Cook said “Post-PC devices” account for 76 percent of Apple revenues.
In addition, the iPad2 just had the price dropped by $100 to $399. As TheNextWeb has explained, this price drop for the iPad2 is not just a sell-off of inventory, but is in fact central to Apple’s strategy.
The iPad 2 is an insanely popular device, with Apple moving 15.43 million units in the first quarter of 2012 alone, making it easily the best selling tablet of all time. [snip]
People are still seriously interested in the ‘old’ iPad. And Apple is able to offer it at a significant discount because of its leverage of the economies of scale due to insane profits. It also gains an edge by paying for manufacturers to construct factories, purchase machines, train employees and perfect the process. It takes its repayment in the form of exclusive access to the tech for a given period of time and a discount on purchases for a period of time after that.
This makes it possible for Apple to have exclusive access to groundbreaking technology at bargain prices, contributing to the products being not only more advanced, but also cheaper to make.
Apple is aggressively moving to make the iPad cheaper and cheaper to build while eyeing the situation where tablets in general, and iPads in particular, are nearly ubiquitous. When you understand these trends, the iBooks Author / iBooks 2 / iTunesU App strategy for education makes a lot more sense.
I’m not arguing that Apple will resolve all arguments against its strategy or even that the closed ecosystem approach is good for education. My point is simply that the current market is not static, and we need to look at trends to understand where Apple is moving.
Hi Phil,
I believe Apple’s strategy would work if the iPad was sold for under $100, making it a commodity at around the same price than a traditional paper textbook. Do you think it will ever get there, or is Apple’s high-end positioning and profit margins will leave that market to competitors?
BTW, comparing iPad sales to PC sales doesn’t tell the whole story. If you combined all the laptop sales from manufacturers of PCs, it would still dwarf the iPad sales. The iPad is also a curated environment that doesn’t allow general computing yet. There will always be resistance from folks in leaving their fate in the hands of a giant corporation. Using Cory Doctorow’s concept, the iPad is a “computer appliance”. http://www.youtube.com/watch?v=HUEvRyemKSg
Mathieu
Mathieu, the PC shipment numbers do include laptop sales. Apple did sell more iPads than HP sold combined desktop and laptops. I agree that this doesn’t tell the whole story, but it is a significant one.
Will the iPad ever get to $100? Apple has typically maintained consistent price points for new products – a new iPhone 4s costs about the same today as an iPhone cost in 2007. But, you can now buy an iPhone 3 for free with a contract. The most likely scenario is that newer versions of the iPad will always cost around $500, but over time you will be able to buy older generation iPads for $100 or less. Speculation, but an attempt to answer your question.
Finally, I agree that the iPad is not a general computing environment. But the educational usage does not require a general computing environment. Also agree about the risk of leaving fate in hands of one corporation.
Hi Phil,
Sorry, by combining the sales of PCs, I meant from any manufacturer (adding HP, Acer, Dell, Lenovo, maybe even their respective Android tablets). Since PC manufacturing is distributed amongst many players, the whole market can’t be compared to one manufacturer. But point taken, the iPad has an extraordinary market share at this point, and there are no indicators that point to a slowdown in that respect.
Agreed that getting the device free with a data contract could be seen in the near future, and that older generation devices will get cheaper. You can probably get a handful of old iPods for under $100.
Good point that education doesn’t necessarily need a general computer to be effective. That’s probably even more true in K12, which is the target market for Apple’s current textbook initiative.
Mathieu
I just wanted to address the cost issue raised above. I’m not sure how much textbooks cost in the US, but in Australia, they are at least $100 each, sometimes getting close to $200. It is rare to find one less than $100.
Most classes require at least one textbook per class, 4 classes per semester, 2 semesters, therefore $800 at least on traditional paper textbooks per year.
If I was to buy an iPad at around $500 (even a higher end model at $600) then 8 textbooks at $15 each, I still come out on top, $ wise. Plus I can reuse the same iPad next year and save hundreds.
The iPad hardware doesn’t need to be $100, since you don’t need an iPad to replace each textbook.
All of that said, I still prefer paper as a study/reading tool. I use computer monitors enough as it is.
Steve, good points, and the US market pays roughly the same as Australia for textbooks based on your description. One aspect to watch is when / whether / how Apple enters the higher ed textbook market. Their January announcement was only for K-12, and in that market the textbooks are purchased by the institution and typically reused for 4 – 5 years. That is the reason that some say that paper is still cheaper than iPad / iBooks2, even with $15 prices.
Higher ed is different, as the textbooks are purchased by the students. Typically they either keep the book or resell them – different economics. Plus, we do not know what price Apple and the publishers will put on higher ed textbooks.
Keep watching.