Apple's K-12 Education Play: Skepticism Should Rule The Day
Thursday, January 26, 2012 at 2:49PM I had to really think about this one. Last weekend, I was trading emails with my good friend and colleague, Michael Horn. He and I agree on almost everything when it comes to disruptive innovation in education, and I have great respect for the noble work he is doing around student-centric, blended learning. He recently discussed Apple's announcement in an interview with the Heartland institute, and it may be the first time we have differences of opinion about a particular issue. I should say we have minor differences, not major ones.
Michael and I were having a very intellectual discourse about whether the iBook was a disruptive innovation and whether it had a good chance of succeeding. In the aforementioned article, Michael correctly points out the opportunities it holds for iTunesU. I believe that for higher ed, there may be some interesting plays here.
With K-12, I am very skeptical, and I believe that education reformers should not be jumping up and down thinking that that the iBook will be the killer app, the "savior" for education. It's funny about Apple, though. I believe that Disruptive Innovation is not a theory, but a law. However, there is one notable exception, one company that has been able to disrupt itself: Apple. HBS Professor and Author, Clayton Christensen, who once wrote of the iPhone's inevitable failure, said about Apple, "There's just something different about those guys. They're freaks." You can never count Apple out, that's for sure. Their brand and market clout make competitors tremble.
But lets look at where the iBook deviates from disruptive innovation theory. Why was Apple able to gain the support of the music labels when they launched the iPod? First of all, remember that Napster was destroying value - completely destroying value. Labels were getting zero, and Apple came to them with the opportunity to protect their IP and get something instead of nothing. The price points were low - $0.99 per song, and the iPods were attractively priced. So at the time, Apple had market leverage. Disruptive innovations are typically low-cost solutions and at the time, were focused on tech-savvy music lovers who wanted to download songs from the Internet.
So with the iBook, Apple has decided to broker deals with the major textbook publishers immediately, and giving them a pretty sizeable revenue share. But here, we see that price points are high ($450 for an iPad and $14.99 for an e-textbook), and you also have a monopoly in the distribution channel: school systems. Can textbook publishers really innovate the online textbook? I'm afraid it's going to be more of the same. The immediate opportunity is to innovate on hardware already installed in public schools, and that is the computer. This will be a sizeable investment for school districts. Apple should fare well in districts where it has a large installed base of iMacs. To me, the opportunity will be in three places: i) independent content developers; ii) remedial programs such as Kumon, Kaplan and Sylvan; and iii) online schools such as K-12 and Florida Virtual School. The education market doesn't operate the same way as the music industry once did, so it is hard to compare apples with apples.
I have another analogy to offer. I was part of the founding team of GameTap, which was an early pioneer in the digital distribution of video games. It's strategy was to do for the video game industry what cable networks did for movie studios, and thus, provide a post-retail exhibition window for its content. It was disruptive. It was able to forge deas with nearly every third-party publisher, even Electronic Arts. But the three console makers: Sony, Microsoft and Nintendo, all stayed on the sidelines. Nintendo still hasn't embraced online games one iota, even with the surge in social gaming. Traditionally, disruptive innovators are ignored by the incumbents. GameTap didn't have the brand strength of Apple, but there are other reasons to compare them in a similar vein.
All in all, I am nonetheless encouraged by Apple's initiative. I would very much like to see the textbook eliminated completely, so my children aren't carrying around bookbags weighing 40-50 lbs. But do you really think that the textbook publishers are going to invest so heavily in their ultimate demise? For them, it's like buying an option - hedging their bets on the future. But until our education system can break up the textbook publisher monopoly and the cycle for buying instructional materials, I'm afraid I have to hit the "pause" button on this one. Maybe Apple will prove me wrong. They've proven everyone wrong for over 25 years.

