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Apple's Back-to-School Blast

Vijay Sonty loves Apple Computer laptops. The chief information officer of the Broward County Public School District, the nation's fifth-largest with 270,000 students, just ordered 4,500 laptops for the upcoming school year. His purchase is part of an ongoing initiative geared to eventually give every high school student a notebook computer. That's an extension of his strategy to put more Apples into classrooms. The district's computers are 70% Apple and 30% Dell (DELL), but Sonty wants to move towards an all-Apple shop. "Apple technology is easier to use. There are fewer issues with the operating system. If you look at the price point, Apple is higher. But when you package everything, the total cost of ownership is lower," says Sonty.

That's particularly relevant as more students carry laptops to and from their homes -- yet it's left to the school district to maintain and service them. Sonty isn't the only education-technology official thinking this way. In 2003, Apple's laptop market share in the K-12 segment grew by 3.2% over the previous year, to 26.9% of laptops sold in this category. During that period, the laptop market share of the K-12 sector leader, Dell, fell 1.1%.

True, during that stretch Apple, by its own admission, struggled to sell desktops to schools. In 2003, Apple managed to boost its overall market share 1.1% in the K-12 education market, according to IDC. But that came amidst declining unit sales of desktops. Further, sector leader Dell boosted its market share at a far faster rate of 7.7%, mainly by taking desktop customers from Apple and others.

ON-THE-SPOT SERVICE. So the big question is whether Apple's strong laptop business can fuel a return to prominence in the K-12 market. Ultimately, Apple hopes that its growing laptop presence will help convince a generation of young scholars and their parents that Macs are better than Windows machines. Apple believes it's on the way back, and that the Broward story will be repeated. Says Apple Senior Vice-President of Worldwide Marketing Phil Schiller: "Rather than march the kid down to the computer lab to learn about computers, now it's about how can computers assist in learning? We've pioneered that shift."

According to Schiller, that shift is translating into more laptop sales. Several factors are driving those deals. Schools love the Apple iBook for its education-centric design. Round surfaces, rugged clamshell enclosures, and slot-loaded drives make it an attractive choice for younger kids. Apple also has bent over backwards to offer better service for those machines. In Henrico County, Va., Apple has a one-to-one lease deal that puts an iBook in the hands of every middle and high school student in the 44,000 student district. Apple also set up a repair depot for faster turnaround on broken Macs. And in the Quaker Valley School District outside Pittsburgh, Apple agreed to dedicate more technicians to repairing machines.

With a track record like this, Apple has racked up more one-to-one deals. "A year ago, you would hear about big deals like Maine [where every middle school student has an Apple] or Henrico Country. Now it's moving out to smaller school districts. It's a lot more deals of smaller sizes," says Schiller.

PC SUPPORT. Another factor in Apple's favor is the increased use of wireless broadband in schools. That has fueled laptop sales as schools embrace the flexibility of WiFi connectivity. The enhancement of Apple's own back-end offerings has helped, too. Consider its Xserve server, which allows school system administrators to manage large mixed networks of Macs and PCs without separate network infrastructures. Apple also has made system administrators' lives a lot easier with the network-management tools built into OS X, its Unix-based operating system. These tools allow administrators to easily patch and update the software on multiple machines, a capability that's less developed in Microsoft's (MSFT) rival operating system, Windows XP.

None of this is to say that Apple doesn't have big obstacles in its road to laptop hegemony. Witness the case of the Irving Independent School District, which lies just outside Dallas. With 31,000 K-12 students, Irving has nearly as many computers as it does pupils. This gives it one of the highest rates of computer penetration in the country, courtesy of a $10 million annual technology budget. Over the past two years, the school district has purchased 5,500 computers as it ramped up its one-to-one computing initiative. That effort gave a laptop to every single high-school student in the district.

However, each of those 5,500 laptops carries the blue logo of fellow Texan Michael Dell's company. "Each time we sent out a proposal to bid, [Dell] offered the best package," says Alice Owen, executive director of technology for the district. Dell offered not only good prices but also extended warranties and deals on laptop-battery replacements. Would Owen ever switch Irving to Macs? "We would consider a bid from Apple. But the problem is, we don't have anybody in the district that knows how to support Apple. All of our guys are PC people," says Owen.

"CORPORATE CLIMATE." That could foreshadow problems for Apple, even in laptops. "The primary reason Apple's share has not grown, despite a robust new operating system and continuing teacher enthusiasm, is the increasingly corporate climate of school districts. Centralizing on one platform makes life easier for tech directors and CIOs," says Jeanne Hayes, president of Quality Education Data, a company that tracks technology-purchasing decisions in the U.S. in the K-12 market.

Still, Apple's expanded offerings in the back office, such as servers, storage software, and hardware- and system-management tools, could well mitigate that trend by letting tech managers standardize more readily on Apple gear. And Apple has taken pains to design all of its back-office systems to work well in the Windows world, heading off the argument that integration is painful. More importantly, Apple appears to have put itself in the sweet spot, as the desktop market continues to wither and the laptop market for K-12 starts to flourish. By Alex Salkever

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