Google is talking with makers of educational software to help build a marketplace for online learning programs, an industry whose value may approach $5 billion
(Bloomberg) — Google Inc. is talking with educational-software companies to help build a marketplace for online learning programs, an industry whose value may approach $5 billion this year.
Games and instructional tools for teachers from companies such as Grockit Inc. and Aviary Inc. are already offered in the Google Apps Marketplace, an online store that opened in March. Google, the world's largest search engine, seeks to lure more educational developers and is stepping up efforts to generate revenue from the project, company executives say.
Software sales for U.S. schools and colleges this year should surpass the 2009 total of $4.6 billion, according to Parthenon Group LLC. That could provide a new growth stream for Google, which gets most of its sales from search advertising. The company works with schools, providing free word processing, e-mail and spreadsheet programs to students and teachers. Now it wants to help outside developers sell applications to educators.
"If we can provide access to education apps to our 10 million users in thousands of schools, then that would be a win all around," said Obadiah Greenberg, Google's business development manager for education.
Most software makers with products on Google Apps Marketplace now collect all revenue from sales generated through the site. In the coming months, Mountain View, California-based Google plans to begin taking a 20 percent share of sales, Greenberg said.
Programs in the Apps Marketplace can be operated inside the private Web domains many schools have set up with Google, said James Birchfield, instructional technology specialist at Harwich Public Schools in Massachusetts.
"A teacher logs into a Google Apps account and they can access anything in the marketplace," said Birchfield, who is known by colleagues as the "Google guru." "It gives you a one-stop-shop kind of thing where we know we can integrate it and we know where it's all saved."
Aviary Education, one of the first education apps offered on the site, is a free Web-based tool that lets students edit images and audio recordings in a private environment that can be monitored by a teacher. It's often used by teachers who want students to record class presentations and share them online, said Michael Galpert, co-founder of New York-based Aviary.
"The more that they promote Google services in the classroom, the larger the audience we get," Galpert said. The company now gets most of its new customers through Google's Marketplace, he said.
Using Aviary's software, seventh graders at Harwich Middle School created presentations on women's issues in the Middle East, pairing images with narrations and sound effects. Google made the software easier to find and easier to protect students' work, said Birchfield. "That was a big deal for us."
In its first nine months, most customers of the Google Apps Marketplace have been technology administrators at small and medium-sized businesses, who use it to find tools such as collaboration software made by Box.net and Atlassian. Google's Greenberg wants to get school leaders to rely on the marketplace to sign up and buy Web-based learning software.
He also says students with experience using free Google apps in school may be more likely to become paying users when they join the workforce.
Analysts estimate Google will report sales of $21.7 billion this year, based on the average of projections compiled by Bloomberg. More than a potential new source of revenue, the company's push into education could help it build its brand recognition among the next generation of Internet users, said Sandeep Aggarwal, an analyst at Caris & Co. in San Francisco.
Providing "more apps for the education vertical helps them to basically acquire a customer for their whole portfolio of products early on," Aggarwal said. Apple Inc. and Microsoft Corp. have offered discounted prices to schools for 25 years in efforts to "own a new computer user" from the get-go, he said.
Google's online store for education apps could soon face competition from Apple, which has said it will open a version of its popular App Store for Mac computers on Jan. 6.
Apple already has ties to educational-software makers. According to data tracker 148Apps.biz, education apps are the fourth-most-represented category in Apple's App Store, with 24,727 programs, behind apps for books, games and other entertainment.
"Apple has a tradition of serving educators," said Margery Mayer, president of the education division of children's book publisher Scholastic Inc. With one out of six Americans going to school every day, "it makes sense that if you are a technology company you would be interested in a market that is serving such a large part of the population."
Makers of enterprise software have had some early success with the Google Apps Marketplace. Visitors to Atlassian's site are 15 percent more likely to become paying customers if they were directed there by the Google store, said Daniel Freeman, director of product marketing at the Sydney-based company.
Box.net expects 2010 sales of more than $100,000 from new customers that came from the Google Apps Marketplace, according to Aaron Levie, Box.net's CEO in Palo Alto, California.
"That's a pretty good indication that there is some interest in the marketplace," Levie said. "That can grow to become more significant over time."
Google is plotting toward a future where it's the broker of all new technology adopted by a school, said Salman Khan, the founder of the nonprofit educational video series Khan Academy. His organization has received some funding from Google.
"If you want to introduce a new app for students or teachers, the district has to sign up the app once and they won't have to reinstall it for every student," Khan said.