How Steve Jobs Failed At School
Just five years ago, school was one of the few places you would be sure to find a Mac. They reigned supreme everywhere, from the campus computer center at Harvard University to my son's elementary school in suburban Atlanta. In fact, the machines were so simple to use that they helped ease anxious teachers and administrators into computing. The students, of course, had no such fear. I'll always remember my son, then age 8, showing his teachers how to turn on a Mac, write a letter, and print it out.
BACKWATER TO BOOM. Lessons like that were perfectly timed for Apple Computer Inc. (AAPL) It was 1996, and President Clinton was championing the Internet and computers as the greatest educational tools since the pencil. Soon, parents nationwide were demanding to know why their kids' schools didn't have more computers. That jolted school administrators into ordering machines by the thousands, most of them Macs. Unopened computer boxes lined the walls of our school library for most of a year because no one knew how to set them up, let alone connect them to the Internet.
How times have changed. Long considered a low-margin backwater, schools are now a boom market for computers. Giant manufacturers such as Dell Computer Inc. (DELL) and Gateway Inc. (GTW) have taken notice. Apple, and to a lesser degree IBM (IBM), are losing their dominant position in the school market.
Dell, in particular, began to aggressively market to schools in the late 1990s, and that strategy has paid off. With 15.1% of the educational sales market, it's now the leader, while Apple has slipped to No. 2 with 12.5%, according to Dataquest Gartner Group. The difference may look small, but it's a big deal to Apple because the education market represents 40% of its sales.
Apple was not simply outmuscled by Michael Dell. The truth is that Steve Jobs is at least partly to blame. He made a big mistake earlier this year when he canned the company's longtime freelance educational sales force and brought the effort in-house.
What prompted the move was the surprise departure of Apple's top education sales executive, Mike Lorion. He left in the summer just as computers were being bought for the coming academic year. With his departure, Apple decided to dump its longtime network of outside educational sales reps and hire its own sales force. The switch in strategy created chaos, according to the schools. Many administrators said the only way they could reach Apple was through the Internet, while Dell's salespeople were showing up in person.
Jobs conceded at Apple's recent briefing on disappointing third-quarter results that switching sales teams during the summer was an error. Revenues slipped in part because of lower education sales.
Can Apple recover its lost footing? Not easily. It's hard to uproot the Windows PCs once they enter a market. After all, most kids use PCs to play games at home, and most parents use them at work. Not surprisingly, many people expect to find Windows PCs at school. Administrators can only meet those expectations if they buy PCs.
Still, all is not lost for Apple. The company has built a strong reputation among educators. It's not hard to find a teacher or administrator who still raves about how easy it is to use a Mac. And most kids fall in love with them--especially the colored, gumdrop-shaped iMacs--once they've had the chance to bang around on one. The trick for Apple will be getting those iMacs in front of kids and teachers soon. It's made a good start in naming Cheryl Vedoe, a longtime developer of education software and well-known among educators, as its new education czar. Already, Vedoe is out knocking on school doors trying to win back former customers.