Education market offers salvation for ailing tech vendors

IT vendors should target education sector, particularly in emerging markets, to rebuild brand, say market observers, who add patience and understanding of market needed for them to succeed.
Written by Ellyne Phneah, Contributor

The education sector, particularly in developing markets, is an ideal arena for struggling tech vendors to stage their comebacks as they can build brand awareness and credibility among youths to reap long-term benefits, as well as help local governments strengthen their education IT infrastructure.

According to Peter McAlpine, senior director of education sales for Asia-Pacific at Adobe Systems, beleaguered tech companies should look to expand their presence in the education market as it could prove lucrative in the long run.

He noted that should these companies deliver a good product and user experience to the students, they would want to continue using these brands' products and services even after they leave school and enter the workforce.

Frank Levering, research manager of IDC's Government Insights, agreed. He said ailing companies should look at building their credibility among students, such as providing support and repair services when needed, will give them a "large competitive advantage" over IT vendors that do not have a presence in the education sector.

"The education [market's] transformation [in general] is at a very early stage, and any company with the right focus on a specific solution or a significant contribution to the education ecosystem will definitely see a good return on investment," he said.

Target developing countries
The analyst went on to suggest that the companies should focus their efforts on developing countries in order to generate market traction for their products and re-establish fundamental best practices in order to scale beyond these markets to more developed economies.

Furthermore, developing markets usually have a specific government budget set aside to improve the quality of education, Levering stated, citing Thailand's "One Tablet Per Child" initiative which aims to equip all Grade 1 child with a tablet PC device as an example.

The government was reportedly poised to ink a 2.2 billion baht (US$70.6 million) deal with Chinese manufacturers for 900,000 tablet devices to fulfill its election promise. A subsequent report by Thai news agency The Nation in April stated that the country's Cabinet had signed off on the revised tablet deal for 1 million devices at 2.4 billion baht (US$77.9 million), even though the Chinese manufacturer Shenzhen Scope Scientific Development had not yet signed on.

The IDC analyst also pointed out that the focus of developing countries is to improve their existing education levels by using technology as an enabler. Infrastructure, too, is commonly lacking in these countries. As such, ailing tech vendors can step up and push their offerings as these are viable market openings, he noted. By comparison, the education sector in developed markets has a more "conservative attitude" toward tech adoption in that the product or service being considered needs to produce a certain benefit or positive outcome for stakeholders, he noted.

"Developed countries will embrace technologies especially if they have a proven track record elsewhere and will transform at a much greater pace from there onward," he added.

Hence, this is why emerging countries may lead in innovations on many occasions over their more established counterparts as they are driven by necessity, Levering surmised.

Already, two regional companies have made moves to enter the education sector to revive their fortunes. Taiwanese display manufacturer BenQ, for one, announced plans to introduce three tablets in the Thai enterprise and education markets amid expectation that the tablet growth in these two areas is "poised to increase exponentially", according to a March report by Bangkok Post.

Singapore-based Creative Technology and its wholly-owned subsidiary ZiiLabs too unveiled its HanZpad in February, targeting China's education market. "This is [an] opportune time when its government aims to transform the conventional education system to one that embraces the latest in digital technologies," its press release stated.

Challenges loom
However, there are challenges vendors such as Creative and BenQ, among others, will have to face in order to see an upturn in their fortunes.

Levering pointed out that it's important tech vendors take time to thoroughly understand the sector in order to create the right offering that would integrate with institutions' existing systems and education methods.

Felicia Brown, Asia-Pacific education programs manager at Microsoft, concurred, saying that the education market is "unique". She noted that this requires a lot of understanding in areas such as creating the right content and curriculum, as well as incorporating "ruggedness" in computing devices meant for students, she explained.

To address this, Redmond works with global and local advisory councils made up of education thought leaders and youths, and also hires ex-teachers who understand specific local markets to develop its education offerings, she added.

The IDC analyst also noted that companies will find developing a generic, international product a "massive challenge". This is because there is too many different needs between schools and countries, and constant customization to the product would prove expensive for a sector with its limited budget, he explained.

High costs of education tech offerings was highlighted by Adobe's McAlpine too, who said that while governments can help financially in facilitating tech adoption, the education market will need to be self-sustaining at some point. This is especially so when the local government decides to shift its priorities to other sectors of the economy, he said.

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