Kids 'R' Us

The government's announcement of the National Grid for Learning has meant the education market is a veritable playground of opportunities for resellers.

As IT exhibitions rise and fall in popularity, it is not always has meant the education market is a veritable playground of opportunities for resellers. possible to discern a trend in the greater scale of things. For example, if Networks 98 turns out to be a dud, it won't necessarily mean networks are passe. If you were among those squeezing through the crowds at Bett 98 at Olympia, you would have noticed two things. First, teachers walk very slowly at trade shows. Second, an unprecedented number of them were shopping for their schools.

In the channel, manufacturers report that resellers are looking seriously at education, for the first time. But doubts remain as to whether a dealer, which is accustomed to the fast turnover and the open wallets of the business sector, can prosper in education.

The education sector has always been a hard one for resellers. Small budgets, non-standard technology and the lack of opportunities to add higher margin business like training and maintenance means it has been anything but lucrative for resellers brave enough to enter the staff room.

But the Labour Party's announcement of its National Grid for Learning, heavily promoted by ICL, RM, Microsoft and BT, has made education a growth market and created a lot of enthusiasm from potential customers.

Enthusiastic customers are fine, but rich customers are even better, and this is one aspect of the National Grid that threatens to undermine the market in education in the short term. So far, the National Grid initiative is long on promises and short on cash. If teachers had been shopping seriously at Bett, they were certainly doing it with existing funds, not new grants.

An example of the parsimony of schools comes from the figures Microsoft quotes for penetration of computers in secondary schools. Today, there is one computer for every nine pupils, the company says, which sounds impressive. But 40 per cent of these computers are more than five years old and four years ago, the equivalent figure was one computer for every 10 pupils. What becomes apparent is that even if you plug in a Nintendo, some educational establishments consider it a school computer.

Yet, whatever the starting point, the government's National Grid for Schools has excited the market significantly. 'We believe a lot of people have money to spend in education,' says Mark East, Microsoft general manager for the education customer unit. 'We think we will have a 30 per cent growth in business as a result of the government initiative.'

Microsoft is selling its software into the education market at a 90 per cent discount, and that is a lot of Windows. But Microsoft doesn't want just anyone selling to the education sector. In September 1997, it launched its Authorised Education Reseller Programme and has so far signed up 400 dealers.

East admits the recruitment terms for the scheme aren't stringent enough.

Unlike customers, resellers don't have to pass any exams to get in. 'It's a simple process. You promise to sell at the education discount only to education customers,' he admits. 'But we have identified who is selling to education and believe there are 1,800 resellers that have sold to schools or universities.'

If those other 1,400 who have dipped toes in the education sector want to make a business from it, says East, they have to understand the customers' needs. 'In universities, people tend to buy on price because they have the skills internally. In schools, they need to buy from someone who understands their needs. Teachers are not au fait with technology. In that way, they're like small companies.'

There's more bad news for resellers that want to make a quick buck from education in 1998 - it's more likely to be a slow buck, says East. 'The sales cycle is a slow one, typically about two years. At the end of it, if you don't understand what they want, they'll buy from someone else.'

The length of the sales cycle means few of this year's entrants to the sector will persist, says Ray Fleming, marketing manager at RM. As a direct supplier, RM knows that the intent to buy in schools often predates the deal by a considerable margin. 'It is shocking how long it can last. Schools that bought networks from us last summer first showed an interest three years ago. Often companies that decide to target education don't do much business in the first year and think education is a waste of time and get out,' he says.

The market is also seasonal Fleming adds. RM's own research shows that by January, four out of five schools committed to a shortlist of suppliers for the technology they plan to buy in the summer. Fleming is braced for a few new competitors, but not many. He cites Escom, which briefly made a splash in education, as a good example of how not to approach the sector.

'Every year a new competitor comes to market, picks up the business but finds it impossible to make any money from it. Schools look for two things - the cheapest deal, or someone to satisfy their educational needs.'

RM's expertise is now concentrated on the second category, and that means a turnkey solution, with specially tailored applications like the primary school curriculum software Window Box.

With only six resellers authorised to sell to education, Fujitsu is beginning to see the potential market. For years it has sold PCs into the sector through subsidiary ICL, which has always had close links with the education market. Now, says European business development manager Peter Stuart, there are compelling reasons to put resources into education.

'We have sold to the corporates and to homes. Now we are pushing into the SME market and recognise we have no history in the education market.

But education will be an influence on the home market. Lots of parents do not know which brands to choose and look to schools for advice.'

That school's advice may not be just which brand to buy, but who to buy it from. Nevertheless, Stuart's tactics in education can't encompass his whole channel. He says: 'We will authorise specific resellers, but want our education products to be sold by someone who can add value in that school's environment. We expect to see a marketing plan and dedicated resources from resellers, and I don't mean someone calling up schools and asking if they are going to buy computers.'

This is enough to put off many Fujitsu dealers. Stuart says: 'Most of them are sticking to what they know.' But he has had one set of inquiries he believes will be a significant source of business in the future - and possibly a short-cut to the education sector for resellers that want to develop contacts in the closed world of education.

We have had a lot of inquiries from educational equipment suppliers that want to sell computers to schools. We warn them what they are letting themselves in for. If they are used to selling rulers and rubbers it's a whole new world for them.' The answer, he thinks, might be for those companies to partner with an existing reseller, which can provide the technical expertise they lack.

Xemplar, an established education reseller which has lasted through the days of the Acorn, the Mac and is now selling PCs, has more perspective on the education gold rush. 'It's double-edged,' says Chris Morley, marketing manager for the secondary school sector. 'The National Grid increased awareness in schools of what is possible using technology. But those schools are hanging back from spending their own money because they think the government will provide it all.'

Although he considered Bett a fantastic show, Morley categorises it as 'not where you come to buy, but where you come to make plans for what you want to buy.' That meant a lot of advising for teachers who wanted to know about technology, and about the subtleties of the National Grid, he explains.

Just selling equipment to fulfil one school's role in a national scheme won't work, Morley says. The National Grid needs planning at a local level.

'Companies must work out how we get local grids for learning. That's a better idea than having one national provider. This is not a short-term opportunity for resellers and we have seen a lot founder because of that.'

Morley also sees a reseller's best opportunity coming from partnership with other suppliers. 'If you look at some of the initiatives, they are dominated by a consortia of big suppliers. A small dealer is not best placed to work with that,' he says.

But the scale of the market is potentially huge, Morley admits Xemplar lays claim to 40 per cent of the education market at the moment, with an annual turnover of #27 million. But with 35,000 schools, in which 60 per cent of teachers have no IT experience, no one can claim the market is saturated.

TAKE INITIATIVE

NATIONAL GRID FOR LEARNING

The government's master plan to connect schools via the internet. Originally set out in the government's consultation document, Connecting the Learning Society, the National Grid, despite the enthusiastic backing of Bill Gates last October, has prompted scepticism from some areas. The suspicion is that a few giant companies - notably BT and Microsoft - will produce an inflexible one-technology-fits-all solution.

Deadline: 2002

UK NETYEAR

A private initiative from Cisco, ICL, Sun and the Telegraph Group, with an aim to get schools online and speed up the National Grid implementation. Government supported, it aims to set up a charity to get underprivileged schools online. Community-based, some IT training and kiddie NetDay campaigns.

VIRTUAL TEACHER CENTRE AND TEACHER TRAINING

A #235 million lottery grant in the period to 2002 to train teachers how to use technology, supported by online training materials. There's #20 million for librarians and #50 million for digitising content for educational purposes. #5 million goes to buying laptops for teachers, although with 450,000 teachers in the UK, that's about #10 for each laptop.

MORE INFORMATION

National Grid for Learning prototype www.ngfl.gov.uk

A SURE BETT

Bett 98 was no small show. It was certainly nothing like a bunch of men in tweed jackets gathered round a BBC Micro. The show was opened by Secretary of State for Education David Blunkett on 14 January, and Microsoft general manager of education Liz King flew in specially from Seattle to deliver the keynote speech.

This year, there were 350 stands and the tone was set by the monster stands of ICL, Microsoft and BT, with seminars on IT pedagogy and classroom practice and accreditation of staff skills in IT. If you ignored the punters, it might have looked like a business show.

Yet as one show closes, another one unpacks its stands.

On 5 March, Birmingham NEC will host The Education Show. Where Bett had 350 exhibitors, the Education Show will have 600. Note to your kids - if you want to bunk off school, Thursday March 5 and Friday March 6 are dates for your diary. Your head teacher will be milling around in Hall 12.