Apple, iPads and the education market
Mike Fisher comments on the future path of Apple against the context of its iPad update
Apple's latest generation of iPad includes an update to the iPad Air and the iPad Mini. After the revamp of the iPhone in September, Apple's upgrade to its tablet line-up has been expected to be more modest.
Anticipated was an introduction of touch ID – which may help shared devices with separate logins – along with other improved specs.
Apple's update to its line-up comes at a challenging time in the tablet market; growth has slowed significantly in 2014. The market is expected to reach 310 million units, with growth slowing to 27 per cent, down from 56 per cent in 2013.
The usage model of tablets has resulted in slower replacement cycles than initially expected; tablets are used primarily for web surfing and the consumption of content such as videos, which place limited demand on the hardware and provide little drive for consumers to upgrade their device.
So how to differentiate offerings?
Tablets' limited usage model has also made it difficult for international brands to differentiate themselves, when low-spec devices can fulfil most desired functions.
Where growth has occurred in the tablet market in the past year, it has typically been driven by low-end local brands, generally manufactured in China and rebranded by a local retailer or distributor, which has driven prices for the category down.
An upgrade, particularly if there are unique features, may therefore help differentiate a tablet from lower-end competition.
The growing popularity of larger-screen phones has also affected tablet demand, particularly for smaller-screen models. With many of the functions of a tablet increasingly fulfilled by ever-more affordable and powerful smartphones, tablets' niche between smartphones and PCs is increasingly tenuous.
Particularly challenging is that larger-screen smartphones have become very popular in many of the emerging markets where new tablet sales growth was expected, such as south-east Asia.
As demand in the consumer tablet market continues to waver, interest is increasing in the fast-growing education sector – a traditional focus for Apple.
One-to-one learning programmes are developing across the globe as the education industry looks to benefit from digital solutions.
As opposed to the overall computing market, the education segment continues to see explosive growth with device – notebook, netbook, tablet combined – shipments increasing 29 per cent from the first half of last year to the first half of 2014.
Apple has traditionally had a strong position within this sector, and is currently the market leader. It was the first firm to penetrate the education industry heavily with the tablet form factor.
For tablets specifically, first-half 2014 sales growth has eclipsed that of the total education sector with 5.77m units shipped, representing 87 per cent growth versus a 29 per cent total market. That compares to first-half 2013 shipments of 3.08 million units, highlighting the fast-growing nature of this device segment.
When scratching beneath these numbers, however, a notable proportion of this growth comes from large-scale national deployments such as the FATIH project in Turkey, OTPC in Thailand, and a nationwide project in Mexico.
These large-scale nationwide projects tend to favour localised OEMs over multinational manufacturers, resulting in brand-share shifts and increased competition. Many more of these large-scale projects are expected to continue – resulting in increased competition for market share.
In the US market, while overall market sales continue to grow, Q2 2014 saw the first year-on-year decline in demand for tablet solutions as cost-effective Chromebook offerings continued to see rapid adoption, reaching 29 per cent of total education sales in the first six months of 2014.
A focus on upgrades to device hardware is unlikely to be a key factor for the education market, but any announcements regarding education likely have the most impact.
Apple's announcement of a partnership with IBM may offer clues to its future development path. As the education industry continues to adopt digital solutions, there are still many questions to address.
First and foremost is the link between intelligent uses of technology and improved learning outcomes, and how this can be measured. Can providers utilise big data to identify trends, learning problems, and as a result, allow educators to make informed decisions regarding learning needs, resulting in improved learning outcomes?
Along with the upsides of using big data come concerns about the privacy and security of student data. Earlier this week, Microsoft and other key suppliers signed a pledge to protect student data. Apple and Google were noticeably absent.
Sales data refers to sales of notebooks, netbooks, or tablets to k-12 schools, not including bring-your-own purchases.
Mike Fisher is associate director of education technology research at Futuresource Consulting