PILOTed

Looking at the 2011-12 Education Market

On March 2, the Center for Digital Education gave a webinar on the 2011 Education Market Landscape. Here are my notes.

The 95 million Millennials are the largest US generation in history, pointing to an increasing long term demand for education, and, hence, education products.

The K12 market

 

Image by IK's World Trip via Flickr

Classrooms and materials are being transformed over the next 10 years to digital: digital labs, mobile interactive social-aware content, and interact-and-communicate as opposed to display-and-present classrooms. Already, 89% of districts offer digital field trips, 84% offer some online classes, 82% offer at least one advanced technology class, 69% use push technology like alerts, and 88% have classes to counteract cyberbullying.

Technology spending is expected to be flat over the next year or so. The edtech market for K12 should be around $9.5B. This is spread over 14,000 districts, although the top 100 districts account for about 30% of the total. The number one reason for purchasing content is to save money, including counteracting the effects of staff or service reductions, to implement consolidation or efficiencies, to standardize, to automate, or to move to cloud based computing.

 

Image by Jacob Anikulapo via Flickr

Looking at overall education spending, there should be about a 3% increase in federal educational funds in 2012, to around $77.4B. At a state level, at least 30 states are expecting to decrease K12 spending, and states contribute about 50% of educational funds.

Technology directors are concerned about providing access to the Internet, they are confused about the proliferations of devices, they are worried about bandwidth issues, they are looking into changes in SIS, ERP, and LMS systems, and are starting to become concerned about blended learning and the transition to digital content and Web 2.0.

The Postsecondary market

 

Image via Wikipedia

Edtech spending in Higher Education is also expected to be flat in 2012, at around $10.3B. Many of the largest institutions are state run, and 41 states are expecting to cut HE spending. This is resulting in a need for institutions to look at economizing, and they are expecting technology to help them increase efficiency, accommodate mobile computing, improve student retention and recruitment, improve tech support, and reduce demand on IT resources.

Some areas of growth are data storage, disaster recovery, ERP, identity and access management, security, and help with staff research. Higher Ed is also grappling with the textbook to digital transition, including looking for the ideal interactive learning environment that integrates well with other institutional systems.

The biggest reasons for purchasing are cost management, productivity gains, data driven decision making, and online education.

Related articles

• Sec. Duncan Pushes for Productivity and Flexibility in Education Amid Budget Crisis (blogs.abcnews.com)
• Six Edtech Predictions for K12 (edreformer.com)

The Higher Education Market

I gave a talk on the Higher Education market at the SIIA Ed Tech Business Forum in San Francisco a few weeks ago. Here is a summary of the talk.

College Enrollment Trend

As you can see, enrollments are expected to be flat for the next eight years.

While you could say that this does not bode well for anyone looking to sell into higher education, that's actually far from the truth. Below, we'll go through some of the market niches that are, in fact, growing.

Growth in Online Courses

Over 4.6 million students were taking at least one online course during the Fall 2008 term. This is a 17 percent increase over the number reported from the previous year, and far exceeds the 1.2 percent growth of the overall higher education student population.

More than one in four higher education students now take at least one course online.

Growth in For-Profit Enrollments

The for-profit market is growing at 12.5% a year. Currently, they are under a 10% market share, but they were under a 3% market share at the beginning of the millennium.

The for-profits have capitalized on three trends: the ability to provide federally backed student loans, their ability to adapt to job-related education, and the adoption of online courses.

Growth in Minorities

While there has been an increase in White students, there have been huge increases in minority students. The compound annual enrollment growth rates of different races are shown below:

White	0.7%
Black	4.7%
Hispanic	9.1%
Asian	8.8%

The increasing numbers of minority students provides opportunities to target services specifically for their needs. Below shows the total enrollments for the different groups.

 

Technology budgets

While many think in terms of publishing content for students (which, in higher education, the students are the ones who actually purchase), there are opportunities selling directly to schools, both in academic and administrative products and services. Below is the breakdown of academic spending in 2009.

Changes in the way content is sold

Historically, textbooks have been sold to students through the campus bookstore, on recommendations or requirements of the professor. the student would purchase the book from the book store, or perhaps buy a used book, as below.

With this increasing use of the Internet, online materials, new devices, and e-books, the distribution channels have become more confused:

Education publishers still go to professors, but they can select from an ever-increasing universe of free materials, and students can choose from a plethora of sources. Look for continued channel confusion, disaggregation, and disintermediation until the channel finally gets sorted out, sometime in the next ten years.

Textbook market concentration

Of a total market of about $4 billion, the top three education publishers, Pearson, Cengage, and McGraw-Hill, control about 75% of the market.

Their national sales forces give them the ability to reach US college or university faculty in any state and of any size institution. On the other hand, the additional pressure of institutions to reduce the costs of textbooks, the availability of free materials, and the flexibility of smaller competitors to create targeted content, does not guarantee that this situation will continue indefinitely.

Where are the opportunities

Following, from our vantage point, is a summary of five big opportunities:

1. Remediation: over 85% of community college students cannot do college level math, and over half cannot do college level reading and writing. In total, over half of all entering higher education students need remediation.
2. Dropout prevention: since the 1950's, about half of all college entrants do not graduate; this is a prime goal of the Obama administration.
3. Online: the use of online courses and online materials are far outstripping the growth in enrollments
4. For-profits: the for-profit institutions have been able to move quickly to meet market needs, and with cutbacks in state funding, their growth may continue.
5. Community Colleges: this is the cheapest way to get a degree and to spend the first two years of college. With a dismal job market, they are more in demand than ever. But, with state spending cuts, they are in distress. They have a huge need to meet the demands of more students at a lower cost.

A lot of this material came from the 140+ page report we wrote for the SIIA on the Postsecondary marketplace, available here: http://www.siia.net/estore/10Expand.asp?ProductCode=EPMR-09

A difference in teaching

My daughter goes to Carnegie Mellon in Pittsburgh, and she is now taking a semester in Singapore.

She just took her mid-term exam for one of her engineering courses. The mid-term was five questions. Each questions was pretty complex, and, in one of the questions, she misread that something took place once a day instead of once per month. Except for this error, she did every step of the problem correctly, but her answer was 30 times too high.

The professor announced he gives partial credit for wrong answers. But, she got zero credit. When she asked why, she was told, the answer was 10,000. If you got the answer you got 20 points. If you got within 10% of the answer, you got 18 points. If you got within 20% of the answer, you got 16 points, etc.

To me, this highlights a huge difference in teaching emphasis between the two cultures. In the US, we are more interested in process: does the student understand the process to tackle the problem.

In Singapore, the professor was more interested in results, how close did the student get to the right answer.

If you really think about it, if you were building a bridge, which would be more important: the correct understanding of the procedures, but a calculation which was 30 times too high, or an answer which was calculated incorrectly, but within 10% of the correct result?

It's an interesting and different way of thought.

New Writing Teacher Webinar

Webinar Title

Why Can't Suzie Write?

Designing a Writing Program for the At-Risk Student

Webinar Description

With almost half of all students entering college needing remediation to bring them up to college level reading and writing, many colleges are struggling to support at-risk students.

Dona Young, author of Writing from the Core and Which Comes First, the Comma or the Pause?, will describe the five steps that make a difference in designing a writing program for at-risk students. This webinar will help you structure your remediation programs around proven techniques.

Why Can't Suzie Write is being hosted by Farimah Schuerman of The Writing Teacher and is sponsored by College Starter skills remediation from LearningExpress, LLC and the Wimba Collaboration Suite.

Webinar Date:

Thursday, September 24, 2:00 Eastern Daylight Time

To Register:

http://www.wimba.com/company/events/1714

Cost:

None

Webinar on SIIA Postsecondary Market Report

Farimah Schuerman, Matt Villano, and I recently completed the SIIA Postsecondary Market Report, and Farimah and I will be participating in a free webcast on the report's highlights on Wednesday, June 17 at 2:00 PM EDT.

The executive summary of the report is available here: Download SIIAPostsecondaryExecOverview.pdf (180.6K).

The report itself is over 100 pages and includes the following chapters:

1. The Changing Characteristics of Postsecondary Institutions
2. Growth and Rising Enrollments
3. Changing Characteristics of the Student Population
4. Rising Financial Pressures
5. Technology Spending and Budgeting
6. Instructional Technology Spending and Online Learning
7. Other Institutional Technology Spending
8. Student Technology Habits
9. Future Challenges and Opportunities

The full report is free for SIIA members, and is also available for purchase from the SIIA for $189.00 here.

The webinar is free for anyone and you can register here.