Switched On: You tell me it's the institution

Ross Rubin
R. Rubin|01.29.12

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Switched On: You tell me it's the institution
Each week Ross Rubin contributes Switched On, a column about consumer technology.

Apple rose to dominate sales of digital music by more or less mirroring the way consumers acquired music in the physical world -- that is, purchasing songs, but providing a greater degree of granularity. This worked well for music and has also held true for apps and best-selling books, but hasn't been as in step with consumer media acquisition habits for other content.

For example, before Apple brought sales of video material to iTunes, most consumers did not generally own TV shows except for perhaps a few cherished series on DVD. They either watched them as they aired as part of a cable-like subscription or paid a flat monthly fee for the privilege of recording them on a DVR to be viewed after they aired. Furthermore, both Blockbuster physical stores and later Netflix's DVD by mail feature relied on a system of one-time consumption via rental or subscription that eschewed ownership of movies. And today, Vevo.com offers free streaming of many music videos that Apple still seeks to sell.

Apple then, is not surprising us by pursuing the same approach to textbooks that it has with virtually all other digital content that it has gotten into the business of offering -- a straightforward purchasing model. Removing a potential resale opportunity mitigates the digital advantage of being able to annotate and highlight without destroying the original text, but substitutes lower new textbook prices for the opportunity purchase used textbooks or earn money reselling them. Overall, the model runs consistent with how most college students acquire textbooks and the iPad is a relatively minimal expense in the overall context of a typical college education.

But while Apple is certainly aiming for the college textbook market, it will initially focus is on high school texts. This exposes two main challenges.

First, unlike colleges students, most public high school students have their textbooks provided to them by the school. Apple is banking that the money saved by purchasing physical textbooks could be applied to significantly cheaper and perpetually current iBooks. But, depending on the cost of the physical textbook, it's doubtful that many districts could afford upgrading to iBooks, and that's not even taking into account the cost of an iPad for each student.

Unlike with sales of entertainment content, which is sold directly to consumers, selling high school textbooks would require the intervention of school districts

Apple counters that iPads could be purchased in lieu of the computers relegated to labs today but, even with Bluetooth keyboards, there is likely curriculum that could not be replicated on an iPad, such as introduction to programming courses. Of course, over time, Apple could introduce cheaper iPads as it has cheaper iPods and iPhones after their introduction, and they could well develop into more capable PC replacements.

Second, unlike with sales of entertainment content, which is sold directly to consumers, selling high school textbooks would require the intervention of school districts. Amidst mostly educators and principals, Apple's textbooks videos did feature one administrator from Los Angeles. But, for better or worse, intermediary bodies will often decide whether high schools make the move to iBooks. This will require a different approach than the direct messaging that the company enjoys with end users, one that emphasizes the kind of manageability, maintenance, cost and multiple-sourcing that is in some ways more akin to an enterprise purchase discussion.

There is also the need to convince these decision-makers that iPads -- or at least tablets -- are the future, and that it is better to prepare youngsters for the future world with them versus traditional computers (because that's likely what the budget tradeoffs will involve).

There are other issues that Apple's proposed textbook revolution faces beyond cost and go-to-market approach such as the much-publicized distribution lock-in of iBooks Author or the terms of its End-User License Agreement. But the only lever that Apple ultimately doesn't control is the purchasing structure of public schools. In a world where we so often hear about "the consumerization of IT," Apple could be banking on leading "the consumerization of education" in which principals or teachers -- perhaps even students -- bring iBooks in through the back door. That could certainly help establish a market for the company, but would not be enough to foment the kind of industry shift the company has driven in music.

Ross Rubin (@rossrubin) is executive director and principal analyst of the NPD Connected Intelligence service at The NPD Group. Views expressed in Switched On are his own.
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