Back in 2012 Apple (NASDAQ:AAPL) had a 50% share of the education market between its iPad tablets and Mac computers while Google (NASDAQ:GOOG) with its still-new Chromebook had just 1%, according to Futuresource Consulting. By the fourth quarter of 2013 the same researchers estimate that Chromebooks had climbed to a 25% market share. That's strong growth from the previous quarter when the same survey showed Chromebooks taking 19% of the K-12 tablet and PC market, with Apple at 47% (and Microsoft likely having the bulk of the rest, though its share was not specified).
Google's gains clearly came at Apple's and Microsoft's expense (though Futuresource did not report Apple's share of the education market in that quarter, focusing its report on the gains Chromebook made). In an email response to the Fool's request for further data, the company wrote that the researchers "[are] not in a position to comment on the market numbers at the moment. Since that research we have begun another round of analysis, which has yet to complete, and as a result there's nothing we can add at this stage."
Still even in the unlikely event that Apple maintained its 47% share and Google's gains came by stealing schools exclusively from Microsoft (NASDAQ:MSFT) (which had a 28% share in January 2014 and was not listed in the March survey), it's clear that the major players in the K-12 market today are Apple, an ascendant Google, and Microsoft, which has only shown hints of its strategy for the market segment.
Chromebooks have won market share in large part because they are cheaper. Some laptop-like models retail for $199, while Apple's cheapest laptop is the $899 MacBook Air. Even its Mac Mini desktop machine costs $599 and users have to supply a keyboard, mouse, and monitor, which would add another $200. Even the iPad Mini tablet and the lowest model of iPad each costs $399. Microsoft offers school-appropriate laptops cheaper than Apple, but thus far (except for a one-day $199 sale) have not matched Chromebooks. Until Microsoft makes a move, price makes Chromebooks enticing for school systems that are perpetually strapped for cash.
The low-end devices running on Google's Chrome operating system have pluses, according to Phil Maddocks, market analyst at Futuresource.
"While savings can be made on the cost of the hardware alone, the majority of the cost savings originate from within infrastructure and device management," Maddocks said. "As Chromebooks are cloud-based devices, the security, device management, and even core content creation apps such as Google Docs are run in the cloud, which produces cost reduction on both managing and setting up the devices, as well as some software licensing costs."
Compared to Apple and Microsoft products Google's Chromebooks have limited functionality, but they're low on headaches and ongoing expenses. And in many school systems (and to many parents), if it looks like a computer, it's a computer. Being able to buy twice the number of machines for the same price while not having to budget for software makes sense.
Google wants to win customers early
Google's attempts to win a piece of the education market go beyond the Chromebook. The company offers its free apps for education, which offers schools secure email, a calendar, access to Google's Microsoft Office-like suite of productivity tools, and more -- all without ads. The company also just launched Google Classroom, a free service that helps teachers create and organize assignments quickly, provide feedback efficiently, and communicate with their classes. "Classroom is based on the principle that educational tools should be simple and easy to use, and is designed to give teachers more time to teach and students more time to learn," Google posted on a company blog.
It's possible given Google's philosophy that part of the reason for offering free tools is an honest attempt to help teachers ... but a side benefit of that altruism is teaching kids the Google system at a very early age. Apple has long benefited from kids who use its computers in school pushing their parents to buy the same tech at home (and eventually buying it themselves as they got older). With its free tools being used across all computing platforms and a growing percentage of schools buying Chromebooks, Google has young customers in its ecosystem who could stay where they are comfortable when it becomes time to buy.
Apple also has a commitment to teachers and offers some resources on its website, but has nothing comparable to the free tools specific to teachers that Google offers. Microsoft has a webpage for educators that offers some free tools and the company offers educators free use of its Skype video-calling platform, but it's also well short of Google's offerings.
How big is the educational tech market?
Fellow Fool Chris Neiger reported in a January article that Futuresource said in a December report that, "Global penetration of mobile computing devices within K-12 education is forecast to reach almost 10% by the end of 2017, growing from just over 3% in 2012." That's a lot of purchasing yet to come and the size of the overall market appears substantial.
Apple CEO Tim Cook said in an October 2013 earnings call that the company earned more than $1 billion in revenue in the quarter in the education sector. Using the Apple quarterly numbers as a guess and projecting out across a year it's likely that educational technology -- at least the classroom portion of it -- is worth somewhere between $7 billion and $9 billion a year.
The winner is yet to come
Google has made large price-based inroads but cheaper Windows laptops that offer a price-competitive option to Chromebooks could reverse those gains. Apple -- with its much higher prices -- risks pricing itself out of many schools no matter how optimized for use in education its devices are.
Microsoft -- even without a $199 laptop -- looks to be Google's biggest rival unless Apple creates a cheaper machine specifically for schools. It has been unwilling to do that in the past, but Apple under Tim Cook is not Apple under Steve Jobs and the company might respond to Google and Microsoft by finding a way to be price competitive. The quick rise of Google should have Apple and Microsoft scared, but this market is still evolving. Despite Google's gains a clear winner has not been determined yet.