Apple’s New Growth Driver

Anindya is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Apple’s (NASDAQ: AAPL) senior VP of worldwide marketing, Phil Schiller, said at an Education Event last year, "Education is in Apple's DNA." Apple broke its own sales records in the education in 2012. The popularity of the iPad with students and instructors helped Apple break its own education market sales records in 1012.

Students Fast Adopting Tablets and Smartphones

According to a recent national survey, access to mobile technology in the classroom has more than tripled among high schools students in the past three years -- and even more interesting, parents say they are more likely to purchase a mobile technology device for their child if it’s for classroom use.

Use of tablets and smartphones by K-12 students has hit 50%, according to an analysis released in October, 2012 at the Wireless EdTECH conference by Blackboard and Project Tomorrow. The report, "Learning in the 21st Century: Taking it Mobile!" found the 50% of high schoolers and 40% of middle schoolers use smartphones or tablets on a regular basis. In November, more than 500 educators attended the iPad Summit hosted by Ed Tech Teacher at Harvard Medical School.

With iPad Apple Revolutionizes Education System

Apple is best equipped to take advantage of the K-12 tablet market. It has quietly worked with schools to develop tools for successful classroom use and to improve the manageability and delivery of custom content and applications. Apple offers extensive training and support for educators, and the iPad Mobile Learning Lab is a charging cart designed for classroom sets of tablets.

The latest iPad technology has been of great help for the devices in automating the classroom processes as well as in implementing new learning methods that were left unexplored earlier. Apple’s move could greatly enhance the ability of educators to create custom instructional content for the iPad, especially in math and the sciences.

Mathematical typesetting for ebooks of all types has been a source of enormous pain for as long as ebooks have been around, but Apple has just made it easy. The newly released update to the iBooks authoring app allows text to be created in three forms widely used for mathematical typesetting, LaTeX, MathML, and MathType.

Apple’s iPad vs. Google’s Nexus

This is obviously the question many are asking, because the iPad is the de facto choice for many schools. And the reality is that the hardware, specs, and price make the Nexus a viable, perhaps a better, option if only looking from that perspective.

But Google (NASDAQ: GOOG) does not appear to be taking on a leadership role in education. The company is promoting Chromebooks for educational use, but not Android. While the Google apps for education suite shows a tremendous commitment to education, Google’s education focus with the Nexus and the ecosystem wrapped around it is nowhere near Apple’s heavy education focus with the iPad and its ecosystem.

Apple’s iPad vs. Microsoft’s Surface

Microsoft (NASDAQ: MSFT) might have a shot in education with its new tablets, but an obscure technical decision will limit their appeal. One of the big attractions of Windows, at least to school system IT departments, is the ability to manage devices centrally, including deploying software and locking down systems. But Windows RT devices, including the Surface and other tablets based on ARM processors, are not able to join Windows Active Directory domains.

Apple’s iPad Has Been Cannibalizing PC Sales

Charlie Wolf with Needham & Company said in a note to investors that PC education shipments fell by 265,000 units, or 13.9%, from the June quarter a year ago. Apple, meanwhile, sold nearly a million iPads in the K-12 market in June, which he said is "definitive evidence" that the iPad has been "cannibalizing" PC sales in the U.S. education market.

"Clearly, a significant portion of iPad sales represented an expansion of the market," Wolf wrote. "But in view of the fact that Mac sales held steady at around 520,000 units but overall PC sales declined by 265,000 units from 1.90 million to 1.64 million units, we believe the inescapable conclusion is that the iPad is beginning to cannibalize a material portion of PC sales in this market."

Apple Launched 128 GB iPad

Apple added another important update to its growing iPad collection. The company recently launched a 128 GB update to its retina display fourth-generation iPad, doubling the storage capacity of its earlier highest-end tablet for an additional $100 in price.

Microsoft plans to launch its own tablet PC, the Surface Pro. By launching an iPad with the same storage option as the Surface Pro, Apple is effectively positioning the high-end iPad as a computer replacement.

Gartner Says iPad Market Will Grow By 35%

Gartner estimates that the iPad market will grow to about 170 million unit sales in 2016, at an average of about 35% annual growth rate.

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The opportunity that lies in the nascent tablet market is so immense that Apple doesn't mind cannibalizing its own computer line, the Mac. At $799, the 128GB iPad is just $200 cheaper than the entry-level MacBook Air. Sales of the iPad to the education market are only the beginning. I believe the iPad will begin to meaningfully chip away at PC sales in other, larger markets in the near future.

Anindya7 has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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