School's Out For Summer
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With much of the western world roiling in economic distress and unsure about the future, many have been left questioning old and trusted paradigms and wondering where the path forward is. One of these is the idea that if you went to school and got your degree that you would be able to get a good job and earn a good living.
The financial crisis of 2008 shattered this notion, leaving millions confused, distraught, mired in student loans and having plenty of free time to ponder what just happened. The Associated Press reports that 53% of recent college graduates under the age of 25 are either underemployed or worse, many taking jobs beneath their qualification level and returning home to live with their parents after graduation. The Project on Student Debt found that out of the 1,000 colleges surveyed, 98 reported students from the class of 2010 graduated owing an average of more than $35,000 in student loans.
Disruption Junction what’s your function?
Little wonder that many are now wondering what was the point of taking on so much debt when they’re getting so little return on investment . To many it is clear that education too is long overdue for a renovation.
In an old school nod to changing times, Yale University launched the Global Network for Advanced Management as a way to shake up the status quo and energize the learning experience. Edward A. Snyder, Yale’s dean, says “there's an obvious need for a different approach. Students understand that the world has gotten flatter, that there is top talent in all kinds of interesting places. Having a network of schools where you can go to [study in] places like Indonesia, Brazil, Ghana and Turkey is really attractive to students. The same rationale makes it really attractive to global enterprises.”
Peter Thiel, one of the initial angel investors in Facebook (NASDAQ: FB), announced that he had started a fund offering $100,000 to students to drop out of college and pursue their big idea. Thiel says there is a bubble happening in education and compares colleges to subprime mortgage lenders.
Reading, 'Riting, 'Rithmetic & Relevance
The traditional model of education, where students carry books to a room to be lectured by a teacher is going the way of the Polaroid and the fax machine. Houghton Mifflin Harcourt, a major publisher of textbooks, recently filed for bankruptcy protection citing a lack of state funding due to the financial crisis, while Encyclopedia Britannica also announced that it will stop the presses after more than 240 years in the information delivery business. In other news Apple has begun selling textbooks for the iPad.
South Korea, traded in the U.S. as the iShares MSCI South Korea ETF (NYSEMKT: EWA), is regarded as the most connected nation on earth and plans to go completely digital by 2015. Dubbed "Smart Education", the program aims to do away with paper-based educational materials altogether and deliver content strictly by digital means in order to “allow students to leave behind their heavy backpacks and explore the world beyond the classroom.”
There’s no Business Like Know Business
Khan Academy started out when Salman Khan offered to tutor his niece over the internet. Now with a library of over 3,200 videos covering a wide variety of subjects, the organization that he founded in 2006 has delivered over 155 million lessons to students all over the world. Khan Academy is the "start of a revolution", says Microsoft (NASDAQ: MSFT) founder Bill Gates. His foundation has so far donated $5.5 million to Khan Academy. Microsoft took the early lead in online education with its Virtual Classroom initiative, as well as many charitable donations of money and software to educational concerns throughout the world. Google (NASDAQ: GOOG) has also taken an interest in Khan Academy to the tune of $2 million.
Microsoft recently announced the launch of a 3G smartphone initiative in cooperation with Qualcomm's Wireless Reach™ program to provide third grade students in Singapore with internet-enabled, mobile devices preloaded with the MyDesk mobile learning platform, allowing students and teachers to share and discuss assignments in real time in the cloud; dispensing with the teacher as lecturer model and creating a collaborative environment with the teacher acting as the guide to the students.
Not to be left out of the action, Hilton Hotels recently partnered with Room to Read, a non-profit dedicated to improving literacy among girls in Southeast Asia.
There is a business upside to this altruism. According to business professors C.K. Prahalad and Stuart Hart, the roughly 4 billion people at the “bottom of the pyramid” represent an untapped and underserved market worth $13 trillion in potential revenue. The education innovation space is getting crowded as more companies recognize the massive potential of this new segment.
The Open University, based in the UK, was an early pioneer in the online education space. The university allows its more than 263,000 students in 23 countries to study from anywhere on their own time, and distributes course materials via the iTunes U service.
Online education startup Udacity, which offers free online courses, has received $5 million in venture funding. The plan is to eventually offer a master’s degree for just $100. So far over 160,000 students have signed up.
In a bid to remain relevant, Harvard, MIT, Stanford, the University of Pennsylvania and other traditional universities have also launched their own online education platforms. MIT famously put their entire course load free online for anyone who can handle it; saying in effect, you can get an MIT education if you want one while advertising to their competitors the quality of the product.
Left to their Own Devices
The rise of mobile devices is another key ingredient in the online education equation. The coming of age of high speed wireless broadband and fast, cheap mobile network connectivity and an assortment of mobile devices have made the transition to digital learning that much more convenient. A recent survey of online behavior conducted by Oxford Institute’s most recent survey of internet use revealed that next generation users are connecting via multiple devices, sometimes simultaneously.
A mobile computing becomes affordable it will become integral to progressively lower economic strata. According to IDC shipments of mobile phones and devices is expected to grow 4% in 2012 to 1.8 billion, a slight decline over previous years due to uncertainty about the financial crisis with growth reaching 2.3 billion by 2016.
Talking about their latest initiative to help students make more use of digital devices, Singapore’s Minister for Education, Heng Swee Keat, says "students used smartphones and digital cameras to document their findings and used iPads to look up information in the field, learning and exploring at the same time”. Singapore placed in the top five for reading, math and science in the latest Pisa tests administered by the OECD, ahead of all European countries except Finland.
In a bid to create a more sustainable manufacturing ecosystem and get more devices in the hands of people, Singapore’s Advanced Remanufacturing & Technology Centre (ARTC) is focused on developing methods to enable companies to refurbish and resell old devices; creating a bridge between public and private research, a divide that is hampering Singapore’s rise as an R&D powerhouse.
With developed economies reaching mobile device saturation, attention of manufacturers has turned to the developing world and emerging markets where growth potential is still high. Companies and governments see cheaper devices as the key to expanding into poorer markets. Nokia and Samsung are working diligently to get cheap 3G-enabled almost-smart phones like the Asha line into major emerging markets like India, Africa and ASEAN’s second tier nations.
India recently introduced a cheap tablet computer to bring help bring the modern world to rural areas and move villagers out of poverty. At $45 each, the tablet is priced to sell, but Datawind, the maker of the device, only has the capacity to produce about 100,000 units a month. At that rate it will take them about 180 years to make enough tablets to meet their goal of getting one in the hands of India’s 220 million children, so first mover advantage in that market does not count for a lot.
In the West there is a tremendous amount of physical capital invested in traditional brick and mortar colleges and universities that are acting like a boat anchor on their bottom line and their ability to continue to attract alumni money and endowments. The best schools still have brand equity and will be able to leverage that for a while, but like the 20th century print media titans, the clock is ticking on them. One day soon the bell’s going to ring, the classrooms will empty and no one will show up for the next period.
PeterPham8 has no positions in the stocks mentioned above. The Motley Fool owns shares of Facebook, Google, and Microsoft. Motley Fool newsletter services recommend 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.If you have questions about this post or the Fool’s blog network, click here for information.
