Net uptake in schools fuels market growth
Education offers lifeline to many in UK channel
Analysis Last week the government stated that the number of primary schools online had grown almost four-fold in the last year. This increase was due to the government pumping cash into the education sector through the National Grid for Learning (NGFL), said Schools Minister Jacqui Smith. The education market is huge for the IT industry -- estimated at between £0.5 and £0.75 billion per year -- and growing rapidly. The government is investing £2 billion in infrastructure and teacher training by 2002. Sixty two per cent of primary schools are now online, compared to last year's dismal 17 per cent. Ninety three per cent of secondary schools are connected to the Internet, up on last year's 83 per cent. Terry Ernest-Jones, IDC research manager, said: "The market is growing rapidly due to government investment, in particular with getting schools online." According to IDC, there has been a 15 per cent growth in PC shipments to the education market in the UK this year. This represents 415,000 units which are expected to be shipped by the end of this year, compared to 360,000 in 1998. And in July the government chose a dozen resellers from which it recommended schools their buy IT kit and training. Though this was good news for the chosen few, it will no doubt have an effect on those not selected. Ray Fleming, secondary schools business manager at RM (Research Machines), the largest supplier of IT kit to the education sector, expects getting on the list to lift sales at his company. RM depends on the education market for 99 per cent of sales. Fleming says the government needed to establish the accreditation to bring some order to the situation. "The IT education market is very diverse in the UK. There are 25,000 primary and 5000 secondary schools, with around 450 PC suppliers. "The government is trying to bring some standardisation into the market via a list of suppliers which have passed their tests," he said. RM controls around 20 per cent of IT shipments to the education market in this country, according to Fleming. This is followed by Apple with 11 per cent and Viglen with eight per cent. Elonex was another company selected for the government accreditation. Stephen Mitchell, Elonex education sector manager, was also optimistic the move would raise the amount of education business done by his company. Fifteen per cent of Elonex's £85 million business is currently from this sector. "The project's only just started, so it hasn't made a difference so far. But it will -- it's like a stamp of approval for a company's product," he said. One of the companies not selected by the government was Tiny Computers. According to Jim Buchanan, Tiny PR manager, the company was disappointed that it was not on the list. "We don't believe not being selected will damage business," said Buchanan. "We have many established contracts." But he said Tiny believed it was important to be included in the list and would try again in the next round. Viglen, with about 40 per cent of its £40 million turnover from education sales, also failed to make the grade. Ernest-Jones said the government list would have an effect on reseller sales -- but it would depend on each educational establishment. "A lot of smaller schools have strong relationships with local dealers, but larger institutions and universities will probably buy from recommended suppliers," he said. Other resellers pointed out that this market was very different to selling PCs to businesses or individuals. More added services were needed -– there are few staff with technical skills in the education sector -- and higher levels of security had to be in place. In addition, there are a large number of users for a small number of PCs - with the dangers of mountains of floppy disks spreading viruses, deliberate deletion of files and security on the Web. A final issue for resellers selling to this market is that, although the sector is growing -- and state schools getting IT puts pressure on the private sector to keep pace -- so is the level of competition to sell into that sector. IDC noted that education was increasingly buying direct. "The most successful resellers will be those who specialise," commented RM's Fleming. ®
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