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A looming "fun gap'' between the relatively crude educational software used in schools and the sophisticated products created for the home market will cause parents to demand that schools make better use of technology, a market analyst says.

Charles H. Finnie, a partner with the San Francisco firm of Volpe, Welty & Company, argues in a research paper for institutional investors, released last month, that as multimedia products flood the home market, parents "may begin to ask why their kids are going to school at all.''

And, he says, parents may begin to pressure schools to match the home experience.

"This seemingly absurd scenario is not only plausible, but will be the primary driver of software-market growth in schools over the next five years,'' he asserts.

A venture of the Microsoft Corporation, the Redmond, Wash.-based software giant, may presage this trend. Although long a presence in schools, Microsoft recently launched a new line of educational software aimed primarily at home users. (See Education Week, Jan. 12, 1994.)

Mr. Finnie predicts that the home market will grow 35 percent annually over the next five years.

"[B]ut resistance to change, slow selling cycles, and budget constraints will cause the school market to unfold more slowly,'' he adds.

Sales to schools, he says, will grow by roughly 20 percent to 25 percent annually in the same period--a rate that, to investors, is significantly less than that expected in the home market.

Mr. Finnie concedes that failed predictions of imminent, explosive growth in the educational-software market have a long pedigree.

But his analysis is consistent with the upbeat tone of an investment conference held last year by a leading New York City firm. (See Education Week, Feb. 3, 1993.)

And he notes that several factors previously have conspired to stymie growth in this sector of the industry, including the high price of computers, the difficulty of using most software, and "the inability of most education software to rival television and video games in sheer fun.''

But "all of these barriers to growth are now eroding,'' he says.

Without parental pressure, however, schools have no incentive to reform.

"My theory is that, if left to their own devices, the schools will never change,'' Mr. Finnie said in an interview. "They're just not going to have a choice anymore.''

Vol. 13, Issue 20

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