Schools Buying More Computer Software, Less Hardware

Education-software publishers are finally cashing in on their efforts to develop software for the school market.

School spending on software increased from $670 million in 1995-96 to $822 million in 1997-98, according to a report scheduled for release this week by the Washington-based Software and Information Industry Association (formerly the Software Publishers Association).

The report, titled “1999 Education Market Report: K-12,” projects not only that the amount of money schools spend on software will continue to grow, but also that schools will increasingly spend a larger percentage of their technology funds on software and a smaller percentage on hardware.

“Our sales have been growing at a great clip over the last year and a half or two years,” said Tom Snyder, the chief executive officer of Tom Snyder Productions, a Watertown, Mass., software-publishing company that targets schools. “The whole market was somewhat flat, if not down, before that.”

“There definitely seem to be more and more schools talking with us about using content on the hardware they’ve been purchasing over the last few years,” added Larry Nelson, the president and CEO of the San Ramon, Calif.-based Decision Development Corp., which produces curriculum-based software.

Tough Market

Schools have been a tough market for software publishers to crack. Many companies have created products for schools while staying afloat with profits from home-software sales.

One of the biggest challenges in marketing to schools is identifying who at a school or district is responsible for software purchases, whether it’s a principal, teacher, curriculum director, library media person, or technology coordinator.

“You really have to talk to everybody,” said Kyle Hart, the marketing-programs manager for education for The Learning Company Inc., based in Cambridge, Mass. “It takes money. It takes time--a lot of relationship-building.”

While for the past two years The Learning Company has found the education market strong, it has made “considerably more” money in the home market, Ms. Hart said.

Another problem in marketing to schools is that they haven’t had the hardware to run a large volume of software. That situation is changing as thousands of schools have installed computer networks and are buying more site licenses and software for networks.

CD-ROM products are finally paying for themselves, said Jenna Bogard, the vice president of software developing and marketing for Sunburst Communications Inc. in New York City. “When there was a move from the disk-based products to CD-ROM products, there was a lag between when there was enough of an installed base to pay for the product,” she explained.

Her company is now trying to anticipate how schools’ increased use of the Internet will affect the education market. At this point, Ms. Bogard said, schools don’t yet have enough of an installed base for the Internet for Sunburst to make money on online products.

Sales Trends

Whatever the delivery method for the digital content, publishers have good reason to believe their sales will continue to be strong.

The software association’s report projects that this school year, schools will spend 9 percent of their technology dollars on software, compared with 6 percent last year. The percentage spent on hardware is projected to decrease from 39 percent to 34 percent.

Drawing on data from Education Market Research, a firm in Rockaway Park, N.Y., the report breaks out school software expenditures for the 1997-98 academic year in the following ways:

• Schools purchased more business software--including word processing, spreadsheet, and database programs--than any other kind of software.

• School expenditures were $288 million for business software, compared with $230 million for instructional software; $181 million for tool/productivity software, such as HyperStudio; and $123 million for reference software, such as Microsoft Encarta.

• Schools spent an additional $378 million on integrated-learning systems, which are comprehensive instructional and administrative packages that include both software and hardware. Industry leaders include Jostens Learning Corp. and Computer Curriculum Corp.

Product Adjustments

The report notes that expenditures for instructional software--sometimes called curriculum-based software--increased more than for any other kind of software over the previous year. Spending for instructional software was up by 16 percent, compared with 8 percent for tool/productivity software and 2 percent for business software. Spending for reference software dropped 7 percent.

School expenditures for integrated-learning systems increased by 7 percent last year over the previous year.

Software publishers have made some changes in their products over the past year, reflecting schools’ needs and incorporating new technology, according to the report. The software contains more animation, video, and interviews with real people than it did before.

In other trends, companies are breaking up software programs into modules so they can more easily be used to supplement curricula rather than to replace core curriculum materials. Companies also are increasingly adding a professional-development feature to their software or stepping up their services in that area.

And to get the word out about their products, software publishers are increasingly marketing them to schools over the Internet through online product demonstrations or try-before-you-buy World Wide Web sites.