Monday, 11 March 2013

An education "tech bubble" ready to burst?

An education "tech bubble" ready to burst?
We should be so lucky! 

A report from a MIT-associated organization that aims to support education technology entrepreneurs is issuing a caution--the situation may be developing somewhat similar to the "tech bubble" that burst in the dot com business at the end of the 1990s.
Investors are expecting that education is rapidly going digital and consequently it is a huge growth area for investment, according to Education Week, whose coverage of the "education industry" is funded by the Gates Foundation. 

Investment is from social-financing websites, large foundations (e.g., Gates), and venture capital funds.
One of the consultants quoted in the Edweek article says that many of the startup ideas don't make any sense as a business proposition.  Marguerite Roza contends "school districts aren't going to pay for edtech products unless they replace existing functions--such as allowing districts to hire fewer teachers."

School districts that do buy new programs face the challenge that startup companies go out of business or change their business model, leaving adventurous school administrators with a white elephant.  It doesn’t take many of these failures to make schools more reluctant to buy the products newly developed.  A danger is that this may lead some schools to turn to the big guys in the field, such as Pearson and News Corps’ Amplify.
The realities of capitalism were described by a spokesman for the Education Industry Association:

"All businesses go through a cycle of wild effervescence, and this excitement will ultimately reach a peak and plateau, and we'll probably have a downward trend as maturing takes place.  We're experiencing that cycle with the current ed-tech trend."

Education Week, February 18, 2013, Flood of Investment, Products Stirs Fears of Education 'Tech Bubble'

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