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'
http://www.edweek.org/ew/articles/2013/01/16/17techbubble_ep.h32.html
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