Google Ups Ante in EdTech to Keep AAPL, AMZN & MSFT at Bay

Zacks

Tension is escalating in the education technology market as behemoths like Alphabet’s GOOGL Google, Microsoft MSFT, Apple AAPL and Amazon AMZN vie to grab market share.

Per Research And Markets, the global educational technology market is forecast to witness CAGR of 18.3% to $40.9 billion between 2017 and 2022.

All these companies are gearing up to offer low-priced quality devices and productivity tools to target the education market.

Google has been a frontrunner in this market for a long time, primarily driven by its Chromebook. However, its position has recently been under threat owing to new product offerings from the likes of Apple and Microsoft.

In order to sustain its market share, Google recently unveiled its first Chrome OS tablet. The Acer 9.7-inch Chromebook Tab 10 starts at $329, which is the same as the current cheapest version of Apple iPad. However, the Chromebook Tab comes with an inbuilt stylus while Apple’s keyboard case and stylus are sold separately.

Interestingly, the launch coincided with Apple’s education-focused event scheduled for today. The iPhone maker is expected to launch cheaper iPad as well as MacBook to improve its competitive position in the market.

Shares of Alphabet have gained 25.7% over a year, outperforming the industry’s rally of 13.6%.

Will Google Sustain Market Share?

Apple used to be a dominant player in the EdTech industry on the back of its iPad and Mac computer offerings. However, with the advent of Google’s lower-priced Chromebook, Apple’s share began to decline.

In 2012, Google with its nascent Chromebook had merely 1% of market share while Apple enjoyed 50%. The popularity of Chromebook in schools, driven by its cost-effectiveness and ease of use, led to a surge in its market share to 50% by 2015.

Per Future Consulting’s latest report, Chrome OS continues to hold a majority share in the U.S. K-12 Mobile PC Market with 58.3% of devices shipped in 2017. Moreover, the share of Chromebook shipment to K-12 schools was 87% in the United States.

Chromebook OS is also gaining traction in international markets. Rising adoption of Chromebooks in schools in Canada, Northern Europe and Australia is encouraging.

The company’s Classroom app is also helping it gain traction in the field of education. The addition of new innovative features to the platform enables students to have a better understanding of the subjects as well as keep parents aware of their kids’ progress in school.

Apple, Amazon and Microsoft – The Challengers

Apple’s iPad business has been sluggish for quite some time. However, with the launch of a low cost iPad in the second quarter of 2017, the company witnessed an uptick in iPad sales.

Per IDC, Apple is the leading tablet market with a share of 27% in 2017. Apple’s tablet shipments increased 3% year over year, while Amazon, which occupied the third spot with 10.2% market share, witnessed 38% growth in 2017.

Amazon’s cloud platform, Amazon Web Services, is also gaining traction among schools for replacing physical storage.

On the other hand, Microsoft’s Windows maintained its top position in the year in terms of global shipments of devices by OS. The company’s productivity suite, Office 365, is also seen as a big threat to Google’s G Suite for education.

Zacks Rank

Google, Apple, Microsoft and Amazon carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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