October 27, 1999 Dell Computer has overtaken Apple in the education market, stealing the crown of Cupertino as the leading company that sells computers to American schools.
Steve Jobs, who is still in the process of rebuilding Apple after its near-collapse in the 1990s, faces heavy criticism for ignoring one of the company’s strongest markets.
Dell’s sales strategy pays off
The news that Apple has lost the advantage in selling computers in the education market came from a report released by Dataquest. While it revolves widely as Apple’s failure, the news actually showed Dell’s growing success.
With the development of computers, Dell’s strategy of selling cheap computers led to a doubling of its sales. Shipments jumped from 77,000 in the second quarter of 1998 to 163,000 in the second quarter of 1999. Apple, meanwhile, increased sales from 101,000 to 125,000 computers. However, as total sales to U.S. colleges, schools and universities grew at a tremendous rate, Apple’s market share fell from 22.7% to just 16.5%.
Why the education market is important to Apple
Today, Apple computers that fall to second place in the education market seem to be hardly worth commenting on. iOS devices now generate more than 50% of the company’s revenue, which is less than Mac sales. Yet Cupertino’s world was different in 1999. While people rightly praised Jobs for restoring Apple’s profitability and launching the cult iMac G3, it was under attack for ignoring one of the company’s traditional strongholds.
Much more than business, education has always proven to be a strong market for Apple.
At one point, the company controlled more than 50% of school sales. In fact, after leaving Apple, Jobs initially started NeXT as an educational computer company. However, that ambition quickly faded after he raised the price of NeXT Computer far above what most schools could pay.
Steve Jobs hates education (or so it seemed)
When Jobs returned to Apple, he focused on consumer and professional markets. This makes people in education (colleges, not students) feel left out in the cold. For proof, check out this 1998 interview between Jobs and a young, very inexperienced journalist for The Chronicle of Higher Education. In it, Jobs becomes prickly about the dwindling number of Macs in colleges.
As is often proven by the case of Jobs ’second act at Apple, things eventually turned around. In particular, Apple’s iBook and iMac DV product lines have helped the company tremendously in the education market. A few years later, Apple launched eMac – specifically targeted at schools – and achieved widespread penetration on campus.
In 1999, Jobs simply put Apple’s house in order before embarking on conquering a new market.
Mac prices have hurt Apple in education
The second part of the equation was price. At the time, the cheapest Mac was selling for about $ 1,400. Computers, meanwhile, cost less than $ 1,000. These two machines were not necessarily comparable, but for school administrators the decision was often reduced to dollars and cents.
Still, it’s fascinating to consider that once – before the iPod, iPhone, and the like – there came a point when the loss of sales in education was taken as positive evidence that Apple’s business strategy had failed.
Did you use Apple computers in high school or college? Leave your comments below.
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