Nov 10, 2012

New business models in the mEducation market

The words 'business' and 'education' aren't frequently used in the same sentence.  However, the business of education is increasingly becoming an important topic as educational institutions adapt to budget pressures and entrepreneurs develop new approaches to education by 'blending' traditional and new techniques.

The GSM Association, in its role of enabling markets for new mobile enabled services, invited me to carry out a  study on the mEducation market. This focused specifically on commercial drivers and business model innovation. In the middle of 2012, I had several discussions with education service providers, policy makers and mobile operators from across the globe; everyone was enthusiastic and hungry for knowledge and insights into the commercial and business model aspects of this market.

It is also relevant to note that the rise in corporate activity in the education market. Apple, AT&T, News Corporation and Pearson are some of the companies that are actively positioning themselves for commercial rather than strictly philanthropic motives.

And, it is reasonable to say that this promises to be a sizable opportunity. Based on work carried out jointly with the GSMA, McKinsey & Co. estimate that the mEducation sector will amount to a $70bn revenue opportunity by 2020. Of this, $32 billion is attributable to hardware and equipment sales. The remaining $38 billion is distributed across a range of products and services, such as eBooks, eCourses, game and simulation-based learning tools, and collaboration tools.

There are several important market drivers including: the digitization of education content; learning via mobiles; and, the integration of  collaborative education tools. These are affecting the historical model of school based teaching in a positive way. The 'blend' of traditional-institution and new approaches to education provides educators and students with a superior framework for learning.

The education market itself is also being disrupted by the availability of 'free' content and access to reputable academic courses at no charge.

Disruption, from several different sources, is a key dynamic that is driving organisations across the mEducation value chain to adapt their business models.In fact, platforms and partnering are key features in the emerging business models.
  • Platforms are essential in order to provide a 'joined-up' learning experience that integrates various forms of education content into a coherent syllabus with built-in tutorials, game-like learning incentives and formal test procedures, for example.

  • Partnering brings together organisations from education, technology and mobile industries to deliver mEducation products and services more quickly and with potentially lower capital outlays.

In terms of the mEducation value chain, this research identified five types of business model in use within the mEdcuation market. These are:
  • B2C (business to consumer)
  • B2B (business to business)
  • three variants of B2B2X (where 'X' may be a consumer, enterprise or government agency): 
    • an arm's length subcontractor (B|B2X), 
    • an involved partner (B2B2X), 
    • and an intermediary (B2B2X) that orchestrates a complete end-user service
The report includes examples of innovative services and business models from Bharti Airtel (B2C), SFR (B2B) and Tata DOCOMO (B2B2C). 

The report also demonstrates how mobile delivers value in the mEducation market. The simple assumption is that mobile adds value through the delivery of educational content. What is less recognized is that mobile frees educators and students from physical and time constraints. This allows for new possibilities in terms of 'blended' education and better access to new customers in the form of educators and students outside of institutional frameworks. Furthermore, mobile operators are also able to provide technical design and implementation services. They can also function as dependable commercial entities when contracting with large, institutional buyers such as governments.

Full details of the study can be obtained from the GSM Association's mEducation portal.

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