Capitalizing On Chromebook: How To Boost Margins In The Education Space

Chromebooks may be the hottest thing in education, but it's tough for solution providers to make money off of them due to their bargain-basement prices.

"We're selling a lot of Chromebooks and we're selling a lot of management consoles, but it's not the most profitable area in the Ingram portfolio," Kirk Robinson, Ingram Micro's senior vice president of commercial markets and global sales, told nearly 1,000 people during the distributor's spring ONE conference in Orlando, Fla.

Most vendors and distributors said the deeper margins and stickiness lie in the professional services and educational testing providers, although others argued some of the higher-end Chromebook devices themselves can be profitable.

[Related: Educator Panel: Engaging Teachers, Students In Its Sales Critical To K-12 Success ]

"Chromebook is really a low-margin business, so it's what you do with Chromebook that allows you to be successful," Tim Wagner, Samsung's senior vice president of business sales, said during ONE.

Google, Microsoft and other vendors are trying to capture business from the surging education market, where federal proficiency standards, personalized learning and the one-to-one pairing of students with devices are finally starting to happen, according to Cathilea Robinett, executive vice president at technology research company e.Republic.

"There is a perfect storm going on in this country in K-12," Robinett told attendees of Synnex's Red, White & You public sector event in Atlanta. "The things we've been saying for 15 years are finally starting to happen."

And the good times should continue to roll since only 40 percent of American classrooms today have adopted a one-to-one technology policy, according to Eddie Franklin, Synnex's vice president of public sector.

Fremont, Calif.-based based Synnex, Santa Ana, Calif.-based Ingram Micro and other distributors have doubled down on growing margins and market share around the Chromebook and other devices.

Ingram Micro has built out a bench of engineers that resellers can tap into for wireless and security assessments, Robinson said. Meanwhile, Synnex is offering all of its channel partners free virtual assessments for any of their school district customers, according to Franklin.

Synnex also has roped in its build-to-order and configuration service units into adding value around the Chromebook, said Tim Rush, senior vice president of operations, at the company's Varnex spring conference in Atlanta.

Partners have asked Synnex for help with back-end services ranging from configuring the Chromebooks for specific users to laser-etching school logos onto the devices themselves so that school districts can begin using them as soon as they are received, Rush said.

Synnex was the first distributor to begin offering the Chrome Management Console back in January 2014 and has retained a dominant share of the market, Franklin said.

"We focused on it early, and we've taken it seriously," Franklin said. "It's not a fad. It's a platform that delivers compute capability at a very aggressive price."

Ingram Micro also has dived into the educational content piece, Robinson said, partnering with publishing giant Pearson around the Common Core education standards. Samsung's Wagner recommended that solution providers be proficient putting software from content powerhouses McGraw-Hill Education, Houghton Mifflin Harcourt (HMH) and Pearson onto the Chromebook.

Although Synnex has invested in wrap-around services, Franklin still believes that the Chromebook devices themselves have margin potential.

"These are not race-to-the-bottom devices," Franklin said. "These are devices that have Intel processors and are capable of performing multiple functions at once, delivering a good result in the classroom."

As an example, Franklin pointed to a Chromebook from Toshiba that has a full high-definition screen and Skullcandy speakers as a device that isn't trying to compete purely on price, as well as full-sized Chromebook units from Acer (with a 15-inch screen) and Hewlett-Packard (with a 14-inch screen).

The hottest Chromebooks, however, are the ones with processors that are lower-powered from Chinese chip maker Rockchip, which debuted on the market at the end of March. Franklin said Synnex is the only distributor engaging at a high level with all four manufacturers that produce Rockchip Chromebooks: Asus, Haier, HiSense and Hipstreet.

"You can't ignore a trend like that," Franklin said. "You can't ignore a technology advancement."

Solution providers, though, should be keeping an eye on much more than Google. Microsoft also is making a big push into the education space with state-of-the-art collaboration tools and multivendor support, according to partners.

"Microsoft really has a very, very solid offering with their whole focus around OneNote and their focus on the Surface 3 product," said Ken Lamneck, CEO of Insight Enterprises, No. 14 on the CRN Solution Provider 500. "There's definitely a lot of interest there that we hadn't seen in prior years."

Paul Bay, Ingram Micro's president of North American technology solutions, agreed that Microsoft's education offerings are selling well, adding that it has built out a K-12 services and training bundle for the Microsoft ecosystem.

The Redmond, Wash.-based vendor has segmented the market into PreK to 3rd grade, 4th to 8th grade, 9th to 12th grade, and teachers, recognizing the device needs differ at each age level, according to Jason Wilmot, a senior business development manager for education on Microsoft's worldwide public sector team.

Microsoft understands that education is a multivendor market, Wilmot said, and is, therefore, willing to supply devices from HP and others. What sets Microsoft apart from the competition is its focus on the learning environment rather than just devices, Wilmot said, offering students and teachers the ability to create rather than merely consume content.

One of Microsoft's most popular tools is OneNote, which Wilmot said can save teachers time with their lesson planning by allowing them to instantaneously share notes or documents with students over the internet or a network. File hosting service OneDrive makes storage easy for teachers and students, though school districts will need support from solution providers as they move into the cloud

The latest innovations in the K-12 space are fueling collaboration, Wilmot said, such as a recent HP offering with a 24-inch screen that can be split into quadrants so that four students can simultaneously work off a single screen. Some school districts are using this in lieu of multiple tablets, Wilmot said.

Pat Turney, a principal consultant at Synnex partner ACE Network Consulting in Tulsa, Okla., was impressed by the adoption of Microsoft technology in the Miami school districts as well as across North Carolina, and is hoping the push will trickle down to some of the school districts he services.

Turney said ACE is hoping to take advantage of the rise of mobile and other emerging technologies in the education space.

PUBLISHED MAY 19, 2015