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PreK-12 Ed-Tech Market Estimated at $7.5 Billion

The Software and Information Industry Association intends a new report that estimates the overall domestic market for PreK-12 non-hardware education technology at $7.5 billion to be the first of an annual series.

The report, authored by the Consulting Services for Education (CS4ED) for the SIIA, is the product of a survey of 81 vendors who completed it in exchange for free data from the study, as well as a promise that each individual company's data would be anonymous. (The goal is to reach 200 respondents for a second edition next year.)

Authors then combined information from that survey with knowledge of the industry at large—estimated at 400 companies—to estimate the $7.5 billion figure, with 42 percent of that revenue coming from content-related products, 35 percent from instructional support services, and 23 percent coming from platforms and administrative tools.

The survey responders actually drew 56 percent of their revenue from content-related products in fiscal year 2010, with the estimate for the total industry revised downward based on who did and didn't respond. The hope is that the quality of the finished product will ease concerns of some vendors—including bigger ones like Adobe, Microsoft, and Oracle—that their individual business figures will be exposed or easily deduced from the document.

"If we can get more of the industry to participate so this becomes definitive and not an extrapolation, we would feel a lot better about it," said John Richards, a study author and an analyst for CS4ED, in a press briefing today at the SIIA Ed-Tech Business Forum in New York.

Karen Billings, the vice president of SIIA's education division, said the report helps fill a need for her members and other ed-tech vendors who want to understand and compare their own revenues against the market. She also admitted it makes her job easier.

"I get asked every week what is the market for 'x' software or whatever, and we simply didn't have the data," Billings said.

The survey found that of the content revenues reported, 52 percent of it was not focused toward a particular grade level, and that which was focused on a specific grade was spread fairly evenly across grades K-12. The 81 participants reported $1.37 billion in total revenues from software and digital resources, and Billings suggested that revenue might be skewed to smaller companies who were driven to respond in part because of the promise of free research.

Despite concerns about obtaining data from more vendors, Richards supported the choice to use company data.

"We believe that this vendor source is much more accurate than a survey of schools," Richards said. "I think there's several reasons for this that is worth talking about, not the least of which is they don't know they've spent money on technology." Richards added that other ambiguities, such as the use of non-technology specific funding for technology purposes, or the inclusion of technology add-ons for free such as CD-ROM discs to go with textbooks, would be more likely to be recorded by vendors than by schools.

The report is available for $750 for SIIA members and $1,500 for non-members. Additionally, the SIIA and CS4ED are now collecting contact information for companies to be surveyed next year, as well as for an accompanying survey about the higher education ed-tech market.

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