• Apple announced an updated iPad along with a suite of programs that enable educators and students to pursue creativity, which is critical in the future of education.
• We estimate education accounts for 10-15% of Apple’s business. We believe today’s announcements will have a small impact on their education business, but an immaterial impact on their overall business.
• Apple emphasized augmented reality as an important aspect in the future of education. Greg Joswiak added, “there’s no doubt that AR is going to dramatically change the way this generation learns.”
• Our research suggests iPad is strongest in K-5 and Chromebooks are preferred 6-12. We don’t think today’s announcements change that dynamic.
• The new iPad is priced essentially the same as its predecessor but adds the A10 Fusion chip and Apple Pencil Support. This essentially now competes with the $649 10.5″ iPad Pro.

We attended Apple’s education event today in Chicago. It’s been 6 years since Apple has done an education-focused event, which means the company had a lot to talk about related to its efforts in education that we estimate to account for 10-15% of Apple’s overall revenue. The main takeaway from today’s event is that Apple has a suite of hardware, software, and services that can be used by students, teachers, and administrators to optimize the education experience. At the core, is Apple’s belief that creativity in music, video, photography, and drawing can be a framework for advancing learning in STEM. Apple’s initiatives in education have hit a headwind over the past five years as cheaper Chromebooks have gained more adoption in schools. We believe Apple and iPad are uniquely positioned toward creativity, while Chromebooks are better positioned for the utilitarian aspect of education (essays, spreadsheets, etc).

What was announced today?

• 9.7″ iPad with support for Apple Pencil. Previously, the cheapest iPad with Pencil support was the 10.5″ iPad Pro for $649. We believe this will have a small impact on overall iPad demand. We are currently modeling for flat iPad unit growth for the next three years, and believe today’s news could inch iPad unit growth to 1-2% per year. The overall iPad revenue will likely remain unchanged given there will be a mix shift from the 10.5″ iPad Pro to the new, lower-priced 9.7″ iPad.
• More free storage for education. Students get 200GB of iCloud storage instead of 5GB.
• Everyone Can Create program. In 2014, Apple announced the educational Swift programming language. Today, Apple announced the Everyone Can Create program, which is a companion to Swift and focuses on creative elements ofmusic, video, photography, and drawing. Apple believes that nurturing creativity will help further education in the sciences.
• SchoolWork. This app is essentially a dashboard for students, allowing them to see current to class topics, manage assignments, and message classmates.
• Apple also talked about management tools for educators for teachers and administrators. These applications have already been available for several years.

Looking to the future with creativity, empathy, and community. One aspect of today’s event was Apple painting its picture of the future of education. Filling in the blanks, it seems that this future includes a combination heavy on science and creativity. We would agree and add that along with creativity, empathy and community are the human qualities that machines are unable to replicate. We’re encouraged to hear that Apple is, to some extent, preparing students for the future by focusing on our most unique abilities and using technology to foster them.

Are kids getting too much screen time? As we processed today’s news, which will ultimately lead to more screens in schools, we revisited our concern that kids are getting too much screen time. This is not an Apple-specific problem, given iPhone and iPad only account for roughly 20% of the world’s mobile screens. That said, given Apple’s dominance in tech, they are a natural target for the “too much screen time” narrative. It appears Apple shares parents’ screen addiction concerns and has dedicated a portion of its website to educating parents on managing screen time. See here.