VARs: L.A. Schools Deal Suspension 'Blip On The Radar' For Apple


Solution providers say Apple is still a dominant player in the education space, despite the suspension of a $1.3 billion contract the company, along with publishing giant Pearson, had with Los Angeles Unified School District.

L.A. Unified Superintendent John Deasy earlier this week suspended the contract that would have given every student in the school district an iPad backed with educational software from Pearson, as first reported by the Los Angeles Times.

The deal, which was struck last year, covered the devices, software and Wi-Fi upgrades to schools. Roughly $61 million had already been spent on iPads for students in 58 schools prior to Deasy's announcement on the contract Monday.

[Related: The Wearables Market Heating Up Among Apple, Samsung and LG]

The contract was suspended due to an unfair bidding process designed to lean in favor of Apple and Pearson winning the deal with Deasy in close contact with executives from the two companies prior to the bidding process, according to the Los Angeles Times report. Though the deal has been suspended, Deasy expects Apple and Pearson to re-bid, the report said.

"Moving forward, we will no longer utilize our current contract with Apple Inc," Deasy said in a memo posted on the Los Angeles Times website. "Not only will this decision enable us to take advantage of an ever-changing marketplace and technology advances, it will also give us time to take into account concerns raised surrounding the [project]."

Solution providers in the government and education sectors that work with Apple said the company is still the leader of the pack in the education space, despite the suspended contract, and expect the company to win the new bidding process.

"This is a blip a on the radar for Apple," said Kyle Cebull, chief marketing officer and consultant at Fort Myers, Fla.-based Entech, a managed IT provider specializing in the education space. "They are the predominant leader in the education space. I feel very sincerely that Apple will still end up putting iPads in the hands of every student in Los Angeles. Android and Windows just have no ability to compete because they don't already have the relationships and infrastructure that the Apple platform has. It is just far and away so much better. Because of that, they continue to grow their share in education."

Apple still leads the tablet market, despite two straight quarters of decreasing year-over-year market share, and remains a dominant player in the education space.

One Apple partner said the possibility of losing out on a billion dollar deal with the second-largest school district in the country is significant, but he doesn't expect it to be a drag on company performance.

"My feeling is that the contract suspension has no effect on iPad sales," said Raul De Arriz, national government sales manager for Waitsfield, Vt.-based Small Dog Electronics, one of the top Apple specialists in the country. "It is a review that they follow due process in the procurement of the product. I would suspect that someone saw something wasn't kosher. That is the responsibility of the school system, not Apple."

De Arriz said Apple's hardware and ecosystem strength is the reason for its major presence in education, and it is why he thinks the company will emerge the contract winner following the bidding process this spring.

"Apple's iPad is the most enabling tool since the pen and paper," he said. "It is beneficial to use Apple products because of the way they work and what they do. Students have access to incredible capabilities and resources developed specifically for them. The iPad is an ideal product for education, bar none. The applications available are amazing and the presentations are very impressive. Students can get access to tools they need that didn't exist four years ago. Apple is at the forefront of that."

PUBLISHED AUG. 28, 2014