AlphaSmart, which was founded by Apple Computer veterans, believes the low cost and ease of maintenance of its platforms can undercut the cost of running most PCs.
However, the falling costs of PCs have squeezed the company’s margins. While revenue grew by 33% to $35.6 million in the five years to 2002, net income of $2 million last year was well down on the $9.9 million it achieved in 1998. In the six months to June 30, net income rose 6.8% to $2.2 million on revenue up 4.7% at $20 million.
Since launching its platform in 1993, California-based AlphaSmart has sold approximately 1,100,000 devices to over 7,500 school districts. The big attraction is low prices. Its AlphaSmart 3000 device costs $200, and the more sophisticated Dana device, which has a Palm OS, sells for $380.
In addition, it offers management tools that enable teachers to configure a group of up to 30 AlphaSmart 3000s and manage the devices from a single PC in the classroom.
With 53 million students at more than 115,000 schools in the US, AlphaSmart sees an enormous market opportunity. Moreover, international net revenue was only 10% of the total in the first half of this year and it is looking to expand in Europe, Canada and Australia.
AlphaSmart also sees great potential in equipping its devices with wireless connectivity. It wants to enable teachers to quiz and evaluate students in real time without wired infrastructure. In addition, it believes the growth in wireless connectivity, in both hotspots and local area networks, will provide additional market opportunities.
However, AlphaSmart’s competitors include sellers of desktop, laptop, tablet and notebook PCs, which it acknowledges have more functionality than its platforms. A particular threat are mobile labs, carts containing up to 30 wirelessly networked laptops that can be wheeled from classroom to classroom. It is relying on lower prices to beat off the competition.
This article was based on material originally published by ComputerWire.
