The digital education industry is delivering increased amounts of education content to classrooms every year. Pearson should make a credible entry into this market by providing free eReaders to educational institutions and bundling the eReader with content subscriptions for digital textbooks. Pearsons entry into the market will help them to retain bargaining power over other eReader providers by providing them with a real value option. By outsourcing the eReader manufacturing, Pearson can combine their design ideas and content with the manufacturing expertise of the outsourcer. Pearson can continue to focus on its core competency of creating unique educational content by partnering with a manufacturer to own the complete end-to-end classroom experience, making the vision of a paperless and interactive classroom a reality.
6. $605 Million profit N. America Edu. Pearsons strategic decision
7. Physical vs. Digital ModelPhysical ModelAuthor royalties = 7% on a book saleRents captured by Publisher & WholesalerDigital ModelPartial book sale, subscription modelRemoves middle man (Wholesaler)Added value provided by publisher to educational institutes
8. $$ or Market Share - Protecting market share/ eroding profits in the emerging digital ageSubscription per subject / year = $10 # of Books / year = 10.4 Free Device (one time) = $299* Market Penetration- Cannibalization*=