EXECUTIVE BRIEFING Education Market Research Robert M. Resnick, Ph.D May 2012 © Education Market Research 2012 K-12 Market Size By Segment: 2012

www. EducationMarketResearch.com K-12 Market Size By Segment: 2012 Fourteenth annual edition of the “Complete K-12 Report”, published in January 2012, supplies the market data. Fourteenth annual edition of the “Complete K-12 Report”, published in January 2012, supplies the market data. Responses from dozens of EMR’s market surveys, encompassing tens of thousands of educators, were analyzed and factored into the market projections. Responses from dozens of EMR’s market surveys, encompassing tens of thousands of educators, were analyzed and factored into the market projections. The following executive briefing highlights selected intelligence from the “Complete K-12 Report: 2012". Full results and analysis are contained in a comprehensive report available from EMR. The following executive briefing highlights selected intelligence from the “Complete K-12 Report: 2012". Full results and analysis are contained in a comprehensive report available from EMR.

www. EducationMarketResearch.com Total K-12 Market Size Estimates $17,268$13,753TOTAL 3,2712,445 Other supplements: trade books, periodicals, tests, etc. 2,4062,054 Instructional materials: supplements 3,5062,903 Instructional materials: textbooks 8,0856,351 Technology products: hardware, software, Internet SY SY MARKET SEGMENT K-12 Market Size (In millions of dollars)

www. EducationMarketResearch.com Total K-12 Market Size Estimates + 6.2% $18,336$17,268TOTAL + 5.4% 3,4463,271 Other supplements: trade books, periodicals, tests, etc + 3.2% 2,4832,406 Instructional materials: supplements + 2.5% 3,5943,506 Instructional materials: textbooks + 9.0% 8,8138,085 Technology products: hardware, software, Internet % INC SY SY MARKET SEGMENT K-12 Market Size (In millions of dollars)

www. EducationMarketResearch.com Historical K-12 Market Growth Rates 4.2%TOTAL 5.1% Other supplements: trade books, periodicals, tests, etc. 2.8% Instructional materials: supplements 3.1% Instructional materials: textbooks 4.8% Technology products: hardware, software, Internet AVG. INC TO MARKET SEGMENT K-12 Market Size (In millions of dollars)

www. EducationMarketResearch.com Market Drivers Product of pupil enrollment multiplied by per pupil expenditures expected to continue to go up a bit each year in the foreseeable future. Product of pupil enrollment multiplied by per pupil expenditures expected to continue to go up a bit each year in the foreseeable future. As a result, the market is unlikely to fall too far or for too long. As a result, the market is unlikely to fall too far or for too long. As digital resources continue to gain more of a foothold in K-12 classrooms, there will be major opportunities in certain product areas. Key examples of 15%+ growth rates in EMR’s most recent surveys: As digital resources continue to gain more of a foothold in K-12 classrooms, there will be major opportunities in certain product areas. Key examples of 15%+ growth rates in EMR’s most recent surveys: - Reading and Mathematics intervention - Online/digital content - Assessment - Instructional software - Productivity tool software - Interactive whiteboards - Trade books/e-books for classroom use - Professional development

www. EducationMarketResearch.com Market Drivers

www. EducationMarketResearch.com Market Drivers  Some, but not all traditional product areas were down in 2010.

www. EducationMarketResearch.com Market Drivers Separating companies into “high” digital and “low” digital groups shows that the “high” digital players are outperforming the “low” digital players in terms of volume of orders, volume of leads, and optimism about future growth prospects. Separating companies into “high” digital and “low” digital groups shows that the “high” digital players are outperforming the “low” digital players in terms of volume of orders, volume of leads, and optimism about future growth prospects. This is also translating into sales success with the “high” digital players forecasting nearly three times the sales growth in 2011 compared to their “low” digital counterparts. This is also translating into sales success with the “high” digital players forecasting nearly three times the sales growth in 2011 compared to their “low” digital counterparts. At the same time that digital is on the rise, print seems to be holding its own. So at this point in time, digital is not replacing print. Actually the two appear to be comfortably co-existing. At the same time that digital is on the rise, print seems to be holding its own. So at this point in time, digital is not replacing print. Actually the two appear to be comfortably co-existing.

www. EducationMarketResearch.com Market Drivers If all of the digital products are grouped together, this group was up a stellar 17.9% in 2010, following a similar 11.3% increase reported to EMR in If all of the digital products are grouped together, this group was up a stellar 17.9% in 2010, following a similar 11.3% increase reported to EMR in 2009.

National Survey of Interactive Whiteboard Usage National survey of K-12 educators fielded by Education Market Research in March Random geographic sample of 18,000: - Classroom teachers in the elementary grades - Subject teachers in the secondary grades - Principals at both elementary and secondary grades Survey respondents had an average of 13.4 years of teaching/supervisory experience. The following executive briefing highlights selected results of EMR’s Spring 2011 survey. Complete results and analysis are contained in a comprehensive report available from EMR.

Educators’ Experience With/Access To IWBs Three quarters of today’s educators have at least some experience using the IWB in the classroom. The approximate installed base of IWBs in K-12 schools is million units. 63.5% indicated they have their own IWB.

IWB Brand Recognition/Market Shares If we take the average sale as $1,500 per unit, we could extrapolate that schools have invested over $2.2 billion (1.471 million $1,500 each) in IWBs. SMART Board (70.5%) is the clear leader in terms of units currently in use, followed by ACTIVBoard (28.7%), and Mimio (6.7%).

IWB Penetration By School Level The number of IWBs now installed in the average school is The number of IWBs expected to be installed in the average school by is 25.9, an increase of 31% compared to

Spending On IWB Hardware And Content/Market Size EMR’s survey data yields a market size of $1.035 billion for IWB hardware and accessories. The survey data suggests a range of spending on IWB content and tools of between $250 million and $590 million.

Sources For Instructional Resources To Use With The IWB The largest group of respondents (45.9%) indicated that the majority of the instructional resources they use with their IWB comes from their own imagination and ingenuity. The second leading source of instructional materials is “a variety of web sites and providers” (32.0%). The educators listed the SMART (32.7%) and Promethean (24.2%) web sites as their two best sources of pre-packaged IWB instructional resources.

Need For New IWB Instructional Materials By Grade GRADE LEVEL% NEED NEW MATERIALS Grades % Grades % Grades K-234.9% Grades % Grade Pre-K12.3%

www. EducationMarketResearch.com Market Size By Grade Level $9,523$5,929$3,594100%Total 2,8571,7791,07830% ,3811, % ,2852,6681,61745% Pre-K - 5 Total Supp. Mkt. Size Text Mkt. Size % Of Total Grade Level K-12 Market Size By Grade, SY (Excluding technology sales) (In millions of dollars)

www. EducationMarketResearch.com Market Size By Subject $9,523$5,929$3,594100%Total 1, %All Other %Social Studies 1, %Science 2,2381, %Mathematics 1, %Language ArtsTotal Supp. Mkt. Size Text Mkt. Size % Of Total Grade Level K-12 Market Size By Subject, SY (Excluding technology sales) (In millions of dollars) 2,6501, %Reading

www. EducationMarketResearch.com Pupil Enrollments Related To Dollar Size Of The Market Enrollment is highly correlated with unit sales and/or market size. Enrollment is highly correlated with unit sales and/or market size. Percentages by grade can be used to estimate potential unit and dollar sales by grade or grades. Percentages by grade can be used to estimate potential unit and dollar sales by grade or grades.

www. EducationMarketResearch.com K-12 Market Projections Through K-12 Market Size Through (In millions of dollars) +6.3%$22,047$20,718$19,484$18,336TOTAL +5.4%4,0353,8283,6323,446 Other supplements: trade books, periodicals, tests, etc. +3.2%2,7292,6442,5622,483 Instructional materials: supplements +2.5%3,8703,7763,6843,594 Instructional materials: textbooks Avg. Inc Est Est Est Est. MARKET SEGMENT +9.0%11,41310,4709,6068,813 Technology products: hardware, software, Internet  Applying the projected increases in , which averaged 6.2%, to the next three school years yields the following forecasts by market segment through

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