1. 2002 K-12 Trends of Note George Warren Diana Richie Christian Childs

2. Trends and Emerging Concepts  Big Growth for K-12 – 1:1 computing coming soon.  It’s all about the handheld!! Price points still too high.  E-education systems are still very mis-understood. –We have the chance to define e-education in the market –Equity investments have been targeted at this goal  Framework for digital content is critical for 1:1. –MS Encarta Classroom Server –Other content providers developing their own framework  Block Grant funding will alter how schools acquire technology – and how funding is reported against. Unclear how this will impact us, but likely to be good.

3. Why Handhelds?  Price point  Mobility  Functionality  Children are comfortable with the form factor  Lower costs than desktops/notebooks  Lower price point, but much higher volume

4. Handheld issues that need addressed  Small screen  Lack of input device  Battery life  Security concerns

5. iPAQ H3650 – If this is not the device that gets us to 1:1, then it looks very close USA Today 5.8.2001 "At River Hill, the experiment grew more quickly than expected -- from a single English class in October to the entire ninth grade now. With a 15-minute lesson, nearly all students and teachers were able to master the device. Glitches were tamed early: Cloudy days often interfered with cellular reception, so they switched from Palms to Compaq iPaqs, whose wireless network system is unaffected by weather."

6. 1:1 Computing in K-12 Education  Education market is NOT saturated –Immense growth potential – 10:1 student to computer ratio  Certain price point must be achieved to facilitate move toward 1:1 computing –Unique opportunity to use volume to increase revenues even with dramatic drop in AUP

7. 1:1 computing = BIG market growth and service opportunities  Our analysis correlates student to PC ratio growing to 1:1 within 5 years/8years/10 years –While popular market trends suggest a decrease in hardware spend – we think just the opposite. –Schools and parents want the movement to 1:1. We are not close – and schools are not ready for full blown IT. –Thin/Slim client technology fills the current need nicely.  Current IT infrastructure in schools are not ready for notebook implementation –Notebook Network schools typically difficult –Notebooks are not designed for rigors of classroom

8. AssumptionsAssumptions  Average Unit Price (AUP) is currently $1200  Decreasing AUP based on 60% straight line decline over 8 years  Current ratio of students to computers is 10:1  Total spent on IT based on 4% increase per year  Percentage spent on Hardware based on 5% decrease in expenditures from year to year

9. Projected IT and Hardware Spending

10. Projected Revenues for K-12 Market Moving to 1:1

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