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March 2000
The Business of Education

     For the past three years, The has been quietly developing the nation's leading educational subscription-based network. Now the company is looking to expand its reach. If it's successful, LearningStation could revolutionize K-12 education throughout the country - even the world. All it has to do is convince educators to totally rethink they way they operate. Jim Pennington, a business strategist from northern California, launched LearningStation in Charlotte three years ago. With the help of local entrepreneurs Craig Larsen and Jim Kirchner, he is trying to change the way educators think about technology in the classroom.
     The company is an Application Service Provider (ASP) that provides schools with access, by rental or subscription, to educational applications and content via te Internet. LearningStation has aligned itself with leading educational software makers, signing distribution deals with companies like The Learning Company, Saratoga Group and SkillsBank. Pennington decided early on that traditional attempts to market Internet-based educational content were doomed to failure because they threatened traditional teaching techniques.
     So in addition to bundling curriculum software, LearningStation provides software tools that help teachers focus more on teaching and less on administrating. By getting teachers on board with the program, LearningStation is an easier sell to usually skeptical educators. In addition to potential resistance from teachers, LearningStation also faced some difficult technical challenges. While over half of U.S. schools are now wired to the Internet, most of those connections are slow and the computers are ancient by today's standards. As they did with content providers, LearningStation developed several key strategic partnerships with technology companies.
     Combining technologies from Microsoft and thin-client network specialist Citrix with proprietary software and an administrative program called DreamWriter I.T., LearningStation is able to deliver educational software applications to any desktop over virtually any connection, including a 28.8 KBs dial-up modem. It's the first network of its kind in the country, and it grants new life to obsolete hardware. "One of the biggest benefits of this program is its ability to make use of the school's existing resources - outdated or older computing equipment of any model - and to relieve the school systems of the burden of managing and maintaining their network hardware and software," says Pennington. "It creates greater efficiencies for the entire school district because software and servers are centralized and are maintained and upgraded by experts in the field. It's quite cost-effective."   
      In 1998, the Charlotte Chamber Information Technologies Council recognized LearningStation with the Blue Diamond Award for Innovative Use of Technology-Based Product or Service. One key company LearningStation partnered with early on was Computer Network Power, another Charlotte-based technology company founded in 1996 by North Carolina natives Craig Larsen and Jim Kirchner. Computer Network Power is a fast-growing network integration company that specializes in thin-client server computing. With revenues going from $650,000 in 1996 to $3.5 million in 1998, it serves about 125 clients, including Dale Earnhardt, Inc., Sound Choice and The Scottish Bank. Both men had worked together previously at what is now Osprey, a Charlotte-based enterprise resource planning provider, Larsen as controller and Kirchner as a sales and marketing representative.   
      Together, the three men saw an opportunity to leverage Computer Network Power's strength in integrated thin-client solutions with LearningStation's growing success as a provider of global, online educational materials. The result was a December 1999 merger of the two companies, which retains the name The and combines the two staffs. "Our vision is to transform the possibilities for learning anytime, anyplace for anyone - and with this merger we have the tools to achieve it," said Larsen in announcing the merger.   
      "From Computer Network Power's standpoint, the merger helps take us from a regional integrator and puts us in The's global environment. Also, it gives LearningStation in-house capacity to maintain research and develop the appropriate infrastructure to support a large number of clients globally." The company now focuses its resources exclusively on the interactive educational market. As a result of the merger, Craig Larsen is the chairman of the new entity and is responsible for financials. Jim Kirchner is the president and heads up operations and the company's sales and marketing efforts. Jim Pennington is chief of innovation. The merged company boasts a staff of 45 employees, who work from offices on the I-85 Service Road, just off of the Sugar Creek Road exit in north Charlotte. LearningStation has ambitious growth plans for 2000, and hopes to have 100 employees by the end of this year.

The Program
     LearningStation currently serves about 19 public and private school systems, including Charlotte-Mecklenburg schools, Mecklenburg Area Catholic schools, and school districts in Lexington (N.C.), Houston (Texas), Miami-Dade (Fla.), Newark (Calif.), and the New York City school system. The beauty of LearningStation's service is that it provides a realistic and cost-effective way to leverage the Internet to deliver educational resources seamlessly to teachers, students, parents and administrators. Subscribing to LearningStation enables schools to run modern software applications on new, used and even obsolete machines. 
     The concept of a thin-client network, which has gained some acceptance in the corporate world, is ideally suited for the educational market. Unlike a conventional network, which often requires software applications to be loaded onto every computer, a thin client network serves programs from a local or remote server. In the case of, all the client computers require is a browser such as Netscape Navigator. The potential implications of this method of delivering content are huge.
      LearningStation can transform older PCs (386 and 486 processors) and Macintoshes into machines as effective as computers with the latest high-end Pentium or PowerPC chips for the K-12 educational market. Additionally, it can provide fairly inexpensive and virtually maintenance-free thin-client computers for its applications. Because it provides the applications from its own server, LearningStation eliminates the problems associated with cross-platform and outdated software.
     "Schools are extremely excited to hear that they can get out of the hardware/software management business, and focus on using software to teach and guide," reports Craig Larsen, LearningStation's CEO." And the fact that they can make good use of their installed base of cross-platform computers makes technology equally accessible to more students and teachers anyplace at anytime." The company has developed partnerships with Time Warner Telecom and MCNC, which house and maintain remote server clusters in Charlotte and Research Triangle Park, respectively.
      This allows entire school systems to access the most modern software applications. Given the beleaguering fiscal constraints of the nation's school systems, the increased focus on learning proficiency and the goal of providing equal access to a quality education for both affluent and disadvantaged students, LearningStation could not be better positioned in the marketplace. As an ASP, it enables educators to rent a broad variety of today's educational software while reducing their capital outlay for new equipment. At the same time, it delivers a high-performance method of deploying, managing and accessing business-critical applications throughout the enterprise while safeguarding application performance, data security and administrative control.
     If they can convince educators to buy into the concept, LearningStation will also be able to capitalize on the ongoing wiring of school systems across the country. Nationwide, schools average one computer for every six students. According to Jupiter Communications, 11.4 million children, ages two to 12, are currently online, and that figure is projected to more than double to 24.3 million by 2003.

The Interactive Education Market
     A primary goal of the current educational standards movement is to rectify unequal learning opportunities. A major watershed in this movement was the creation of the federal government-initiated objective, Goals 2000, in 1994. Goals 2000 established a clear expectation that all students would be held to challenging academic standards and that lower expectations for poor or disadvantaged children would not be tolerated. The U.S. Department of Education has stated a goal of having every public school wired by the year 2000, and according to the National Center for Education Statistics, expects to meet that goal by year end. Teachers and administrators are faced with increased accountability for student performance and parents are trying to take more responsibility.
     Despite computer technology present in over 70% of U.S. schools, educators continue to rely on multiple sources for preparing lessons, measuring performance and reporting results - limiting their valuable time to help students reach newly expected academic achievement. By subscribing to an interactive educational ASP, the schools would have one convenient place for teachers, administrators and students to access instructional management tools, educational resources and student data, thereby focusing more attention into the classroom and making the instructional process more efficient.
    With the benefit of an ASP, the classroom becomes the focal point from which teachers can create lessons and post assignments, students are able to retrieve assignments and utilize digital resources, administrators can obtain attendance and grades, and parents can receive messages and progress reports. In addition, teachers are able to tailor instruction to individual needs. Networks and computers have transformed the business world in ways that no one could have imagined a few decades ago. While computers have been used in educational administrative offices and some classrooms over the past decade, they have not yet been fully integrated into the learning process. Lack of funding, technical complexity, and ever-changing software applications have all contributed to slow the enterprise-wide adoption of technology in education. However, social and political forces are finally aligned in producing an educational environment where technology is funded and embraced.   
     Instructional technology expenditures are predicted to grow from $5.2 billion in 1997-1998 to $8.8 billion in 2001-20. Some of the largest growth areas within this market include telecommunication services, personal computers and educational software, according to Technology & Learning's "Technology Expenditures Overview".

More Bang for the Buck
     Access to the LearningStation network allows schools to focus on the business of education and not the management of technology. Educators have access to vast resources of pertinent information, helping them to integrate technology and teach a better curriculum in a fraction of the time. LearningStation offers ways to lower both long-term desktop management costs, as well as short-term capital outlay. Their technology allows schools to use existing equipment to access the latest releases of software and educational resources. Using this cost-effective alternative, more students have access to modern software applications, improving the student-to-computer ratio substantially.
     "Statistics show that up to 55% of our school systems' desktop computers are incompatible with current software. It's easy to see that the problem of staying current will eventually catch up with any school district," points out Jim Pennington. "And that’s where this program will help." LearningStation levels the playing field and ensures a computer savvy generation of learners.
    Shirley S. Fahringer, Director of Technology at the Gaston Day School, concurs. "Through the use of LearningStation, we can now use a variety of age appropriate and diagnostic software for a fraction of the cost of purchasing and maintaining it ourselves. In addition to this cost savings, the Citrix platform used by LearningStation allows subscribers to use what is considered antiquated computer equipment (386 and 486 processors) at the same Pentium processor speed of the server bank at LearningStation."

The Benefits of Using an ASP
     Schools can benefit from using an ASP such as LearningStation, particularly as follows: Lower Cost of Technology Zona Research, a technology research firm, estimates that organizations can save 54% to 57% of system administration costs over a period of five years with a thin-client computing approach. Using the services of an ASP further reduces costs by eliminating software upgrades and inefficient purchasing volumes.
     Learning Anytime, Anyplace Since applications and data are stored on the ASP's server, access is available to students and faculty from any computer at any location and at anytime via an Internet connection. The desktop appearance is always consistent. Reliability and Ease of Use ASPs allow teachers and students to spend more time working on technology projects - such as accessing information on the Internet and using educational software - rather than spending class time fixing and upgrading PCs or adjusting software programs to suit each individual workstation. Users simply log on and access their applications and data.
    Simplified, Centralized Management Skilled network administrators manage LearningStation's servers, lifting this responsibility from educators, Updates and additions are made one time - at the server - and are immediately available to all users. Security Vital data and applications may be kept on LearningStation's servers creating a higher level of security. Sensitive applications and data are made available to authorized users only via password protection. Data is effectively secured and backed-up centrally.

Interactive Competition    
     According to The Heller Report (August 1999), iMind Education Systems, Inc. (iMind) is LearningStation's first competitor in the business of providing access to a library of educational software over the Internet. iMind was founded in 1998 and is headquartered in Mill Valley, Calif. James Ransdall, vice president of business development for LearningStation, points out that, while the business of distributing curriculum via the Web is the same, LearningStation integrates hardware as part of its solution, much like the cell phone industry does. Both use Citrix to deliver cost saving solutions to schools; iMind houses servers at schools, LearningStation maintains servers at server farms (or at schools if requested).
     Both LearningStation and iMind are partnered with MediaSeek for aligning standards and software, and both are charter members of Sun's SchoolTone alliance. Both also have the credibility f carrying software from The Learning Company. LearningStation, however, LSC is further down the road of signing up additional publishers. Though LearningStation was first to market, iMind could have an edge with its tutoring products. However, as LearningStation broadening partnering program could place it in the lead, as evidenced by its more than 1400 software titles currently offered. A more recent Internet education startup is, formed in January of this year from the combination of the online research services of Bell & Howell Company and Infonautics, Inc., headquartered in New York, plans to build upon the predecessors services' position in 40,000 schools to provide Internet-based learning tools that support the entire K-12 community.
     The company recently acquired MediaSeek Technologies, Inc., a leading provider of Internet tools. Although it will have "advertising-free zones", revenues from advertising and sponsorships will enable to provide services free of charge to local school communities. Whether or not communities will accept such corporate-sponsored material in their schools remains to be seen.

Impact of LearningStation in Charlotte Schools
     While SAT scores have steadily increased over the last few years in North Carolina, the state's ranking in student performance hasn't changed from 48th out of 50 since 1991. This ranking can be adjusted and even explained by some factors, but the magnitude of the deficiency indicates an immediate need for the delivery of better educational services.     
     LearningStation, along with some of its strategic partners, are coming together to provide North Carolina's K-12 schools and teachers access to innovative online education software. LearningStation's next-generation learning programs initially will be available to the Charlotte Mecklenburg School system and to school systems in the western and central parts of North Carolina, and ultimately on a national basis. More than 300 connections, reaching an average of 12 students per connection, will be activated in the pilot phase of the program.     
     Some of the first online programs include a student progress management system as well as self-directed teacher assessment and training tools. The packages conform to the State Department of Education's Total Quality Education Program. Because the programs are standardized and made available online, students and teachers will have greater control over their academic progress and professional development. John Lassiter, vice chairman of the Charlotte Mecklenburg School Board, considers LearningStation "a great concept, a technical product that fills the cost gap."
     He notes that other less affluent communities have partnered with corporate interests to bridge the technology gap, leading to commercialization of the learning environment. He's impressed that LearningStation makes use of otherwise outdated 386/486 computers, and that students, parents and teachers can access the system at all times from all places Together, he sees the potential for LearningStation to level the playing field for every student regardless of socio-economic position, but emphasizes the need for learning in the community about this approach and its impact on the education of children.

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