News Corp. Announces Plans to Wind Down Amplify’s Tablet Business

Senior Editor

UDPATED

Amplify, which has moved aggressively to market its mobile devices and curriculum to schools, told investors Wednesday that it is abandoning the tablet business, ending months of speculation about its intentions on that front.

The company says it will stop actively marketing tablets and will no longer accept new customers, though it will continue to support existing users.

In addition, the CEO of News Corp., Robert Thomson, said in a conference call that the company is in advanced stages of negotiations to sell off its remaining education business.

The company, in a statement, said it is “reviewing strategic alternatives with respect to Amplify’s remaining digital education business.”

The announcement came as News Corp. released fourth-quarter and full-year earning results and reported a $371 million non-cash “impairment charge,” or write-down, for Amplify. Thomson said the decision to re-evaluate Amplify’s role in News Corp. was a result of a “fair amount of institutional introspection.”

The decision marks a dramatic turn for Amplify, the education division of News Corp., the global media and information service company led by Rupert Murdoch.

Amplify has received tons of attention since its entry into the education market, in part because of its connection to Murdoch, whose business background and views of education were viewed with suspicion by some segments of the K-12 community.

But the company’s heavy investments and full-throttle marketing of its products—particularly its tablets, but also its digital curriculum and educational games—have also garnered significant media coverage and interest in the K-12 community.

At the same time, Amplify has taken some high-profile hits, which included the troubled rollout of a 1-to-1 technology program in the Guilford County, N.C., school system. The district’s attempts to implement the technology were plagued with setbacks.

Exiting the tablet market will allow the company to focus its attention on its digital curriculum and assessment products, the company said on Thursday.

[UPDATE: In a memo to Amplify’s staff, company CEO Joel Klein—the former chancellor of New York City’s schools—said “it was clear to us that is time to cease marketing the Amplify tablet,” and that “the market has moved in a different direction.”

In some respects, Amplify’s work has been so “innovative and transformative” that it has been ahead of the market, Klein argued.

But he pointed to hurdles the company has faced in bringing its technology to schools, including districts’ struggles with lack of Internet connectivity. The landscape is changing, Klein argued, with recent federal investments in K-12 connectivity (most notably, through changes to the E-rate program) and states’ efforts to move from print textbooks to digital materials.

“I believe we are on the cusp of great progress,” Klein said, and the company’s products “have long term potential. But today, our financials are not where we anticipated they would be.”

As a result, Amplify and News Corp will “explore new and exciting strategic opportunities,” said Klein.

The companies are in the “active conversations with an outside investor regarding the potential sale of Amplify,” he said. “We expect this lead investor would be backed by Amplify’s management team, some of whom also plan to participate in the investment.”]

The decision marks the end of months of uncertainty about the fate of Amplify’s tablet operations.

As my colleague Michele Molnar reported in June, sales in the K-12 market have slipped overall, as districts have been increasingly attracted to Chromebooks. Questions about whether Amplify would stay in the tablet game ramped up when the company appeared to have stopped ordering new Android-based tablets from its Asian supplier, as BloombergBusiness reported this summer.

(The president of Amplify Learning, Larry Berger, formerly served on the board of Editorial Projects in Education, the nonprofit corporation that publishes Education Week. Berger co-founded Wireless Generation, which is now part of Amplify. Berger’s term on the board ended in July.)

UPDATE: This post has been updated with comments from Joel Klein to Amplify’s staff, and with other information. It’s also been updated to clarify Larry Berger’s status with regard to EPE’s board.

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