Market Overview

Apple Could Make 'Hundreds of Millions' in L.A. School Deal (AAPL)

Apple Could Make 'Hundreds of Millions' in L.A. School Deal AAPL

The Cupertino, California-based tech giant has persuaded the Los Angeles Unified School District to purchase iPads for all of its campuses.

According to the LA Times, Apple (NASDAQ: AAPL) will earn $30 million for the deal, which consists of iPads that will be sold for $678 each.

This is considerably more than the retail prices of both the 16GB ($499) and 32GB ($599) models. Apple has reportedly justified the added expense because it pre-loaded each tablet with educational apps, the details of which were not revealed.

Today's $30 million pay day is just the beginning.

"…By choosing Apple as the sole vendor, the district also made a de facto commitment to spend hundreds of millions of dollars with the Cupertino, Calif.-based digital giant over the next two years," LA Times' Howard Blume wrote.

Microsoft (NASDAQ: MSFT) fought against the all-inclusive Apple deal, arguing that by signing with just one company, Los Angeles schools would miss out on industry price cuts, future (non-Apple) innovations and other potential benefits that competing tablets may offer.

With a vote of six to zero from the Board of Education, however, the deal is all but guaranteed to proceed as planned.

At $678 per tablet, Apple will sell more than 44,200 units to Los Angeles schools ($30 million revenue / $678 unit price = 44,246 units). In addition to the "hundreds of millions of dollars" that could be made over the next 24 months, third-party manufacturers could also benefit by selling accessories to the school district. Older students, for example, might need keyboards for their tablets, which Apple does not provide.

This is just one of many major corporate and education deals that Apple has signed over the last several years.

In February Apple made headlines when it secured a massive deal with Home Depot (NYSE: HD). The home improvement retailer purchased 10,000 iPhones with Apple in order to replace the aging BlackBerry (NASDAQ: BBRY) devices that were previously employed.

Needless to say, this did not have a positive effect on BlackBerry's shares, which plummeted more than four percent after Home Depot confirmed that the company was making the switch to iOS.

This switch came after BlackBerry released its long-awaited mobile OS, BlackBerry 10.

Meanwhile, the LA Unified School District did not seem to be interested in delaying the vote until after the next versions of Android, Windows 8 and Windows RT are unveiled.

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ

Posted-In: Android AppleNews Contracts Topics Success Stories Tech General Best of Benzinga


Related Articles (AAPL + BB)

View Comments and Join the Discussion!

Partner Center