Apple Joins Digital Textbooks Market with Launch of iBooks 2 Software

Apple Inc took a big jump into the digital textbooks market with the launch of its iBooks 2 software on Thursday, aiming to revitalize the U.S. education market and quicken the adoption of its market-leading iPad in that sector.

The giant consumer electronics company has been working on digital textbooks with publishers Pearson PLC, McGraw-Hill Cos Inc and Houghton Mifflin Harcourt, a trio responsible for 90 percent of textbooks sold in the United States.

The move pits the maker of the iPod and iPhone against Amazon.com Inc (AMZN.O) and other content and device makers that have made inroads into the estimated $8 billion market with their electronic textbook offerings.

It could also see Apple shake up the traditional textbook market significantly, changing the emphasis from content to hardware; but publishers said working would be a great opportunity to revive and expand the market.

I give such incredible marks to Steve Jobs and Apple for having this vision and pushing it through the iPad, said Terry McGraw, chief executive of McGraw-Hill. He said he had been talking to Apple's founder Jobs and his team since last June about recreating textbooks as applications. Jobs died in October.

He said having textbooks on iPads will open up the market beyond high school and university students to everyday consumers. I think without a doubt this will open up a learning agency for anybody and anywhere.

The early plan is to enable students to buy their books directly through Apple rather than through their school districts. The books in the pilot launch are priced at $14.99 each on the iPad, with a range of interactive features.

McGraw confirmed that Apple would take a cut of each sale, believed to be its standard amount of some 30 percent. He said he was very relaxed about having to share his profits with Apple, as printing and distributing textbooks accounts for about 25 percent of their cover prices.

Apple also unveiled iBooks Author, a new free application available on the Mac App Store which enables anyone to create a book. It also re-introduced its iTunes U service as a standalone app, with up to 100 complete university online courses from colleges including Yale and Duke.

At an event at New York's Guggenheim Museum, Apple marketing chief Phil Schiller and Apple Internet chief Eddy Cue introduced tools to craft digital textbooks and demonstrated how authors and even teachers can create books for students.

The value of the app is directly proportional to students having iPads, said Michael Gartenberg, an analyst with industry research firm Gartner.

REINVENTING THE TEXTBOOK

Apple's Schiller said it is time to reinvent the textbook, adding that 1.5 million iPads are in use now in education.

It's hard not to see that the textbook is not always the ideal learning tool, he said. It's a bit cumbersome.

IBooks 2 will be available as a free app on the iPad, starting Thursday. High school textbooks will be priced at $14.99 or less, Schiller said.

You'll see textbooks for every subject for every level, he added.

At the event, the first since the passing of Jobs, Schiller said teachers need help and Apple is trying to figure out how it can do its part.

In general, education is in the dark ages, he said, adding that education has challenges that are pretty profound.

Cue told Reuters that young students would be quick to adopt the iBooks 2 technology, which is based on its iPad. But he declined to comment on whether Apple would introduce a cheaper iPads to make the iBooks software available to poorer students.

Our iPads are very affordable; they start at $499. It's an amazing product with all the capabilities that it brings; that's what we've got and we feel very good about that, said Cue.

Other media and technology companies have eyed the U.S. education market as ripe for some sort of upheaval. Rupert Murdoch's News Corp (NWSA.O) launched an education business two years ago and hired former New York City Education Chancellor Joel Klein to lead it.

According to Jobs' biography by Walter Isaacson, Murdoch met with Jobs last year and discussed the possibility of Apple's entrance into a market Jobs estimated at $8 billion a year and believed was ripe for disruption.

Shares in Apple dipped 10 cents to $429.01 on the Nasdaq in afternoon trade.