Two of the Baltimore area's New Economy companies said yesterday that they believe that the nation's schools will be the next hotbed for the mobile computing trend sweeping America, and they've launched a new venture to profit from the billions of dollars they anticipate schools spending on wireless technologies in the next decade.
The companies, Aether Systems Inc., the Owings Mills wireless services company, and Sylvan Ventures, the e-commerce investment arm of Sylvan Learning Systems Inc., the Baltimore-based education and training company, said yesterday that they and another company have invested $70 million to launch MindSurf.
The new company will market wireless services and applications to the nation's elementary and high schools.
"This is a very positive deal in terms of how far out in front they are trying to be with a technology platform that has significant potential for how schools operate," said Peter L. Martin, an education industry analyst with Jeffries & Co. in San Francisco.
"We expect pretty wide interest in this. It will allow teachers to move away from their administrative duties and focus more on the students," said Ciro Pinto-Coelho, director of strategic business development for Aether, which is contributing $29.4 million to the venture.
Sylvan Ventures is contributing an equal amount. The investment is Sylvan Ventures' first since it was launched in February.
Sylvan and Aether each will hold a 42 percent stake in MindSurf. Critical Path Inc., a San Francisco-based wireless messaging and document company, and other investors will hold the remaining 16 percent. Pinto-Coelho said the companies were moving quickly to hire top executives for MindSurf by the end of August. The new company, he said, could employ as many as 150 by this time next year.
It is expected to be based in Baltimore, near Sylvan's corporate headquarters in Inner Harbor East.
"We see this as the third wave in computing in schools," Sylvan co-founder and Chief Executive Officer Douglas L. Becker said. "I don't know that this will help kids read better, but I do think it will get kids a lot more involved in the schooling process."
Pinto-Coelho at Aether said one of the services MindSurf will offer would be to equip students, teachers and administrators with low-cost handheld computing devices that would be used to take school and class attendance, access assignments and school activity schedules and issue some tests. Students could collaborate with each other and with teachers on assignments and projects via the wireless devices.
The network would be based on Bluetooth, an emerging office communication technology that links computers and other office machines in a building through wireless messaging.
MindSurf hopes to generate revenue by selling or leasing Blue- tooth and other wireless network equipment to schools, and by charging licensing fees for MindSurf software and user subscription fees.
Pinto-Coelho estimated the network installation costs for a typical school with 1,000 students at $100,000. Becker said it's likely MindSurf will set up leasing arrangements to bring down up-front costs. Technology advances may also lower costs, he said.
The handheld devices, which teachers and administrators would be able to disable throughout the day, are expected to cost between $100 and $150 each, while user fees would run about $2 per month.
Martin at Jeffries & Co. said he doesn't believe that network or device costs would prove big barriers to the technology taking off in schools, although he doesn't anticipate the company generating significant revenue in the next 12 months.
"More and more schools are willing to pay someone else to maintain and operate their [computer] networks for them," he said. "This platform is a productivity tool - it has the potential of saving schools money in administrative costs in the long run."
Pinto-Coelho said the initial market for the technology will be private high schools and public magnet schools for advanced students.
Sylvan and Aether expect MindSurf to line up six to 12 schools to participate as pilot locations this year.
Aether Chairman and CEO David S. Oros said he thinks MindSurf has the "potential to help transform the way education is delivered."
Said Chris Hoehn-Saric, Sylvan Ventures chief executive officer: "Mobile computing will help make computing and communications affordable in the education environment."
Shares in Aether lost $2.9375 yesterday to close at $178.4375; Sylvan's shares gained 6.25 cents to close at $12.9375.