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Since the earliest days of the brand, Apple (Nasdaq: AAPL) 
computers have been a fixture on many college campuses. However, for the better part of two decades, the success of Apple in reaching educators and the reputation for usability it gained with students didn't translate into market share gains.
More recently, Apple saw discount computer makers, notably Dell (Nasdaq: DELL) , eat into its market share in the education market -- primarily through the competitors' ability to offer lower prices than Apple. A report from IDC pegged 2004 market shares in education at 44 percent for Dell and 14 percent for Apple, a sharp turnaround from 1999, when Apple led the U.S. education market with a 30 percent share among all levels of education.
Yet, Apple continues to forge ahead with a marketing strategy that includes finding new footholds in the collegiate universe. Analysts say the practice is a sound one, giving Apple a large share of the sizable education marketplace, which is sometimes less subject to sharp fluctuations than the business and consumer markets.
Recent Growth
In fact, if anything, Apple's presence on the college campuses of the U.S. has grown manifold in recent years. While it has always has a strong presence in the computer labs of universities, the arrival of the iPod has made Apple hardware a nearly ubiquitous presence on campuses from coast to coast.
Many analysts believe Apple's strength in the college setting will pay long-term dividends. After all, they note, having the company's machines on campus is a de facto endorsement of them by universities. And many Apple users say that trying the company's computers is liking them, making the exposure at college especially valuable.
While Apple works to offer discounts to colleges and students, it also strategically partners with research projects and other departments to put Apples to use in high-profile projects that can also help polish Apple's image as a maker of workhorse machines.
One of its most recent efforts is the Apple Digital Campus, under which it partners with a range of higher education institutions to leverage computing, and especially wireless computing, in and outside the classroom.
At the University of Colorado school of dentistry, for instance, students are required to buy Apple PowerBooks that then replace text books and other learning tools. PowerBooks are also a requirement now at the Berklee College of Music in Boston. In many cases, campuses have also adopted Apple's Airport wireless protocol and switched what were PC-dominant IT systems over to Apple's standard. At small Laguna College, the entire campus was wired for wireless access and all students offered an Apple notebook discount.
Bottom Line
Even the iPod is getting into the act. At Georgia College and State University, lectures were digitally recorded and translated into iPod-friendly format and then made available at docking stations across campus.
Such partnerships do more than burnish the Apple brand, however -- they contribute to the bottom line. Last year, Apple held about a 14 percent market share among colleges, compared to an overall market share worldwide of between 4 and 5 percent, which itself is inching up from the 3 percent share it long held.
"Apple has a strong history of doing well among educational buyers of technology," Gartner (NYSE: IT) Vice President Charles Smulders noted. "There has always been an expectation that would translate to more market share overall."
That hold on the education market extends to secondary and primary education but is especially strong at the university level. Apple got its foot in the door by promising colleges computers that were intuitively easy to use when PCs still required some modest programming skills to do much more than word processing, Smulders noted. "They're eager to hold onto the market they have and get back some of what got away in recent years."
Music to Apple's Ears
One place that Apple has been aggressive in striking deals with colleges is in the digital music arena. The iTunes on Campus program offers free institutional site licenses for the iTunes application and the ability for students to purchase songs at a discount. Billed as a way of curbing illegal file-swapping, the service also lays the groundwork for students to become paying iTunes customers on their own once they leave the confines of campus.
Needham & Co. analyst Charles Wolf is among the analysts who believe there is more interest in other Apple products because of the iPod -- the so-called Halo effect -- and that it might be strongest on campuses, where the close proximity of students can help accelerate the pace of word-of-mouth and viral marketing that has driven so much of the iPod's success.
"My sense is that the success that Apple has had with digital music in general and the iPod in particular are influencing other purchasing decisions," he said.
Apple has also benefited from the trend toward laptops replacing desktops, with its iBook and PowerBook covering both entry level and high-end parts of the market. IDC said 75 percent of all student computer purchases are now laptops and that Apple's share of the educational laptop market rose to 27 percent late last year, a gain of nearly 5 percentage points in less than a year. "If there is a halo effect, they are positioned and ready to capitalize on it," Wolf said.
IDC analyst Roger Kay, meanwhile, said that what kept Apple's strength on campuses from spreading to market share gains in the 1990s was the lack of compatibility of Apple computers with the dominant Windows-driven PC platform. That's changed, he noted, with more programs running on multiple platforms and popular software suites such as Microsoft (Nasdaq: MSFT) Office now available for the Apple.
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