Higher Education Goes Straight To Dell

Carnegie... Vanderbilt... Dell...?

Will the computer-marketing maestro from Texas be the next mogul to create a university? We at Más Kapital think so... and in a style oh so Dell. In other words: a university so efficient and inexpensive, it will knock the established players flat on their well-endowed fundaments.

Where the hell did we get this wacko prognostication? Let's rewind to a certain lecture at a certain L.A.-based university in late 2004...

An American professor who was an "expert" in offshoring labor was extolling the virtues of sending American jobs to India. Something about pain now, gain later. But then a certain editor of a certain satirical magazine asked the strutting academic, "What about all the American workers who can't adapt to losing their jobs—who are too old or too indebted to go back to school or learn new skills? What happens to them and their families?"

The professor patted his nice cushy tenured position and replied, "That's their problem. They should have planned ahead. Let them eat cake." Okay, he didn't say the cake bit, but the sentiment was there.

The editor didn't respond, but quietly thought, why not outsource professorships? Several of the school's best professors were Indian. And since labor is the largest single cost for most universities—and a key reason why tuition is outpacing inflation faster than Congress can say "regulation"—why not ship the teaching function to India? We could set up an online-education system not unlike the University of Phoenix...

Oh, wait, we hear you laughing out there. The University of Phoenix—the K-Mart of higher education. But before you turn to the next article, consider these numbers, you freaking elitists:

For-profit education is a multi-billion-dollar business growing faster than the ego of a just-hired junior prof. The University of Phoenix served 228,000 students in 2004, and reported net income of nearly $140 million. Its parent company, The Apollo Group (which owns several for-profit academic institutions), has a market cap of $13 billion and a P/E of 72. By contrast, Dell—a much larger company—has a P/E of just 32. So if Dell were to get into this for-profit education game... you do the math.

Now let's look at Dell. Business ain't too shabby in Round Rock, TX. However, shareholders want growth, growth, and while you're at it, how about a little more growth there, buddy? But how long can you sustain double-digit growth by selling computers (an increasingly commoditized product) on the cheap?  Perfect efficiency will get you only so far, and Dell knows this, so they're expanding big time into consumer electronics. But those, too, can become commoditized, and they bring Dell head-on with that other behemoth of efficiency, Wal-Mart. Meanwhile, the company that Dell drove out of hardware, IBM, decided there's much more profit potential in services. So guess what? Dell is also offering "solutions" (i.e. "Consultants! Get your fresh hot consultants here!").

But that's not all.

A stroll through Dell's website reveals other tasty morsels, including the fact that Dell is already selling education. LearnDell.com offers training and certification in everything from Digital Photography (course price $19.95) to Financial Management ($773.95), from Project Management Institute Certification ($1,099.95) to Negotiation Skills ($386.95). Some courses are Dell-led, others outsourced. The point: it's already happening.

A little more strolling uncovers this factoid: Michael Dell is currently serving on the governing board of the Indian School of Business in Hyderabad, India. Low-cost professors, tech savvy country, hmmm... and isn't the school's name just a little too generic? How about a new name, something that rhymes with "swell"? And who is ideally equipped to rename that school and get it entirely online and ready to roll?

Forget that $60,000 MBA—dude, you're getting a Dell!

Now the problem any new university faces is credibility—note the derisive chuckles when we mentioned "University of Phoenix." A school can get accredited by an entire pantheon of Greek gods, but it takes decades, even centuries, to build academic respectability, and even then it can be hard to maintain a Top 20 ranking. But what if your school is branded by a multinational mega-corp run by a billionaire who enjoys name recognition on six continents? (The penguins are still kind of in the dark.)

Now imagine you're thumbing through resumes to hire an IT Director. You find one guy trained by the flaming bird (the "Phoenix" for you mythologically challenged), and the other is trained by Dell. All other things being equal, whom do you hire? No, you have to pick one—you can't outsource the job. Yet...

Welcome to Century 21.1, where even academia isn't safe from the scourge of offshoring. If you're an untenured professor, better start publishing and playing politics. Dr. Habib in Hyderabad has an online account all ready to fire up... [$]

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