Google, Apple and Amazon: The next Ivy League
Every iPhone has an iTunes U app. Sebastian Thrun, CEO and cofounder of online education company Udacity, is a Stanford professor and former Google X executive. Adaptive-learning company Knewton refers to itself as the "Amazon Web Services of online education." Reid Hoffman, cofounder of LinkedIn, was an early investor in Knewton, too. Amazon acquired online math education start-up TenMarks to make education apps. What's to stop the giants among tech pure plays from ultimately dominating in the rapidly evolving online education space? Student certifications for course completions being offered by Coursera and others are being used to pad LinkedIn profiles, so how much of a leap is it to LinkedIn University?
One thing is certain: As online education becomes big business, it will also be one of the biggest data grabs that exists for Silicon Valley—and it will be interesting to see how the tech pure plays capitalize on the advances being made today by the education-tech pure plays.
Jose Ferreira, CEO of Knewton, said education is the most "data-mine-able" of all big data industries. "Education produces far more data per users than any other industry—vastly more data each day than Google and Netflix," he said. Ferreira believes that as more courses go online—whether through massive open online courses (MOOCs) that compete with his company, or blended learning like Knewton offers through publishers and partner institutions—individuals will carry around lifetime profiles based on every course they have ever taken. The data will "know" what you know about each concept and how and when you learn best.
(Read more: The biggest data grab is education: Commentary)
"Is it science in 23-minute bites, math best in the morning?" Ferreira speculated. "If a course knows you will struggle next Thursday because it builds on concepts you are already weak at, we know that in advance, and in our world, maybe we never let you get to the point where you struggle on Thursday," the Knewton CEO said.
Ferreira said that is very valuable information to universities, but it's also intriguing to Silicon Valley's biggest platforms.
The new Google search
Ray Schroeder, associate vice chancellor for online learning at the University of Illinois Springfield—who founded one of the first MOOCs before MOOCs were ever thought of as a business—noted that Amazon has a built-in library of courses, Google has lots of titles for free, and Apple has iTunes U. "Look at the sphere. You see the potential there; they could go out and hire their own professors to create online courses," Schroeder said. "If we see a continued shakeout in education, with a third of professors out of work, maybe they go to work for Apple." The MOOC pioneer pointed to Udemy, where anyone can propose a topic and create an online course and charge any fee they want—an approach that has attracted hundreds of thousands of users. Udemy has raised $15 million in venture capital.
"Ten years ago if you had an innovation in education you could roll it out to 200 students," said Andrew Ng, co-founder of Coursera. "Now if someone has an idea you can flip a switch and it goes out to millions of students. MOOCs have changed scalability and that is a deep shift."
(Read more: America's most-hated teachers)
Google is already producing some MOOCs running on Udacity, where the former Google X executive Thrun is CEO. "What I expect to happen is that Google will buy Udacity as it has bought so many and will begin delivering courses using the model it already has for search," Schroeder said. "For example, have 100,000 nurses taking an advanced nursing course, and then on the left or right column have ads for medical devices. The YouTube of higher ed," he said.
No. 1 educator in world today: It's not an Ivy
Thrun said it is already happening, though not quite like Schroeder predicts. "Who is the biggest constructor of education today? You'd probably have to say Google or Wikipedia, one of these companies where massive education takes place," Thrun said, adding that people no longer have to carry knowledge in the brain, because they can simply go to Google.
"That's already been the biggest transformation. Forty percent of what people learn in life they now learn online, not in college." Thrun said that online education is not dissimilar from the spread of Amazon and its e-commerce platform, which, representing in the low-30 percentile of sales, is a huge transformation. Something similar is already being seen in the increasing number of degrees conferred online, but these changes take time and the predictions range widely.
(Read more: Learn more about CNBC's Education Disruptors here)
"I would not be surprised if I saw more pure-play tech companies get into education," said Chip Paucek, CEO of 2U. "It's entirely possible we will see it, and Apple in some ways already has a foot in the door with iTunes U. The number of downloads is higher than the aggregated number of MOOC students."
The Udacity CEO said disruption comes in ways that are not obvious—how ranking Amazon versus Netflix and iTunes, as far as education platform potential, ultimately can be reduced to a typical question: Who is king of content, and where is content siloed? "The key thing for me," Thrun said, "is not who owns the platform, but will we reach every student in the world." Ultimately, he said that's a question he wants to see answered in the affirmative, whether or not it's good for Udacity, in particular.
"The education opportunity for companies like ours is to rethink all of this, and I bet there will be opportunities for some very large players to emerge," Thrun said, adding that LinkedIn badges could become really important as part of education credentials. "I would be sort of sad about that, but it could be one dimension," he said.
—By Eric Rosenbaum, CNBC.com
(In May, CNBC launched its inaugural CNBC Disruptor 50 list. The CNBC Education Disruptors is an extension of this annual editorial feature covering the companies upending the status quo in the market's biggest sectors).