Kno raises $30M round led by Intel Capital

Drops tablets and focuses on software

Education software company Kno announced Friday morning that it has raised $30 million Series C round led by Intel Capital, which contributed a whopping $20 million to the round. Other participants in the round included Advance Publications and all of Kno’s previous investors, including Andreessen Horowitz, First Round Capital, FLOODGATE, and SV Angel.

Those of you who get just as pumped over the digital textbook industry as I do might recall that last summer, Kno announced that it would be releasing a two-panel touchscreen tablet that students can use to read digital textbooks just as they would a traditional textbook (by opening and closing it, silly), with the added highlight of being able to take notes on the pages, stick digital post-it notes to mark important spots, highlight text, and multitask by switching between text and video. In September, the company also announced that in addition to the double-screened tablet, it would be releasing a single-screen 14-inch tablet to deliver more flexible e-reader options to students.

Both debuted in December 2010, but with dismal results. Kno has since gone back into stealth mode. While the company site formerly offered demo videos and testimonials, it now features a single landing page that promises more news in the future. Could it be the company is facing rockier challenges to its business model?

When we last covered Kno in September, there were some foreseeable problems with the company’s digital textbook solution and how it was going to market two pricey tablets to its target demographic of penniless college students. The company put the double-screen tablet was priced at $899 while the single-screen tablet was priced at $599. That might be two semesters’ worth of college textbooks right there—on top of the digital textbook prices students will be paying.

Is that a realistic pricing model for a target demographic that gets so broke it has to choose between asking parents for money or selling plasma?

The company has since confirmed that it's dropping its tablet offerings, conceding that it makes no sense to try to compete against the iPad and all of the other lower-priced (and multi-functional) tablets bursting onto the scene today. Instead, it will be focusing on software.

Other companies like Inkling have developed similar digital textbook platforms to cater to increasing demand for e-books.  Inkling’s platform, developed for the iPad, emphasizes the social learning approach by allowing users—both students and professors—to collaborate and share notes in real time, from any location.  But with Inkling, users get textbooks plus all the features of the iPad for $500. 

Intel is sold on Kno and whatever new product it's coming up with now. “Kno’s unique end-to-end software and their experience with content publishers aligns very well with Intel’s approach of delivering a holistic solution for education that comprises of hardware, software, digital content and services,” said Arvind Sodhani, Intel EVP and president of Intel Capital, in a statement. “We plan to work with Kno and continue to bring a wide range of innovative platform choices to students worldwide.”