Microsoft takes minority stake in education tech firm ePals

By Nicole Norfleet
Monday, April 26, 2010

By Nicole Norfleet

Microsoft has taken a undisclosed minority stake in a small Northern Virginia education technology company as part of a deal to incorporate the software giant's new suite of Web-based products into the start-up's social networking service.

Herndon-based ePals, which is backed by several former top executives at AOL, already connects million of students in classrooms around the world with an online service that includes features such as e-mail, wikis, video and interactive exercises made possible through a partnership with National Geographic. A key component of ePals' technology is its ability to give students access to only the people and information schools want them to have.

Microsoft is building up its Live@edu site, offering a host of Web-based e-mail, calendar and document-sharing products to schools and other education-oriented groups. Some of the company's offerings should be integrated into ePals' application this fall.

"What we are delivering and what will be greatly enhanced through this technical collaboration agreement is our ability to deliver safe and secure experiences that really enrich collaboration-based learning," ePals President Ed Fish said in an interview.

EPals Co-Chair Miles Gilburne, who was a member of America Online's senior executive team for several years, compared ePals' products to a Facebook for education. He envisions education moving from a model in which a teacher delivers a lecture to a classroom to a more peer-to-peer world, where a group of students from one school could collaborate and peer-edit a project with another group of students on the other side of the world.

"The theory behind ePals from the beginning is that education is going to move in the direction of collaborative activities, peer-to-peer activities," he said.

The large number of people using peer-to-peer communication tools such as the AIM instant messaging system was critical to AOL's early success, Gilburne said. Several of ePals' investors and executive team are AOL alum such as Fish, who was the vice president and general manger of premium and subscription services, and ePals Chief Technical Officer Linda Dozier, who was a senior executive for AOL Internet services.

With the new partnership comes a financial investment from Microsoft; Gilburne declined to disclose the amount.

Microsoft has released beta Web versions of its popular Word, PowerPoint, Excel and OneNote products, which will be included in its Office 2010 release in June. Demand is growing for Web services as more and more people have smartphones and other mobile devices that access data stored on the Internet instead of a desktop hard drive, commonly called cloud computing.

The software giant said it hoped its deal with ePals would help it anticipate the future needs of students.

"One of the things we are excited about is . . . our ability to grow and evolve in the future so we can look at scenarios that schools are anticipating and looking for not only in cloud technology but technology itself," said Anthony Salcito, vice president of worldwide education for Microsoft.

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