Aug. 26, 2014 7:38 p.m. ET
LOS ANGELES—The nation's second-largest school district is slowing down its $1 billion initiative to outfit every student with an iPad or laptop computer, in a setback for Apple Inc. AAPL +1.23% Apple Inc. U.S.: Nasdaq $102.13 +1.24 +1.23% Aug. 27, 2014 4:00 pm Volume (Delayed 15m) : 46.54M AFTER HOURS $102.10 -0.03 -0.03% Aug. 27, 2014 7:59 pm Volume (Delayed 15m) : 5.83M P/E Ratio 16.39 Market Cap $604.11 Billion Dividend Yield 1.84% Rev. per Employee $2,214,380 08/27/14 Alibaba's Results Improve Ahea... 08/27/14 Judge Denies Apple Request for... 08/27/14 Judge Denies Apple Request to ... More quote details and news » and Pearson PLC.
Following the leak of its own internal report critical of the program and questions about the bidding process, the Los Angeles Unified School District said Monday it would end a contract with Apple and Pearson, and begin taking new bids to supply students throughout the district, including from the two companies. Superintendent John Deasy said the current contract didn't meet the district's needs.
Apple didn't immediately comment, and publishing giant Pearson said it looked forward to continuing to support the initiative in Los Angeles, where it has been providing content for the devices. Last year, Apple highlighted the iPad rollout, saying it was "thrilled" to work on what company officials described as a major education initiative.
The slowdown comes at a time when Apple is facing questions about iPad demand. As smartphone sizes have increased and computers have grown lighter, Apple's tablet sales have fallen for two straight quarters. Apple has struck a deal with IBM Corp. IBM -0.38% International Business Machines Corp. U.S.: NYSE $192.25 -0.74 -0.38% Aug. 27, 2014 4:00 pm Volume (Delayed 15m) : 2.12M AFTER HOURS $192.34 +0.09 +0.05% Aug. 27, 2014 7:11 pm Volume (Delayed 15m) : 73,790 P/E Ratio 12.08 Market Cap $197.87 Billion Dividend Yield 2.29% Rev. per Employee $229,711 08/27/14 Ten Things I Learned About Man... 08/25/14 Apple May Sweeten MobileIron's... 08/24/14 Apple's Next Act for the iPad ... More quote details and news » to create more iPad-specific apps for corporate clients.
Still, Apple remains the overwhelming option for schools looking to provide students with tablets. The iPad holds an 85% share of the U.S. education market, according to estimates from research firm IDC. Apple said it has sold 13 million iPads globally—accounting for about 8% of all the iPads sold since its 2010 debut—to education customers.
Los Angeles isn't abandoning its plans. In the coming months, more than a dozen schools will receive devices for students and teachers for the first time. The new bidding process is expected to wrap up in February, and more students will begin to receive devices.
Tablets first went out in the summer of 2013 and were initially scheduled to reach across the district by the end of this year.
Fueling the pullback were early stumbles for the project, which is funded through voter-approved bonds that many opponents argued were meant to pay for school maintenance and construction costs.
One school-board member, Monica Ratliff, led a committee to investigate the district's handling of the operation. On Tuesday, the committee released a report, which found problems with the procurement and programming of the devices, raised questions about the installed curriculum and called for improved technology training for students, staff and parents.
Local media outlets have raised questions about how school officials handled the bidding process, saying certain steps could have unfairly influenced which companies were chosen.
Mr. Deasy said the bidding process was conducted properly, and concerns raised over bidding didn't play into the decision to slow the program and go through a new bidding process. He added that Los Angeles so far has spent about $61 million on tablets and laptops, reaching about 40 schools, or 4% of the district.
In recent years, U.S. schools have hustled to keep up with popular learning trends. In 2013, at least nine million U.S. students participated in some type of blended learning—where online instruction is combined with brick-and-mortar schools—representing a 30% increase over 2012, said Michael Horn, executive director of the education program at the Christensen Institute, a nonprofit think tank.
"When they made the announcement, Los Angeles was seen as a big sign that technology in education had arrived by education-technology enthusiasts," said Mr. Horn, who dubbed the entire project a debacle, referencing missing devices, poor planning and unclear training for teachers. "But very quickly, though, this became a cautionary tale."
Now, more educators are rethinking what works for each school, rather than employing a one-size-fits-all method with technology-driven reform, he said.
Leslie Wilson, chief executive of the One-to-One Institute, a nonprofit that helps schools use technology, said that her organization has received calls from school districts with questions about the Los Angeles rollout since it began in 2013. "This is a real wake-up call for superintendents," she said.
—Daisuke Wakabayashi contributed to this article.
Write to Caroline Porter at caroline.porter@wsj.com and Erica E. Phillips at erica.phillips@wsj.com
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