the same guy who distracted your kids from doing their homework now wants to sell them textbooks. dan undercutting the college bookstores. and do kids in the developing world need a computer upgrade? marvel technology's waley dye talks one better laptop per child. reporters from cnbc and tech crunches sarah lacey this peek on press here. good morning, everyone. the three most beautiful words in the english language are, i love you. but the runner up for parents at least are the three words, back

to school. sure to bring a smile to any tired parent's face. a smile at least until faced with the bill from the school bookstore. a high school textbook purchased new costs on average $70. the u.s. general accounting office says the average college student can expect to spend $898 for textbooks every year. check.com, an online textbook supplier, offers textbook rentals for a fraction of the cost. the website claims to have saved american students a quarter million dollars. >> the experience is great. >> its ceo is a familiar face in technology. former chief operating officer of yahoo! his most recent job, head of guitar hero division. so dan spent several years

distracting kids from their homework. now he's selling them books to do their homework. this is his second trip here. and sarah lacey of tech crunch. it's not a quarter million dollars. it's a quarter billion dollars. >> right. >> how can you be saving that much money? >> all the taverns that are on campus. >> how is it possible you are able to save that kind of money that some other organizations cannot? >> it's the simplicity of the model, which is kids have been paying high prices for new books and even high prices for used books. if you were to buy a book for $100, you could rent it for $70. you could rent it from us for $40 or $50. >> have you done something particularly innovative to pass along the savings that other people couldn't? >> it's a simple model to

understand. most of us don't want to keep our textbooks. so buying it does not create value for us in the long term. so we can reuse from student to student to student until the edition is done. then we replace that book. our model allows us to rent at a really low price. the students take good care of it. they're allowed to highlight, write some notes, but accepted it back in good condition. we can turn a book around. we can evaluate it. make sure it's high quality and get it out in four hours. it's intricate to make it work. we pass all of that savings along to the student. we take the risk. we acquire the book, rent it to them. we have to rent it several days and liquidate the book. our goal is to make it more affordable for families. >> part of the secrets must be the logistics, to get them to use it, send it back in the right kind of packaging and have

your warehouse in good order. is that a lot of what it is? >> it is exactly what it is. we have a lot of the great netflix dna in our company. we did that deliberately. they have been the best in logistics and marketing. >> people are hard to get. they have one of the highest satisfaction ratings. >> they do. it's a great company. they create value for their employees, shareholders and users. we try to emulate that and be on our own, of course, because we're in a different market. we take a lot of that thinking and put it to work here. we have our own warehouse in kentucky. 6,000 square foot warehouse. we have tremendous automation. we want to make it seamless to order the book, now on the iphone app we're number one or number two on the site already. we can get the book in three,

four, five days, whatever shipping the student wants. we pay for the shipping back to us. it makes it easy. >> the low cost, you're passing a great deal to the students and taking a smaller profit would be part of the low cost. is it just the efficiency of doing this that the college bookstore cannot do the same thing? they can rent me a book. >> they're taking the greater risk, which is how we're able to put the savings off to the student. we're buying the book and counted on it being rented a certain number of times and coming back in good condition. because the students are saving 65% to 85% off the cost of anew book, take care of the book and send it back on time. that allows us to be efficient in getting the books out really fast and pass that savings onto them. >> what kind of skin does the student have in the game? do they have incentive to give it back to you in condition?

do they pay less if the book is really nice? >> no. the incentive is most of our customers once they rent from us, rent from us again. they want to continue to save the money. it's not to their advantage to do anything bad. >> do they get kicked out? >> if they don't return the book, they get charged for it. if it's not repairable, they get charged for it. but mostly we're not about that. most of the kids get it back on time in terrific condition and it's not a real issue. >> do you feel good about the kids of america? >> you should. >> hard-working kids putting themselves through college, whose families are working really hard. if they were to rent from us they would save $2,000, $3,000. that's a lot of money for a hard-working american family. >> there is something about the internet that people love it.

the same student who would rip off a copy of word would never dream of messing up the textbook. there's some sort of allegiance. and you foster that. you communicate them. >> we delighted them with instant prizes called the golden shag. which they didn't realize we would do. you can win an ipad to ipod to a division to discounts, discounts with us. so we're giving out little prizes like that. we recognize, and my daughter rachel is 17. so i'm going through the college process. it's evident to me how difficult it is. how much stress it puts on families. how much stress it puts on kids. so anything we can do to make their lives easier, save them time, money, and get them smarter is something we want to do. we acquired the company course rank because that allows kids easily to go on the internet, plan their courses, find out

which friends are in their courses, rate the professors. look how the professor grades. it's a way for them to calculate the cheapest and fastest way for them to get their degree in their major. we're all about making it more easy and affordable for kids to go to college. >> stretching the netflix technology. when it went public there was a lot of concern, this is a very clever idea but blockbuster could get into this overnight. turned out that didn't happen. >> it did, it just didn't work. >> it turned out it was for a night. the concern was dvds did not stay the medium of choice and that market started to shrink and collapse. so netflix is now really struggling to get into streaming and all these other markets. >> they're doing pretty well. >> they're doing pretty well but they have struggled because they have taken it upon themselves to

say our market is dying. so are you then trying to head that off by getting into these other areas? >> you're talking electronic books? >> yeah. like head up your market becoming a one-trick pony market, a market somebody else could get into. are you trying to go over electronic, become more of a social network before you get to the point that netflix got to. >> i'll take them 1 to 100, those questions. they're all good questions. let me start with the size of the market. it's a $12 billion domestic market. that market is going to be big for a long time. and we are renting required textbookses in that market. they don't fit the rental

market. it allows books we would otherwise have to say no to. in addition we have increased the catalog to begin to offer worksheets, supplements and many in digital format. we're working directly with the publishers to bring whatever format makes sense much the expectation is the textbook and the print format will be around for a long time. ereaders aren't there yet. they will be one day. we all took these. ultimately it will bring e books. and course rank. they will digitally connect to us 300 days a year instead of two days a year. we intend to be a big part of that. and we intend to help lead that and bring students whatever

content they need whether it's from publishers, schools or other sources. >> we'll do a commercial and be back in just a minute.

one of the best assets that apple has is the credit cards they have on file with itunes. they can bill on that to move into apps from music, and movies and things like that. textbooks are no good after you leave college. what else can you do to build on that? >> it's a great question. we think about that. fist things, we're only 2 1/2 years old. we want to perfect the rental model and make sure we're

getting the right book, the right time, the right quality. that has grown enormously. so that's been really good. we're going to be able to offer a lot more things. and that will come over time. the acquisition of course rank allows us to be more valuable to the students many days a year as opposed to just two. gives us even more data. it allows us to bring more information, more services, more opportunities and more ways to save money directly to the student on a day-to-day basis. we're beginning to experiment this semester. we don't want to do snig that isn't valuable to the student. this takes the stuff seriously. >> you know what classes students have taken. you have a rough idea how they did because you know if they went from 100 level to 200 level.

>> increasingly, we do. so we know who the student is, what school they went to, whether they're going to graduate school, business school or medical school because they continue to rent from us if they do. we know what their majors are. we do think there are opportunities for us to build and work, opportunities for students to ultimately get internships and students to get jobs. so, yeah, we see our roll to be just focused on what benefits the students and all of that helps our core business. >> someone is screaming, privacy, privacy, privacy. how careful do you have to be in collecting and monitoring of data of students to get into anything that might be selling that data or offering that data? >> i have a 17-year-old and 15-year-old and i'm as concerned as anybody about privacy. i worked for yahoo!.

i have an appreciation for privacy. this is bringing something directly to them. it has nothing to do about giving their information to anybody else. it's not in our best interest to do it. it's not good for business or the internet. for us it's about relevance. this is the twitter generation, facebook generation. >> they can turn on you fast. >> and our focus, one of our core values is students work hard. make it easier for them. when they call with a problem, we assume they're telling the truth. then we figure out later if they're wrong. our natural assumption is the student is right. these are their books. get them to them on time. we believe in being part of our community. >> dan, the last question, let me just ask the simplest one. what excels a guy to leave guitar hero to sell textbooks? >> ransom.

>> honestly, it's a couple of things. i accomplished my most important goal when i was at guitar hero. i introduced my daughters to taylor swift. i grew up -- my wife and i take education very seriously. we went to a great public school. we recognize how difficult it is in america. 14 million of 18 million kids are on some sort of financial aid. in order for america to compete in the world we need to focus on educating our kids, not making it difficult, not creating obstacles. states are broke. the government is broke. if we can save kids money where we can get the education we want that is a well worthwhile use of my time and my management team and we feel lucky to be in the

space. i don't comment on my finances. >> up next, more than a million laptops sent to more than a million kids works out to one laptop per child.

welcome back. back-to-school theme on this week's show, whether silicon valley or under a tree in the amazon rain forest. kids are learning thanks to an effort thanks to a professor at m.i.t. the rugged plastic laptops traveled the globe. more than 1.5 million from cambodia to inner-city new york. the for-profit maker intel

dropped out to make its own computer, the classmate. and there are reasonable questions as to whether laptops should be a priority in very poor communities. now a redesign. the silicon valley chipmaker marvel is working with the one laptop charity on a new version, a low-cost tablet simulated here. marvel today makes chips for everything from the blackberry to the audi a-8. 10 billion chips sold. one of the founders of marvel came to the united states at age 17. she's been on the forbes list of one of the richest women in the world. and she played semi pro basketball. joined by john fort of cnbc, sarah lacey of tech crunch. we see the pictures of the new possible one laptop per child. if you can build such a thing and look so marvelous, why not

just sell it to us and make much more money. why give it away or sell it at very low cost to developing nations in. >> well, great question. i look at nicholas, the leader, to try to draw the education of the world. so his idea first applied to the developing world. but absolutely you're right. we are really focusing on the worldwide effort. and i think marvel has been supporting his effort in the last four years. and driving the mobile tablet. >> the tablet being the -- what you make this, idea, this reference design that can then be used in different -- >> exactly. >> such as one laptop. >> exactly. >> can i get from you sort of an honest assessment how you think one laptop has gone so far. i have seen them in africa.

i have seen instances where they work well and instances where they don't work well. a lot of lifting they have to do in terms of maintenance of the devices, constructing a curriculum. they are quite expensive. how do you think one laptop per child has done? >> well, i think it's a great idea. it's really for a good cause. i give credit to nicholas. we as a semi conductor solution providers and personally i'm very passionate about education. and so is my company. i think it requires an eco system. and i think nicholas needs more help globally, and i hope more companies like us, including governments around the world, can help more because this idea is brilliant. >> you say help. help like money? help like -- >> i think all aspects. i think financially could be

useful. more importantly, i think take this seriously in developing technology and, you know, understand the overall how to launch this in a global way. and i think that's very, very key. >> i've always wondered -- not always but over the last couple years, why not one cell phone per child. you look at these countries are the laptop is going and a cell phone is a much more important platform for economic development, health and medical, education. why not teach the kids how to use cell phones in ways that are cultural and economically relevant? and they're cheaper. >> great question. the surface is a challenge because whether or not it's a laptop or tablet, and this is for purpose of really, you know, text and knowledge, pictures, image and video for learning.

so it's great. but that to me is the next step. >> and to me a phone, most of the emerging world does have phones. there's more people with phones in the world. >> and financial transactions. >> actually, they are quite phone literate. i agree with you we should be doing more. but i've been in villages in india and the kids are walking around with cell phones. it's like going into someone's house here. i think it's a software issue. you don't even need the hardware because the phone is already there. the promise with a laptop is bringing a bigger platform. kids can draw, compose music. they have a rich interface. they can do different kinds of learning. we were in columbia, a school. they were dancing. we were holding up our video cameras or whatever. kids were holding their laptops with a video camera in it and taking pictures. it's a richer environment for kids to use than a cell phone.

>> and for the tablet, it's really multipurpose. so today the tablet has the light surface to reading books, video. but at the same time it has the modem connection as option. >> i was going to ask you that. are there really kids who have the one laptop per child and i need an upgrade. good, you can have a tablet. why upgrade to the tablet? you said viewing surface. if what we're trying to do is get computers into the hands of the remotest parts of the world, you know, the technology is, what, three, four years old with the actual clam shells. isn't that good enough? >> well, this is why we try to support them to upgrade to the tablet. and for our silicone capability it's address all the light contents. you go all the way from blue ray

quality. >> my question is, if this is a computer, no kid is going to say, but does it do blu-ray. >> marvel technology is very cost-effective and very dynamic technology which means you can do heavy duty video capability as well as 3d graphics so you can use it perfect for reading books as well as watching some learning videos. and, you know, it's multipurpose. and that's why it's our mission to help the effort to see if we can move faster. >> you guys are a big chip company. another big chip company in the area intel announced intent to buy mcafee, a security software provider. very different. do you need to buy software in

order to stay competitive as a chipmaker? >> well, our talent is chip design. but at the same time today it is very important. you're talking about platform solution, so this is why. we partner with other partners as well, education software. it's about teamwork. like playing basketball. our forte is chip design. >> there's a bit of a cold war between nicholas's group and silicon valley. they have been criticizing -- >> and answer this quickly. >> do you think silicon valley needs to play a greater role for the benefit of the emerging world? >> i think so. marvel takes leadership. i think, you know, when you run a business it is important to also help for a good cause. and that's our company's mission

as well. >> that's all the time we have. we'll be back in just a moment.

that's our show for this week. our thanks to the guests. in the meantime, check out pressheretv.com for archived shows. thank you for making us part of our sunday morning.

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