Intel Capital, Condé Nast Owner Invest $30 Million in Kno; Intel to Consult on Student Tablet Hardware
According to sources close to the situation, Intel Capital and Advance Publications will lead a $30 million investment round in Kno, the high-profile student tablet start-up.
In addition to the funding from its venture capital arm, Intel itself will consult with Kno on its tablet design. Kno, which is getting out of the hardware business, will now focus on its software to manage the devices that are aimed at the college market.
Intel will not manufacture tablets either. Instead, its engineers will consult with Kno on power management, graphics, display, systems integration, which it does for a variety of its customers.
Along with Intel Capital and Advance, current investors will also participate in the round, said sources. But Intel Capital and Advance, the owner of the Condé Nast publishing empire, make up a big part of the funding.
Sources said Intel Capital’s investment is $20 million and Advance and others make up the rest of it.
BoomTown reported in February that the much-funded and high-profile Silicon Valley start-up–aimed at making tablet computers focused at students–was considering selling off the entire hardware part of the business.
Sources said Kno execs have recently decided that the quicker-than-expected uptake in tablet production by a multitude of powerful device makers had made its efforts to package a seamless offering less critical.
Instead, the company will now focus on its robust software and services to offer students on the Apple iPad, as well as upcoming tablets based on Google’s Android mobile operating system and others.
The move is a dramatic shift for the company, which had not shipped significant numbers of the touchscreen device as it has long touted.
In fact, Kno said in November that it would ship a $599 and $899 version of the tablet by the end of the year.
The lower price was for its single-screen device, while the clamshell double-screen version was more expensive.
And, although it has been reported no pre-orders were fulfilled, Kno did indeed ship several hundred of them, built by China’s Foxconn, before stopping doing so earlier this year.
Many have been dubious about Kno’s ambitious hardware efforts.
That’s because marketing a new and complex product like the Kno takes a lot of effort and cash, especially since it is an increasingly competitive market for mobile and portable computing products that includes Apple, Microsoft, Hewlett-Packard, Google, Amazon, Dell and many others.
Before this $30 million, Kno has raised another $46 million in funding to add to an earlier $10 million round.
Sources in February said that the Santa Clara, Calif.-based company considering going back out to raise even more.
Its current backers include prominent venture players like Andreessen Horowitz and First Round Capital, along with angel investors Mike Maples and Ron Conway.
Sources said the shift to deliver textbook and other student-related delivery system would be a better path for all that investment money, since Kno has established a wide range of partnerships with colleges and universities.
In addition, Kno co-founder Osman Rashid has a lot of experience in digital education market. He was also the co-founder of Chegg, the textbook rental business that is reportedly aiming for an IPO soon.
BusinessWeek was first to report that Intel Capital was making the investment in Kno, but the post did not mention Advance’s involvement or that Intel itself was licensing the hardware design business from Kno.