Cover Story: Publishers' Outlook 2012: The Industry's Next Bold Move

Howard: You're very committed to testing.

McMahon: [Our customers] want us to help them learn, so we have to be very careful not to produce a bad result for them. We actually have to make sure that something works and delivers a better result for students before we roll it out into our larger product. And I think our students like it. They know that they can trust our core products, because we've tested them. But they also know that we're really continuously seeking ways to produce a better experience for them. Kaplan Labs will continue to be where we pilot ideas first and then hopefully, if they're successful, roll them into our larger courses.

Howard: What are you doing with mobile and apps? McMahon: It's funny, just speaking on the retail side, our customers appear to trust e-books more than they trust mobile apps. When we deliver content in a mobile app and we deliver the same content in an e-book, we sell many more e-books, and I think that's because customers understand the value of a book and feel like that is more predictable than apps.

… We are experimenting with delivering our course materials through mobile apps. A smartphone is a great device for practice questions, drilling and flash cards. We've been experimenting with delivering our [full] course materials through mobile apps and the tablet. … We decided to stick with the tablet format only, versus making course materials available for smaller devices. While many … more people have smartphones, we didn't want the majority of our users to have a lesser experience than the really great experience you have with a tablet device.

Howard: I want to ask you about the economy. Is your strategy different when things are good as opposed to now when lots of folks are just trying to find a job, or replace obsolete skills with new ones?