Publishing businesses, schools and colleges are starting to see results from their investment in the new technology revolution in education

'Technology is fast replacing textbooks in schools and colleges around the world." Discuss.

This question is exercising students not just in the classrooms that are being transformed by online lesson plans and interactive whiteboards but also in the boardrooms of some of the world's largest publishing companies and private equity groups.

The educational publishing industry, which many investors have shunned because of its dependence on the vagaries of political budgets, is enjoying a rare moment in the sun, helped by rising growth rates and a spate of corporate activity that will define the shape of the industry for years to come.

In the past month, almost $10 billion (€7.8 billion) worth of deals have been proposed in the sector. Thomson, the Canadian corporation, is selling its $5 billion higher education and assessment business; Houghton Mifflin, the $3.5 billion private equity-backed US school book company, has begun talks to be acquired by Riverdeep, a far smaller Irish educational software group; and Wolters Kluwer, the Dutch publisher, has put its $800 million European education business up for review.

Behind all of these deals lies a debate about the transformation of the industry by technology.

For Dick Harrington, chief executive of Thomson, the growth of e-learning tools is "just taking much longer than we anticipated".

Nancy McKinstry, Wolters Kluwer's chief executive, says the evolution is at a "tipping point". This has forced her to review the business because as it "becomes more electronic, and it's just beginning to have those characteristics, scale will become more important".

While Thomson has decided that its college customers are not making the transition from print to digital as quickly as the lawyers, scientists and bankers it supplies in its other divisions, and Wolters Kluwer is wondering whether it has the necessary economies of scale in technology and geography, others see the tipping point in more positive terms.

Veronis Suhler Stevenson, the US private equity group, says that while other corners of the media industry have suffered as digital technologies have taken hold, spending on educational and training media rose 9.3 per cent in 2005 to $21.2 billion (€16.7 billion), and should continue at a compound annual growth rate of 5.3 per cent between 2006 and 2010.

"I think there's definitely a change in the air," adds Marjorie Scardino, chief executive of Pearson, which owns the Financial Times but makes most of its revenues from educational publishing and services.

Six years ago, Pearson made a £1.7 billion (€2.5 billion) bet on the development of school software, testing and data management tools with the purchase of National Computer Systems.

"We wanted to forward the goal of teaching each and every student, and the only way to do that was through the combination of content and assessment," says Dame Marjorie. Since then, she argues, political momentum on both sides of the Atlantic has led to a new focus on accountability, personalisation, productivity and technology in the education system. Initiatives such as the No Child Left Behind programme in the US and the UK's investment in "electronic learning credits" have provided new funding to develop the market.

As a result, says Rob Cooper, head of strategy for Reed Elsevier's Harcourt International education business, an entrepreneurial sector of e-learning start-ups has emerged. As the market matures, and schools demand a "blended learning" approach combining electronic teaching, lesson planning and assessment tools, the industry is rapidly becoming more professional and economies of scale are becoming more important, he says.

Educational content providers are benefiting from heavy investment by schools and colleges in technology equipment. Since 1998, the ratio of children to internet-enabled computers in US schools has fallen from 12 to below four. All US schools now have internet access and internet-enabled computers are in 93 per cent of US classrooms.

In the UK, an estimated 70 per cent of schools have replaced their blackboards with electronic whiteboards from companies such as Smart Technologies, RM and Hitachi. These allow teachers to write notes or display online information on the board, then save, print or e-mail their lessons.

Schools and colleges are seeing results from their investments in technology. "Suddenly you measure every student instead of averaging the class," says Dame Marjorie. "Like anything, if you measure it, it gives you the information to improve it."

She cites the example of the University of Alabama, Tuscaloosa, where pass rates have risen from 40 per cent to 75 per cent since it began using Pearson's MyMathLab online learning programme, which provides personalised feedback about areas where students are struggling.

Personalised curriculum software tools have a further benefit, allowing a single teacher to teach as many as 100 students or letting students work online from home or from their dormitory rooms.

For children who have grown up using a mouse before they can use a pen, computer-based teaching tools such as Rapid, Harcourt's special needs programme, can also provide a less "intimidating" learning environment, Mr Cooper adds, and a rare chance to engage difficult audiences.

Stephen Bourne, chief executive of Cambridge University Press, highlights the prospect of a single teacher being able to beam the same lesson to dozens of different classrooms.

"The crossover point is coming very soon where it will be cheaper to go the technology route than to go the HR route, especially in western countries where the cost of labour is going up with factors such as insurance costs and pension costs."

Dame Marjorie is more cautious, but says technology is professionalising education, providing teachers with the tools any other professional would expect.

The growth of technology in classrooms will be helped by demographic trends, she says. In the US, "there'll be 700,000 teachers retiring and another 700,000- 800,000 moving on to another profession within the decade".

Mr Bourne says the answer to this demographic "crisis" is technological. High turnover in teaching jobs, he predicts, will usher in a generation of teachers who are more comfortable with technology than some older colleagues are today.

Cambridge University Press has joined forces with technology partners such as Microsoft, Hitachi and Oracle, all attracted by the prospect of adding educational content to their technology, Mr Bourne says. "We've arrived at that technological moment where you either go with the technology or you don't. Those who don't will be left behind."

The pace of change may not be as fast as some in the market had hoped, Mr Bourne says, but there has been progress.

Recalling a conversation a couple of years ago with the head of an Italian company, he says: "The market was expecting a CD- Rom with every textbook. One day, by accident, he sent 10,000 CD-Roms out that were blank. He didn't get one back."