EX-GAMES MARKETER HOPES TO REPRODUCE BIG BUCKS IN EDUCATION.

Byline: Denise Caruso The New York Times

It may be a sign of the times when the former president of Sega of America, Thomas Kalinske, leaves his job - as he announced earlier this month - to join a start-up called Education Technology LLC.

What could it mean when the master salesman of Sonic the Hedgehog takes the top job at a company set up to create and buy companies that sell educational technology?

It means that some big-money players have their eyes on what they hope is a very big market for what are called ``edutainment'' products.

Education Technology was announced in March by its two high-profile founders - Lawrence Ellison, chairman of Oracle Corp., and Michael Milken, the former junk-bond financier. They hope to ``do well by doing good,'' as Ellison puts it, by playing the educational-products market.

As described by Oracle, a leader in corporate database software, this is an $833 billion worldwide market opportunity. But as it turns out, that number, compiled from various sources by Oracle, counts all the costs of providing education - salaries, books, supplies, administration - to schools and universities, government and corporations.

Presumably, edutainment would be a small subset. A report on the U.S. education market, published by the Software Publishers Association, found that for the 1993-94 school year, the latest data compiled, a total of $2.6 billion was spent in grades kindergarten to 12 for products and services that included personal computers, educational software and courseware, computer supplies and telecommunications connections.

And the association projects an increase to just $4.5 billion by 1999. Nonetheless, a new batch of players is joining the education software field, where the veterans include Wolfram Research, whose Mathematica program revolutionized the way mathematics is taught in many schools; Broderbund Software Inc., and the Learning Co.

Like some of these established players, the new entrants mean to combine education with entertainment. One example is a company called Lightspan Partners of Carlsbad, Calif., which has backers like Microsoft and the cable television giant Tele-Communications Inc., and a management that includes Hollywood screenwriters and animators, as well as education-software executives.

Similarly, the first investment for Ellison's Education Technology was to buy shares in the toy company Hasbro Inc.

``The Hasbro characters, in an educational context, have enduring value,'' Ellison said. ``Mr. Potato Head might be able to teach you arithmetic.''

But Ellison is banking on far more than Mr. Potato Head to make education a profit center. ``If we can get the price down low enough, and I think we can, we see every kid having a network computer at home and at school - as common as telephones and televisions - by the year 2000,'' he said. ``I don't know whether that's realistic, though; it might take until 2005.''

This forecast may seem incredible, considering that most of the nation's schools struggle to pay teachers a competitive salary. And even if they could put a network computer on every school desk, few schools have the multiple phone lines in every classroom that such machines would require.

Some steps are being taken to correct this situation. Earlier this year, some 100,000 volunteers installed network cabling in 4,000 schools around the nation as part of a continuing program called Net Day 96. But there are some education technology experts who wonder whether the effort is worth the time and trouble.

The best of the educational software available today is excellent, according to Judah L. Schwartz, a professor emeritus at the Massachusetts Institute of Technology and a professor of education and a co-director of the Educational Technology Center at Harvard University.

As for the rest of it, Schwartz said, ``The metaphor of the Augean stables is wonderfully appropriate.'' (In Greek mythology, one of Hercules' tasks was to clean the stables of King Augeas, where celestial horse muck was being produced at a faster rate than Hercules could shovel it.)

But no matter how low the quality, or how high the cost, economics may yet drive technology into the schools, since much of the cost of education is those pesky salaries for teachers - whose labor many people see as a natural target for automation.

The cost of higher education has tripled over the past decade, mostly because of teacher salaries, according to Robert Heterick, the president of Educom, a consortium of colleges and universities that works to integrate technology into education.

``Today you're looking at a highly personal, human-mediated environment,'' Heterick said. ``The potential to remove the human mediation in some areas and replace it with automation - smart, computer-based, network-based systems - is tremendous. It's gotta happen.''

The likeliest candidates include courses like basic math, English and science, which enroll some 50 percent of a university's students and are at the core of any K-12 curriculum. ``If I could get a small piece of that market,'' he said, ``there's huge potential out there.''

Educators like Schwartz are not so enthusiastic.

``If you think of education as a production-line function, to train the next generation of `proles' in the Orwellian sense, then you're right,'' he said. ``It is a big market. But the object of schooling is not simply to transmit knowledge. It's to get students to participate in the making of knowledge. That's an essential part of the human experience.''