3 Surprising LMS Market Observations

This is a guest post by Phil Hill from Delta Initiative, follow on Twitter  @PhilOnEdTech or his blog

In a recent post, I argued that Blackboard is most likely losing at least 150 clients per year in their LMS core business.  This is part of my larger argument that the LMS market is changing significantly.

The reason for focusing on these subjects is that Blackboard’s prospects are having and will have a major impact on the overall LMS and educational technology market, affecting educational customers as well as technology vendors and their investors.  If you misread Blackboard’s strategic direction, you might misread the upcoming changes in the educational technology market.

[snip] Looking at the 3 different sets of public data, the conclusion I have is that Blackboard is losing more than 150 total LMS clients per year, and probably closer to 250.  This decline in market share is significant enough to affect the overall LMS and educational technology market – it is driving many competitors into a land grab mentality to acquire as many of these ex-Blackboard clients as possible.  Furthermore, the decline of the Blackboard business model in terms of LMS market share is allowing new LMS models to emerge.  All of these conclusions hold even if Blackboard has been able to achieve stable or increasing profits from their LMS customers.

Let’s look at some of the other LMS competitors.  Surely if the market is changing as much as I’m arguing, then there must be some real evidence in terms of companies picking up LMS clients.

While doing additional LMS market research I discovered three surprising facts about the LMS market.

• Desire2Learn has roughly doubled in size in the past year, in terms of headcount – now employing over 300 people.  Their growth has been accelerating, especially now that they have successfully emerged from the Blackboard patent lawsuits.  In the 2010 Campus Computing Survey they had 10% market share – I would expect that number to increase significantly this year.  I do not know how many new institutions or students this represents, but Desire2Learn’s win at the University System of Georgia alone accounts for 35 institutions and over 300,000 students.
• Instructure has already won over 60 clients, in just their second year of operation.  This includes over 40 higher education clients representing almost 400,000 students – the vast majority of which occurred in the past year.  Instructure got a lot of press for their win with the Utah Education Network (9 institutions representing 109,000 students), but not as well know is how many non-Utah wins they’ve had recently.  There are some fairly big-name schools that have not gone public, but have selected Instructure’s Canvas LMS product.
• LoudCloud is on track to have 150,000 students using their system by the end of the calendar year.  Their focus is primarily on for-profit institutions and online programs, and they are off to an impressive start.

Later this week I’ll share more of my observations on the continued change in the LMS market, but my main point in this post is simply to share evidence of dramatic growth among certain LMS companies.

Just between Desire2Learn, Instructure and LoudCloud, it appears that more than 150 clients representing over 1M students made decisions to change platforms in just the past year.  According to discussions with executives of the companies, a majority of these clients are transitioning away from Blackboard (including their WebCT and ANGEL legacy product lines).

In a nutshell – these facts seem to confirm how significantly the LMS market is changing.