e-Literate

Present is Prologue

Category: Ed Tech

The “Ed Tech” category includes posts about educational technology products themselves, including LMSs and other learning platforms, adaptive learning and other digital curricular materials products, learning analytics, and educational apps of all types. It also includes technical aspects of ed tech products, especially interoperability.

  • Emerging Trends in LMS / Ed Tech Market

    This is a guest post by Phil Hill.  Phil Hill is executive vice president of Delta Initiative and has been consulting in educational technology for over 8 years, with a strong focus on the LMS market.  He is also the founder of HBO Systems, which merged operations with Delta Initiative in 2008.  Phil is known to many in the educational technology community for some info graphics that help people see the broader trends and issues with the technology markets.  You can follow Phil on Twitter at @PhilOnEdTech or on his main blog at http://www.deltainitiative.com/index.php/phils-blog.

    I have argued in previous blog posts on the Blackboard acquisition that their position of being a safe bet is now gone, they are picking up only a handful of new LMS clients, while they are losing hundreds of LMS clients per year.  The theme behind these observations is that Blackboard’s future 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.”

    Put another way, as Lou Pugliese commented in a post by Michael Feldstein on the LMS Market –

    Typical disruptive markets (Clay Christiansen) are repeatable events exist where (a) over-served customers consume a product or service but don’t need all its features or functionality (b) there is broad based industry concern about the effective use of overly complex, expensive products and services (c) features that are not valued and therefore are not used and (d) decreasing price premiums for innovations that historically created value but in the current market are now irrelevant. The street will eventually see it this way no matter how you NPV a business’s customer base. . . . I would argue that there is an exact parallel here and the education market is not immune to the same disruption experienced in other markets.

    What I believe we are seeing in 2011 is a transition to a market no longer dominated by Blackboard and other players’ reactions to Blackboard.  This new market that is emerging will look quite different from the market we have seen for the past 6 – 8 years, and we should no longer view this as an evolving market, but instead view it as a market being disrupted, with new competitors and new dynamics.

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  • On Innovation and Commodification

    I had a wonderful time at the Moodle Moot two weeks ago. Conferences for different LMSs tend to have very similar presentation types (how to migrate, tricks for making the grade book usable, great Web 2.0 tools that integrate with the platform, ways to improve training and help, etc.), but the crowds are different. Moodle Moots tend to be heavy with people who are very pedagogically focused and sophisticated. (They also, apparently, attract a high percentage of iPad owners.) Anyway, it was fun.

    One of the best parts of the experience was getting to spend time with David Wiley (who, in addition to being a pioneer and major driver of OER propagation, is also one of the truly great human beings in the field of educational technology). David and I had dinner the last night of the conference and got to talking about how textbook publishers are moving in the direction of developing platforms that go well beyond the book in terms of what they deliver to students, e.g., Cengage’s MindTap, Pearson’s MyLabs, etc. He asked me whether I think open source and open content could build something similar. I replied that the infrastructure being built around Khan Academy is a step in that direction. David mused that it must be frustrating for textbook publishers to face not only competition from other publishers but also the open content movement constantly working to undermine their business model. I didn’t give him a very good answer that night. This blog post is my attempt to formulate a better one.

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  • The Blackboard Acquisition: Two Views

    As busy as I have been lately, I have tried to keep up on the various analyses of Blackboard’s acquisition by Providence Equity Partners, Inc. There seem to be two schools of thought. The first school, which seems to be getting the most play, is moderately negative for higher education. The second school, which I’ve seen gestured to in a few places here and there but never fully and clearly articulated, is neutral to positive for education.

    I honestly don’t know which of these analyses is more accurate. Both are grounded in the known behaviors and motivations of private equity firms like Providence. Neither is supported by a lot of publicly available information specific to this deal. But the facts will come. My goal with this post is to provide a framework through which the facts we learn in the future can be interpreted by comparing them to one hypothesis or the other.

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  • More Blackboard Acquisition Coverage Coming

    Jim Farmer tells me that I really should write at least one analysis post on the Blackboard acquisition myself. Since it’s Jim doing the asking, I’m going to do that. But I still don’t feel like I’m going to be able to do justice to an event of this magnitude. As a result, I will be pulling in some guest posters to get a range of opinions and analysis. Jim says he has another blog post in mind for the topic. We also will be hearing from Phil Hill of the Delta Initiative, and I’m working on lining up a couple of more people, although I don’t have anything to announce in that regard just yet.

    As always, I’m carefully hand-picking guest bloggers who I consistently learn from every time I talk to them. I’m not picking anybody based on what opinion I think I’ll get from them–in fact, in some cases I don’t know what opinion I’ll get from them–and I don’t censor my guests or require them to toe any editorial line. I just want to know what they’re thinking, so I’m giving them space to tell us. If this strategy works well and doesn’t eat up too much of my time, I may start doing it on a more regular basis.

    Anyway, stay tuned.

  • Investment Bankers and Blackboard’s Future, Part One: If …

    This is a guest post by Jim Farmer, Chairman of Sigma Group Inc.

    On Friday July 1,st after this was written, Blackboard Inc. was acquired by “affiliates of Providence Equity Partners” for $1.64 billion. They will also assume approximately $130 million in net debt. Providence will pay $45 per share; it closed Thursday at $43.38.

    The Washington Business Journal reported:

    The transaction is anticipated to close during the fourth quarter of 2011. Upon closing Blackboard will become a privately held company, remain headquartered in Washington and continue to be led by its existing senior management team.

    This suggests a more complex deal than the publicly available information suggests.

    Blackboard’s April 19, 2011 press release reads; “Blackboard (NASDAQ: BBBB) today announced that it has retained Barclay’s Capital as its financial advisor in response to receiving unsolicited, non-binding proposals to acquire the company.” On Thursday, June 23, The Chronicle of Higher Education, citing the Wall Street Journal, reported: “Providence Equity could announce a deal to buy Blackboard, Inc. as early as next week [the week of June 27 – July 1].”

    If this acquisition is completed, ((Editor’s Note: While Blackboard and Providence have agreed on the acquisition, the deal doesn’t close until the fourth quarter of 2011. Acquisition agreements sometimes do fall apart before they close, although there is no particular reason to think that this one will.)) the question then turns to the impact it will have on higher education.

    From the Wall Street perspective Blackboard is a very successful and well managed company. The founders’ goal at Cornell University was to save faculty time by automating typical faculty communications with students, and making the administrative tasks of a lecture more convenient for students. Since then, through software development and recent acquisitions, Blackboard has a suite of complementary learning applications. Blackboard’s learning management products have become a successful source of revenue. Some acquisitions products, such as Blackboard Connect, seem to be leading in their market segment.

    However, the expectation of private equity firms for earnings exceeds Blackboard’s 2010 earnings. A combination of higher prices for annual software licenses and reduction of staff and lower services will, in the short run, be needed to achieve this higher profitability.

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  • Blackboard Has Been Acquired

    You may or may not have heard the news that Blackboard has agreed to be acquired by a private equity firm called Providence Equity for a total of $1.64 billion. Ray Henderson has a blog post about the acquisition here. I’m still completely overwhelmed trying to get up to speed on my new job, so I won’t have time to write an analysis of the deal. Lucky for you, Jim Farmer has offered to write one—in two parts, no less. I’m always interested to learn Jim’s perspective, particularly on financial and legal analysis. His first post will be up shortly.

  • Textbook Publishers and OERs

    Not too long ago, The Chronicle ran an piece called “Publishers Criticize Federal Investment in Open Educational Resources.” The meat of the article was some quotes of textbook company executives on a panel at an SIIA conference speaking out against a provision in a United States Department of Labor grants program that requires course materials being produced for grant-supported courses to be released under a Creative Commons Attribution license. Here’s a taste of their comments:

    “I think it’s very dangerous for them to be in the product business,” said Bill Hughes, vice president of business development and innovation at Pearson Education.

    “There’s no free lunch,” said James Kourmadas, vice president of strategic marketing at McGraw-Hill Higher Education.

    “I fear when big bucks from government is put into certain places, it actually stops pushing people to innovate,” said Kevin Wiggen, chief technology officer of Blackboard Xythos….

    “I think what the industry says is that we don’t see the point in the government collecting up taxpayer money and trying to rebuild an industry from scratch,” said Mr. Kourmadas of McGraw-Hill.

    To my esteemed fellow textbook industry professionals, I reply,

    Dudes. Seriously? (more…)