e-Literate

Present is Prologue

Tag: edunomics

  • The Financial Impact of the Patent Loss on Blackboard

    Financial Crisis / Finanzkrise
    photo credit: alles-schlumpf

    You may recall that Blackboard originally won a judgment of $3.3 million from Desire2Learn in their lawsuit. The ruling from the Court of Appeals means that Blackboar will probably have to return that money—plus interest—to Desire2Learn, as Blackboard indicates in an 8-K SEC filing today. The filing says, in part, that Blackboard “expects to record one-time charges of approximately $3.5 million related to the reversal of the district court judgment” of which $3.3 million is the money they have to return and the extra $200K is presumably interest.

    Now, here’s the thing. According to Blackboard’s 2008 10-K filing, their net income for that year was $2.8 million. If you subtract the $3.3 million in income that they are going to have to return to D2L from the $2.8 million net profit, it appears that Blackboard’s business actually lost $500K in 2008.

  • Three Tests for the 'New' Blackboard

    Today Blackboard announced that ANGEL’s Ray Henderson will be the new President of the Blackboard Learn division. This is great news. Ray is one of the best executives in educational technology today, known for his competence, his integrity, and his leadership in supporting open standards and openness in general. Does this mean a new beginning for Blackboard?

    Many of us remember when WebCT’s Chris Vento was made Blackboard’s Senior Vice President of Technology and Product Development after that merger. Like Ray, Chris was regarded as a leader in the field. And like Ray, he was a champion of open standards. I remember listening to Chris, soon after the merger, speaking with great confidence about how Blackboard was committed to standards like Tool Interoperability, how openness was good for Blackboard’s business, and how it was a new day. A year later, he was gone. Blackboard is not known today for its leadership in open standards. Nor is it known for its leadership in customer service—something that the company claimed it was going to learn from WebCT and claims again that it will learn from ANGEL. Going by the tweets from the ANGEL user conference, Blackboard’s leadership wasn’t talking a whole lot this week about how Chris and the WebCT leadership helped to change Blackboard’s culture for the better. When the speakers mentioned WebCT at all, it seemed to be mostly to say that they underestimated how buggy the software was. That’s not change we can believe in.

    So the question is whether Blackboard will prove more willing to be changed by Ray and ANGEL than they were by Chris and WebCT. Are they ready to learn? Time will tell. But there are three specific actions I will be watching for as early tests of just how serious Blackboard is about learning from ANGEL, particularly with regard to openness.

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  • Bad News for Blackboard, Good News for ANGEL

    This is another one I’ve been meaning to post for some time. Last year, I wrote a post called Bad News for Blackboard, Good News for Moodle that talked about changes in LMS market share among American community colleges according to a survey done by the Instructional Technology Council. The headline number was that Blackboard’s market share in this customer group was declining rapidly, with Moodle being the primary beneficiary and ANGEL being the secondary beneficiary.

    Blackboard’s downward trend continues. According to this year’s study, Blackboard’s market share among ITC’s constituents is 59%, down from 77% percent the previous year. There was a slight drop in market share for the Blackboard platform, but most of it was for WebCT. It looks like Blackboard is failing to hold on to the community colleges that are being forced to migrate off WebCT as it approaches its end of life. 

    This year is something of a mirror image of last year’s results in the race for the #2 spot. ANGEL zoomed to the top, more than doubling their market share to over 20%. (It’s hard to tell the exact number from the graph in the report.) This is the first time I’m aware of that any non-Blackboard LMS has achieved market share in any U.S. segment that pushed so far into the double digits. The third place, Moodle, is up to about 11%, making ANGEL the clear front runner as the replacement for WebCT, particularly Campus Edition, which has had a lot of market share in the community colleges. (It looks like something close to two thirds of community colleges in the survey who left WebCT in the last year moved to ANGEL.) All the other entrants are at 5% or below.

  • EduPatent Fight As Complicated As Ever

    As you might imagine, Blackboard and Desire2Learn have somewhat different interpretations of what the recent USPTO ruling means in the bigger picture. And there certainly is plenty of room for interpretation, given the complexity of the situation. There are now no less than three separate, parallel, but not entirely unrelated fronts in the legal war between Blackboard and Desire2Learn. There are many possible permutations of outcomes based on how each is resolved and in which order.

    Fasten your seatbelts, folks. This is getting even more complicated. I have spoken with a few experts over the past week to get some perspective. None of them wanted to be quoted on the record, and most preferred to remain anonymous. (I can at least acknowledge and thank Peter Zura for being very generous with his time and providing me with some great background information on patent law.) What follows here is my own, non-lawyer’s interpretation of the sometimes conflicting input I got from these experts. I don’t promise that I’ve gotten every nuance right here, but I’ll do my best to lay out the basics.

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  • Blackboard Patent Invalidated. Again.

    Update: Turns out I was incorrect about the relationship between the old patent and the new one. The ruling may (or may not) have some influence on the suit over the new patent, but it is not determinative.

    This is getting very complicated. I’ll try to get a post up about at least some of the many permutations of possible outcomes soon.

    Some big news on the edupatent front: 

     

    Today, the U.S. Patent and Trademark Office posted its Action Closing Prosecution (nonfinal). We’re still studying the lengthy document, but all 57 claims of Blackboard’s 6,988,138 patent have been rejected – the original 44, plus the ones they attempted to add during the re-examination process.

    Here’s the PTO document about Actions Closing Prosecution.

    The USPTO has now ruled against the patent twice. They made a preliminary judgment of invalidity, they gave Blackboard a chance to rebut that judgment, and then they said again with today’s announcement that they still think the patent is invalid. Blackboard now has 30 days to make one final attempt at rebuttal. After that, Desire2Learn has 30 days to respond to Blackboard’s response, at which point the USPTO will issue a final judgment. Assuming that the third judgment goes the same way as the first two, then the patent will be officially, legally invalidated. Blackboard would be able to file for an appeal in the courts, but they would be fighting the USPTO, not Desire2Learn.

    But there may be even more here. If I understand this announcement correctly, this invalidation applies not only to the original patent but also to the continuation patent that Blackboard was recently issued and over which they have initiated a new lawsuit against Desire2Learn. (I’m seeking confirmation on this point and will update this post when I find out more; it’s a bit hard for me to parse since I’m legally constrained from looking at the documents directly.) If so, then this ruling is very significant indeed. It could be the beginning of the end for this whole chapter in the history of educational technology—after Blackboard spent many millions of shareholder dollars pursuing the litigation while failing to put Desire2Learn out of business, failing to prevent Desire2Learn from acquiring new customers and developing new versions of their products, and creating a popular backlash that could have a lasting effect on the Blackboard brand. (The Facebook Million$Mission group has 347 members after just a couple of weeks of existence and appears to be growing daily.)  

    At this point, Blackboard might be wise to take up Desire2Learn on their Million$Mission quickly before D2L takes it off the table. It may be their last opportunity to extract money out of their rival and save some face in what appears to be turning into a financial fiasco for the company.

  • Blackboard's Market Share Erosion

    Barry Dahl is asking the question, “Is Blackboard losing clients?” and has created a wiki for people to enter information on whether they are migrating to Blackboard, migrating from it, or re-evaluating their installation. In general, it would be great to see more visibility of information of this kind. I’d love to see a wiki or database where schools can enter the LMS(s) they are using and their state of evaluation for the future, regardless of brands they adopt or consider. But at a coarse-grained level, we already know the answer to Barry’s question. In November of 2007, bolstered by the excellent financial forensic work of Jim Farmer, I wrote a post entitled “Blackboard Is Losing Customers, But What Does It Mean?” Then in March, 2008 I reported on a survey by the American Association of Community College’s Instructional Technology Council (ITC) showing a loss of Blackboard’s market share within the American community college cohort.

    The main takeaways from these data points are as follows:

    • Blackboard is losing market share.
    • Most or all of this loss is happening at the low end of the market.
    • The two main drivers for loss on the low end are (1) Blackboard raising their average price to $50K/customer, and (2) Blackboard announcing the imminent death of WebCT CE, which is forcing low-end campuses to re-evaluate their vendor situation.
    • Despite the market share loss, Blackboard is growing both revenues and profits.
    • The reason Blackboard is growing both of these is that they are able to cross-sell and up-sell more product to their higher end customers (and even some of their mid-sized customers) while acquiring new high-end customers. 
    • So far, it appears that Blackboard is continuing to do very well on the higher end of the market, probably because they are perceived as a “safe bet” by the average risk-averse university.
    Blackboard CFO Michael Beach explicitly acknowledged much of this in the company’s last quarterly earnings call. Responding to a question about Blackboard’s shrinking number of international customers over the quarter, Beach responded,

    Yeah, I think clearly we never want to lose clients, but I think the trend, which generally what we’ve kind of experience broader across Blackboard, which was we had attrition of low priced customers at the same time we were adding higher priced customers. So, the overall dynamic the overall impact on contract value is positive but from a unit back that we, we didn’t had enough to cover the losses.

    So the answer to Barry’s question is yes, Blackboard is losing clients, but that doesn’t mean that they are losing net business.

  • Advice for Small Schools on the LMS Selection Process

    I have volunteered to give my local community college some advice regarding some LMS migration decisions they have to make—if to migrate, when to migrate, how to migrate, and so on. In many ways, they’re a pretty typical school with some pretty typical problems, so I thought it might be worthwhile to write down some of this advice for others in similar situations. You might be one of those others if at least three of the following are true:

    • You work at a small school of 3,500 students or less.
    • You have a couple of dozen faculty “heroes” who are using the LMS heavily, a bunch more who just stick their syllabus in it, and a substantial number who don’t use it at all.
    • You offer a small number of distance learning and/or blended courses, but you don’t have any online degree programs or similar systematic collections of online classes.
    • Your school hasn’t migrated to a different LMS in a long, long time. Maybe ever.
    • Your LMS is hosted because you don’t have the IT staff to manage it internally.
    • Your “integration” between your Student Information System (SIS) and your LMS is to manually export CSV files from the SIS and upload them into the LMS.
    • You have been on Blackboard CE since it was WebCT CE version 4 or earlier.
    • You’re not sure if you can handle a migration to anything from either a staffing or a budgetary perspective.
    If so, then this advice is for you: