18 responses

  1. Anonymous
    December 22, 2010

    One aspect I’d be interesting in hearing about is the relationships between the various LMS players and the large educational publishers. Each of these publishers has an LMS platform that they use for hosting online courses and other e-products. Which of these are Blackboard’s platforms, which are others (including open source), and which are home-grown? What portion of the LMS vendors’ revenue comes from these large customers and what would be the effect of them switching?

    For example, Pearson’s CourseCompass is built (AFAIK) on Blackboard 6 and, with the large number of students using the Pearson MyLabs and other products on that platform, must account for significant revenue for Bb. With Pearson’s acquisition of eCollege and Fronter and their new push for LearningStudio, what happens to Bb if (or when) Pearson switches CourseCompass to LearningStudio? Similarly, Elsevier Health Sciences uses the ANGEL LMS for its Evolve platform and (again, AFAIK) is one of the largest ANGEL implementations. What happens if Elsevier decides to not renew that contract? Wolters Kluwer chose D2L a few years ago. How big are they for D2L and what would the effect be of switching? I may be wrong, but I think Wiley used to have a Bb-based platform but recently moved to one built around Sakai. How has that affected Blackboard, if at all?
    I know the publishers are small in number but I think each hosts a great deal of users on their systems and therefore the license fees must be signicant, far larger than those paid by most educational institutions. I would be interested in hearing your thoughts about this market segment.

  2. Michael Feldstein
    December 22, 2010

    Good questions, Anonymous. I don’t have much to add about current licensing by academic publishers beyond what you’ve cited here (although I may try to look into it a bit). But my sense of that market is that it is very fluid at the moment. On the one hand, as academic (particularly textbook) content goes digital, owning the learning platform becomes more critical. So I expect to see significant moves toward owning their own platform (either build or buy) in the academic publisher over the next couple of years. On the other hand, it looks like Blackboard is getting significant revenues not only from licensing their platforms to publishers but also by charging publishers for the right to publish their content into the LMSs of Blackboard’s K20 customers. They’ve done a couple of deals with both textbook publishers and less traditional academic publishers, e.g., NBC.

  3. Charles Severance
    December 23, 2010

    You see grand tectonic shifts in market share that are in motion and seemingly inevitable. I disagree – I see a market that is shifting from a seller’s market to a buyer’s market. Blackboard, D2L and Sakai will have to deliver more and more and deliver better and better to keep or gain customers. It is now a race and in the next four years there will likely be a clearer winner than now.

    It kind of looks like the market has been tweaked as much as it will be tweaked by acquisitions. Those willing to sell have sold. The rest are in it for the long haul. With the acquisition option seemingly off the table – the only other option is to compete based on building the best product.

    You seem to feel as though you know at this moment who will win or lose. I feel that the race has just begun and that Blackboard, D2L, and Sakai have an equal shot at winning starting now.

    What is absolutely clear to me is that any LMS vendor (Sakai, Moodle, D2L, Blackboard, etc) that sits on their hands for the next four years – will likely end up outside looking in. So it is time for everyone in the marketplace to play strong or go home. An frankly, everyone in the market needs to just get cranking and build the best damn user-centered mousetrap ever seen and stop imagining that unseen forces are inexorably driving the market to one advantage or another.

  4. Charles Severance
    December 23, 2010

    A bit of clarification on my previous comment – your blog system chopped off the first half so the second half (above) is a little choppy. I won’t rewrite the top half but just summarize it here.

    I think that if you re-drew your market share graphs with Moodle stacked on top, you would see that Moodle has real, significant growth, and Sakai and D2L are growing very gently. I think the for schools who decide to switch who are price conscious, Moodle is nearly always be the choice and so Moodle will slowly completely take over the “lower-end” of the market.

    But as you also have said previously – that is not where the money is and so even if the number Blackboard clients may have declined, revenues continue strong because the remaining customers (a) buy more, and (b) pay well.

    So if we segment the market into the “price conscious” and the “not-so-price conscious”, we end up with two sub-markets, and Sakai, D2L, and Blackboard will fight of the the piece of the market with money to spend.

    I am not suggesting Moodle is an inferior product in any way. I just think their market approach is dramatically different than the other three. Moodle has the low-cost / high volume model completely owned and are making good revenue in high volumed volume of low-marginal-revenue customers. The other three are fighting for the “high-cost-per-sale” crowd – and when you win one of those, you make more money per customer.

    Now back to my previous comment :)

  5. Brian Bridges
    December 23, 2010

    Great post. i appreciated learning about dominate LMS companies as well as the trends you’ve tracked. Do you have any data about online course LMS systems? Are Sakai and D2L part of the equation in K12 online courses?

    thanks.

  6. Michael Feldstein
    December 23, 2010

    Chuck, I don’t think that changing the order that the LMSs appear on the graph would have changed the perception (or the reality) that Moodle is easily the fastest growing LMS in the U.S. higher education market at the moment, while Desire2Learn and Sakai both also have solid but less dramatic growth trajectories.

    I do think there is some validity to your point about market segmentation, although I don’t think that price sensitivity captures the whole of it. If you look at the market segmentation graph in the first post, the public and private research universities are the ones that have shown the least growth in non-Blackboard alternatives. Those schools are the ones that are most likely to be on Blackboard Enterprise and thus less likely to be in play, but they are also the ones that are most likely to be on Vista. Public four-year colleges is the third least penetrated category by non-Blackboard LMSs, and I have a feeling that the public four-year colleges (which include big CSU schools like SFSU with over 30,000 students) tend to have a significantly larger average size than the schools in the private four-year college category. While Moodle has been competitive in those top segments, its growth relative to the other options is less impressive. There are multiple factors that probably go into these differences, including perceived scalability of the alternatives, functional differences, price differences, historical accidents about which peers/neighbors went with which platforms early, and so on. At any rate, it is quite possible that, over the next four years, the schools in those segments will break in greater proportions to Sakai and/or Desire2Learn than we have seen in overall market changes in the past four years. It’s also possible that those schools will stay with Blackboard in greater numbers. And finally, it’s possible that Moodle is gaining enough momentum in the overall market that perceptions about the platform being more appropriate for smaller, price-sensitive schools will fade and their rate of growth in those segments will increase over the next few years. That uncertainty is one of the main points of this post. If you ask me how much of a difference that uncertainty can make in changing the 2014 projection from the previous post, I would guess plus or minus four percent for any one platform. That’s a pretty big margin of error. It could even be bigger than that. But not hugely so. I would be very surprised, for example, if any of the platforms was six percent off of those projections. The market isn’t infinitely malleable. Schools are already beginning to evaluate, and they rarely start from a completely neutral, objective perspective. They go in with certain preferences based on the existing reputations of the platforms, of open source versus private source, of what their close peers seem to be doing, and so on.

    What the various platform developers do in their respective 2011 releases is important. It will impact the market, possibly enough to really help or hurt particular vendors, or significantly impact the sustainability of small companies or open source communities. But when all is said and done, if you squint when you look at the 2014 projection graph so that the numbers are blurred and all you can see are the rough proportions, I doubt it’s going to look very different than it does now.

    Brian, all of these platforms are used in full distance learning (which is what I presume you mean when you refer to “online course LMS systems”), and all of them compete in K12.

  7. Charles Severance
    December 23, 2010

    Michael – yes – we agree very much.
    Perhaps the simplest expression of where my analysis and your analysis differs is that you break the market into two “chunks” in all of your graphs and commentary into “Blackboard” and “Everyone except Blackboard”. I think that in your breakdown you are grouping rather unlike creatures (Moodle, D2L, and Sakai) as if they were a “segment” which I claim are not.

    My formulation is that the breakdown is better thought of as “Moodle” and “Everyone except Moodle” and that in many ways the fates of D2L, Blackboard and Sakai are more closely linked than the fates of “Everyone except Blackboard”.

    I re-emphasize that this is not intended as criticism of Moodle’s functionality or anything else. Moodle is successful because it is outstanding software that meets the needs of users.

    (Here is where I will be badly mis-interpreted) Moodle is fundamentally different than Sakai, D2L, and Blackboard because of its “franchise model” and very low cost of entry. In a sense if these were restaurants or stores, Sakai, D2L, and Blackboard would be steak-houses with mahogany walls or fancy jewelry stores in the mall and Moodle would be Kentucky-Fried-Chicken or Walmart. My metaphor is *not* about features or fitness for purpose – I am talking about the underlying foundational business model and the clash of business models here.

    And as you rightfully say, Moodle is patiently waiting right outside in the mall parking lot and making increasing forays into the up-scale segment. Who knows they might even put food-court in the mall and the next thing you know, people are going to the mall for fast food – it is so crazy it might just work…

  8. Michael Feldstein
    December 23, 2010

    The reason that the graphs are the way they are has to do with the kind of data that I do and don’t have access to. I would have much preferred a graph that included Blackboard Enterprise, Blackboard Basic, CE, Vista, and ANGEL. But we don’t have market share numbers for Blackboard by platform and, barring that, including them in the graphs creates a lot of noise due to the acquisitions.

    I made a conscious decision when writing these posts to stay close to statements that I can back up with data. Part I is all about what the survey data says. Part II is about the kinds and range of uncertainty in using past performance to project future events. We should be getting in data in 2011 and 2012 that will give us clearer indicators of how all this will break. There is a degree to which the trends are likely set and a degree to which the story has yet to be written. I’m trying to clarify how those two parts work in relation to each other rather than making predictions within the bounds of the the part that has yet to be written.

  9. EzraSF
    December 24, 2010

    The University System of Georgia has the GeorgiaVIEW (Vista 8) with 292,000 active LMS users (probably around 275,000 students) and 311,000 students is in the process of selecting which LMS we will use. Throw in others in the system who host their own, and we are at about 300,000 higher ed students. Throw in continuing education and we have about 325,000 students in the LMS and probably 360,000 total.

    Our selection process web site: http://www.usg.edu/lms Our selection plan is due to the January 2013 end-of-life.

    I agree with your sentiments this is a disruptive time where anything could happen.

  10. Michael Feldstein
    December 26, 2010

    Thanks for the update on the University System of Georgia, Ezra. It’s going to be interesting to follow.

  11. Michael Berman
    January 3, 2011

    Michael, really interesting analysis, thank you.

    There’s been a lot of talk and speculation in the last year or so about alternatives to LMS’s, or next-gen LMS’s, that are more open (not in the open source sense, but in two-way connection between students to resources outside of the walled garden of the LMS), personal, and modular. While it’s still early days, I’d be interested in your thoughts about these discussions and the impact they might have on the LMS market moving forward.

  12. Michael Berman
    January 3, 2011

    p.s. – in addition to the other modifiers describing the future learning environment, I should add “more social”.

  13. Michael Feldstein
    January 3, 2011

    Thanks for your kind words, Michael. For my take on the future of the LMS, see this post.

  14. Lisa Cheney-Steen
    February 6, 2011

    The Colorado Community College System moved from Vista to D2L 2 years ago now. 125,000 students.

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