December 1, 2015

Is Blackboard Inc. really worth $3 billion?

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WebCT to BB 2

Baker, L., Roumeliotis, G. and Stone, M. (2105) Education company Blackboard seeks $3 billion sale – sources Reuters, July 28

Fleming, B. (2015) The Real Vision Behind the New Blackboard, Eduventures, July 31

Phil Hill (2015) Blackboard Potential Sale: Market timing, financials, and some thoughts on potential buyers, August 4

I have a special interest in Blackboard. In 1995, I gave a grant of $25,000 from the university’s fund for distance education to a young, untenured associate professor named Murray Goldberg in the Department of Computer Science at the University of British Columbia, to cover the costs of two of his research assistants who were finalising the development of WebCT, the first real LMS.  In 1999, WebCT was sold to ULT, who then in 2006 sold the product on to the current owners of Blackboard, Providence Equity Partners LLC, who further developed the product to its current state. So in a sense I was a midwife to Murray’s Blackboard baby. From a small acorn grows an oak.

So I was particularly interested when Reuters reported that:

Blackboard Inc… is exploring a sale that it hopes could value it at as much as $3 billion, including debt.

Now $3 billion is a lot of money for a company that specialises in software mainly for the higher education market. (It’s a lot of money for a company specialising in anything, for that matter). So what makes Blackboard think it is worth this amount to a buyer?

Blackboard Ultra

It’s probably no coincidence that Reuters reported this at the same time that Blackboard announced its new learning platform called Ultra. (Yes, groans from all the faculty who have just moved up to the latest version of Blackboard Learn). However, although I have not yet seen Ultra in operation, it is reported to be much more than just an LMS.  According to Brian Fleming, a senior analyst at Eduventures:

Ultra consists of an integration of three core products (Learn, Collaborate, and Mobile) into one coherent, responsive, and immersive platform. It includes a radically improved user experience (UX) and a number of improved workflows, including drag-and-drop capabilities, embedded grading tools, mobile communication features, and expanded analytics.

In other words, it’s more of a complete learning platform than an LMS. Fleming believes this makes Blackboard Ultra a:

product that is on par, if not prepared to outmatch, its most agile competitors (ahem, Canvas).

More importantly, according to Fleming,

Bb now has the foundation it needs to develop a comprehensive learning analytics platform unlike anything the education world has seen.

But before you rush out to buy Blackboard stocks, you might like to listen to this old midwife (especially as the company is private at the moment and isn’t publicly listed, so it has no stock to buy.)

Risks and opportunities

I’m not a financial analyst (for a good discussion of the financial aspects, see Phil Hill’s blog post), but I do know a bit about learning technologies, and here are some of the risks or challenges I see for Blackboard in the future that might influence whether or not you rush out to buy the stock of any company that buys Blackboard. (I doubt whether anyone actually contemplating buying Blackboard will read my little blog, but the advice is free.)

1. A maturing market 

There are signs that the rapid growth in online learning is beginning to slow down, if not flatten out. The Babson Surveys had been recording growth of between 10-20% per annum in online enrolments in the USA over the 10 years up to 2012. However, the U.S. Federal Integrated Postsecondary Education Data System (IPEDS) survey showed an overall decrease in DE enrolments of 4% from 2012 to 2013. The biggest area was the for-profits, which declined by 17%. Even the Babson Survey recorded a slower growth rate in online enrolments in 2013.

There are technical reasons that make measuring the growth in online learning very difficult, and one year is not enough to determine a trend. However, the rate of students taking fully online courses in the USA (and Canada) is likely to slow in the future for two reasons:

  • there is a limit to the market for fully online studies and after 10 years of fairly large gains, it is not surprising that the rate now appears to be slowing down
  • as more and more courses are offered in a hybrid mode, students have another option besides fully online for flexible study.

However, offsetting this is the much bigger move to blended and hybrid learning, resulting in the use of online learning in campus-based classes. This is a much bigger overall market than the fully online student market, and has hardly been touched yet outside North America (Blackboard is actually used more for on-campus than fully online courses in the USA). As more and more institutions move to blended learning, so will the demand for software to support such course designs. So while the market is changing, the demand for some kind of platform to manage the online, and increasingly the on-campus components, is likely to continue well into the future. The market then may be maturing but there is still plenty of room for growth, especially internationally. At the same time, the product has to meet the demands of new blended course designs and not be merely an online platform somewhat adapted to use on campus. It remains to be seen whether Ultra can really respond to that requirement.

2. Increasing competition from other integrated platform providers

This is probably Blackboard’s most obvious (but not necessarily most serious) challenge. It is operating in a market with more than 50 direct competitors, and the list grows almost daily. Some of the later entrants, such as Instructure and Desire2Learn, have been taking a big bite out of Blackboard’s market in recent years. Learning platforms still require a relatively low-entry level of technology/software development and it is not difficult to design alternatives on the general theme. While Ultra certainly will help Blackboard to push back against its competitors, they too will not stand still in new software developments and approaches. So while the overall market may be maturing, the consolidation into two or three dominant players seems to be moving even further away.

3. Alternatives to course platforms

The design of Ultra in bringing together a range of disparate but proprietary products into one integrated, consolidated product or platform is being countered by moves to lighter, stand-alone, often ‘open’ technologies that the end-users (both teacher and learners) integrate on an ‘as needs’ basis. This can be seen particularly in the use of social media, such as blogs, wikis, You Tube videos, and mobile apps.

On the other hand, I have also argued elsewhere that the need for some kind of platform that enables learning materials to be stored and organised, limits access to registered students and appropriate teaching staff, provides secure assessment and learning analytics, and offers a central, single location for student work, is not likely to go away well into the future.

The question though is whether the kind of proprietary system such as Ultra is the best way to provide such a platform. Open source solutions such as Canvas and WordPress provide more flexibility and allow more easily for future technology developments and new teaching approaches to be incorporated.

Watch this space

These arguments of course may be actually just academic. No-one has yet made an offer and although suggestions have been made that Oracle, Microsoft or some other company with data-based products might be interested, Blackboard sits in a fairly small, niche market.

In the meantime it will be interesting to see how many institutions, having made the investment in Blackboard Learn or some other LMS, are willing to go through the major upheaval needed to move to a new platform such as Ultra. If I had $3 billion to spend, I’d wait and see – but then that’s why I don’t have $3 billion in the first place.


Blackboard adds on open source service

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© BeyondHollywood, 2012

Today Blackboard issued a strange letter to clients announcing that, in parallel with its existing proprietary platform, it will be offering a new business to support and host open source learning management systems, and also the acquisition of two teams to help guide that work, Moodlerooms and NetSpot.

The letter states:

We are committed to continuing our deep focus on quality and innovation to make sure Blackboard Learn meets your needs—now and into the future. But we also know that different approaches to online learning require different strategies. So we’re broadening our focus to help clients select and manage the right technologies within and beyond the LMS to support all aspects of the student experience. 

Our new effort, the Blackboard Education Open Source Services group, will support clients using open source learning platforms with guidance from the leadership teams from NetSpot and Moodlerooms that bring deep expertise in this area. At Blackboard, these teams will operate independently as separate units to support their clients. We’re also announcing today that Chuck Severance, a longtime leader in the Sakai community, will join Blackboard to guide our efforts to support clients using Sakai. 

Is Blackboard eating its own tail – or growing two tails? If so, which tail will win? Talk about hedging your bets!

Blackboard launches learning analytics pilot

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Blackboard Inc. (2012) Blackboard opens field trial for learning analytics solution, Jan 10

From the press release:

Blackboard Inc. has partnered with several colleges and universities that will test-drive its new solution for learning analytics, the company announced on January 10. The institutions will pilot the new solution – Blackboard Analytics™ for Blackboard Learn™, and provide feedback to the company.

Blackboard plans for the solution to provide a complete view of teaching and learning, monitoring usage patterns and data in the learning management system (LMS) along with information from the student information system. The real-time and longitudinal data generated by the system would be used to help better engage students, measure and improve learning outcomes, and assess the adoption and use of online learning tools.

A number of four-year colleges and universities and two-year community colleges are participating in the field trial, including the University of Maryland, Baltimore County, Seton Hall University, Grand Rapids Community College and Montgomery County Community College. All of the institutions currently use Blackboard Learn 9.1 for learning management, and will provide feedback on the solution as well as how they use the information it generates to help shape final development of the product.

The solution is built on the Blackboard Analytics™ platform, which provides immediate, highly customizable access to data analytics from across the institution through dashboards, predefined reports, and guided data exploration. Blackboard Analytics was launched in 2011 and is now used to guide data-driven decision-making at over 150 higher education institutions.

Blackboard plans for Blackboard Analytics for Blackboard Learn to present both course-specific and institution-wide data over time. The information would also help individual instructors better identify and help at-risk students at the course level, while enabling administrators to better understand the impact of online learning and justify expenditures and investments at the institutional level.

Blackboard plans for the analytics solution to offer integration with all the leading SIS platforms and can be customized to integrate with other SIS solutions. The new product is scheduled to be generally available early this year.

For more on Blackboard Analytics, click here



See my next post: Do we have too much innovation in e-learning? (Coming shortly) and also e-learning outlook for 2012: will it be a rough ride?

Promo for Blackboard Mobile

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Stoller, E. (2011) Blackboard Mobile: With a StartUp Mentality, They’re Making Waves on the West Coast Inside Higher Education, October 27

This is a blatant promo for Blackboard Mobile. However, there are some interesting video shorts, which give an indication of the wide range of institutions that have implemented Blackboard Mobile.

The videos show a range of student affairs applications, which in themselves are valuable. However there were no examples of how mobile learning was directly used for instruction, in terms of redesign to develop the affordances of mobile learning – rather than just making the LMS platform available by phone, as useful as that is.

More on the acquisition of Blackboard

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Boyd, R. (2011) Blackboard: A Tale of Two Companies Seeking Alpha August 29

Farmer, J. (2011) Investment bankers and Blackboard’s future, Part 1, If…. e-Literate, July 2

Back in July, I wrote about the implications of the then potential acquisition of Blackboard by a private equity company, referring to Jim Farmer’s market analysis.

Now another financial analyst, Robby Boyd, has issued a scathing critique of the financial status of Blackboard. Whether or not you agree with his analysis, he provides some interesting comparative figures about the pricing of Blackboard license fees.

Blackboard’s fees are often negotiated individually with each institution and vary depending on the level of service and functions/tools provided, but Boyd estimates costs for higher education institutions in the range of $20-$30 per student per year for Blackboard users, with more towards the lower than the upper end of the range. However it’s difficult to know how reliable his figures are.

Boyd’s point is that Blackboard charges much more for US military contracts than for higher education, and that Blackboard’s profit comes primarily from the large, high-cost contracts with the military. He also argues that Blackboard’s share of the higher education market is rapidly diminishing, citing a large number of major higher education institutions ‘who have announced plans to quit Blackboard.’ (This certainly reflects a trend in my own province, British Columbia, where now only three out of 24 or so post-secondary institutions are now using Blackboard.) Boyd argues that

The reasons for this exodus are naturally varied–and include pricing–but for the most part, however, they boil down to dissatisfaction with a nearly decade old software framework seen as, well, obsolete.

In particular, he argues that newer products, such as Instructure, make better use of new technology developments such as social media. What Boyd underestimates though is the inertia in higher education institutions which are often reluctant to upset faculty by making radical changes in online software which, at least in the short term, means more work learning a new tool, and possible snafus when the first courses on the new platform open.

Where does this leave institutions wanting to make a decision about learning management systems? Apart from increasing their unease if they are Blackboard users, probably not much better placed. In the end what really matters is how institutions and in particular individual faculty want to teach. Any LMS can probably do the job.

The real question is whether you need an LMS at all, given the range of tools now available. My own view is that LMSs do provide a useful way to organize teaching materials, but the more they enable the easy integration of other tools, the more likely it is that the quality of teaching, in terms of student engagement and participation, will increase. Frankly, without a major re-design, this leaves Blackboard at a disadvantage, so the question is, will the new owners invest in a better product, or will they look for a quick exit?