As a follow-up to my two-part series on LMS market share, I am tracking news development about adoption announcements, particularly of Vista schools. Today brings word that CSU Chico is moving from Vista to Blackboard 9.1.
As I wrote in an earlier post, defections of Blackboard Enterprise customers to other LMS platforms might be an indicator of a greater market share movement that we’ve seen in the past because, absent any forced migration, schools just don’t change LMSs very often. Well, Duke has announced that they are moving from Blackboard Enterprise to Sakai. Particularly interesting is their reasoning for undertaking an LMS evaluation in the first place:
Since future versions of Blackboard are significantly different than the current Blackboard 8, any upgrade would necessitate a fair amount of change for users. [Emphasis added.] On top of that, Duke’s needs and priorities have shifted in the 10+ years since we first adopted Blackboard as the campus LMS. This plus the fact that our Blackboard license is up for renewal in July 2012 suggests that it is a good time to review the LMS “landscape” and determine if Blackboard is still the best system to meet Duke faculty, student and strategic needs.
It sounds as though the Duke folks thought that the changes from Blackboard 8 to Blackboard 9 were large enough that they amounted to a forced migration. They passed the threshold of user retraining beyond which you might as well look at all options.
This is always a tough dilemma for developers of software with a significant installed base. You need to evolve your software to keep up with the competition, but in doing so, you force your users to deal with change, when not requiring them to change has been one of your competitive advantages. The challenge for Blackboard is that they face this dilemma at a time when they are also putting their WebCT and ANGEL customers through a forced migration. So if the move to Blackboard 9 from Blackboard 8 is also perceived as, effectively, a forced migration, then that means an alarmingly high percentage of their LMS customers might be looking around at alternatives.
I’m interested in hearing from people who have experience with both Blackboard 9.x and 8.x. In your opinion, is it really a big change? How much user retraining does it require?
Possibly related posts:
Following up on my two-part series on the changing LMS market, I am going to write short posts noting LMS evaluation decisions of Vista, Blackboard Enterprise, and select ANGEL customers (as well as any others that seem noteworthy) when I hear of them. Today, via Ray Henderson’s tweet, I note that the San Diego Community College District (131,403 students) has chosen to migrate from Vista to Blackboard 9.1.
Possibly related posts:
I have gotten a lot of very nice compliments in the last 24 hours about the first post in this two-part series. I do want to emphasize that a huge portion of the value in that post comes from the great survey work that Casey Green does. All I did was tease out a few implications and make a few new graphs (which, I admit, were very pretty). If you want to see analysis like this continue in future years, then support the Campus Computing Project.
In this next part, we’re going to go “off-road” a little and see what we can figure out in areas where we don’t have quantitative data that is as solid as Casey’s. As I wrote in the previous post in this series, there are roughly 875 WebCT and ANGEL customers who will have to migrate to a new LMS in the next few years, in an environment of strong budget pressures. This creates an atmosphere in which more and different schools may be in play than has typically been the case. But evaluating options and choosing to move are two different things. What happens in the next few years is likely to shape the LMS landscape for years to come, at least in North America.
Let’s see if we can read the tea leaves.
More on Market Share Numbers
One of the (many) reasons that figuring out what’s happening is so hard is that we don’t really have good, granular data on LMS market share by LMS platform, and the data that we do have appears to be contradictory on the surface. The numbers we get from Campus Computing are very good as far as they go, but they break down market share by company rather than by platform. We have no way of knowing from the survey data, for example, how many WebCT Vista customers there are versus Blackboard Learn Basic, etc.. Blackboard used to break out Blackboard Learn Enterprise licenses versus all other LMS licenses in their public reporting, which was better than nothing, but they stopped doing even that much last year.
On top of that, the aggregate market share numbers we get from Campus Computing seem to be in tension with the customer retention numbers that Blackboard reports. If you strip out the noise from acquisitions, Campus Computing’s survey numbers suggest that Blackboard is losing 6% to 8% organic market share annually. But Blackboard regularly reports customer retention numbers in the 90% to 92% range. Can both of these be right?
Actually, they can. When a company reports customer retention numbers, that’s usually an indication of churn, i.e., how many customers are moving around among the competitors. It matters because there is a cost of sale; every new customer costs money to win over. Therefore, the more customers you hold onto, the fewer new ones you have to recruit to stay even, the more profitable you can be. But Blackboard’s situation may be somewhat different. As far as I can tell, their retention rate reflects not churn, primarily, but almost pure attrition. I am not aware of Blackboard acquiring any new higher education customers for their LMS in North America in recent years, and none of the experts that I asked in preparing to write this blog post were able to cite any either. This doesn’t mean that there haven’t been any, but it suggests that there probably haven’t been many. The company may be picking up a few new customers overseas and a handful of domestic K12 and government/corporate customers, but for the most part, it looks like that 8% to 10% of the LMS customer base lost every year is not being replaced. An 8% to 10% attrition rate at their market share level is roughly compatible with a 6% to 8% loss of overall market share. Furthermore, it’s not entirely clear how Blackboard has been defining retention. If a customer drops a Blackboard-owned LMS but continues to license the Blackboard-owned Xythos content management product, does that customer count as retained? From a cost-of-customer-acquisition perspective, it would be perfectly reasonable for a company to count that customer as retained. But if you’re trying to understand what’s going on in Blackboard’s LMS business, then that sort of accounting wouldn’t tell you a whole lot. More recently, Blackboard management has referred specifically to “revenue retention,” although it’s not entirely clear whether that has always been their definition, nor is it entirely clear how the company derives such a metric. Again, since neither Blackboard nor Campus Computing breaks out customers by the various platforms Blackboard owns (and, in Blackboard’s case, they no longer even consistently break out LMS licenses from other licenses), we don’t have much in the way of hard numbers to help us reconcile these various bits of data and management statements that we’re getting.
At any rate, we have about as good a picture of the recent past as we’re likely to get. There are three questions going forward. First, are the kinds (and sizes) of customers that migrate off of Blackboard going forward different than the kinds of customers who have done so in the past? Second, will the trend away from Blackboard-owned platforms accelerate or decelerate? And finally, will the proportion of departing Blackboard customers going to each platform alternative change going forward?
Kinds of Customers
As I wrote at the top of the post, we’re getting into an area in which we have very little hard data. But from what Blackboard has said on their earnings calls, it appears that the majority of customers they have lost in the past have been WebCT CE and Blackboard Learn Basic customers. By and large, these were low contract value customers. My guess is that they also have tended to be small in terms of student population, but I don’t have the data to prove it. What I do know is that in November of 2007, then-Vice President of Investor Relations Michael Stanton told me that the company may have lost “one or two” Vista customers since WebCT had been acquired in February 2006. Vista was WebCT’s enterprise platform, where it’s larger and higher contract value customers tended to be. And at that point, they were staying.
There are signs that this the state of affairs may be changing, though. Consider:
- University of North Carolina, Charlotte (24,700 students) has decided to move from Vista to Moodle in 2011.
- North Carolina State University (31,000 students) has also decided to move from Vista to Moodle in 2011.
- Wilfred Laurier University (16,000 students) moved from Vista to Desire2Learn last quarter.
- University of Delaware (19,391 students) just completed a move from Vista to Sakai last quarter.
- University of Minnesota (51,721 students) is moving from Vista to Moodle in 2012.
- The Utah Education Network (109,000 college students plus 40,000 K12 students and teachers) is moving from Vista to Instructure Canvas in 2012.
These are just anecdotal, of course, but they raise the possibility of a trend. Particularly important to note is that Vista supports multi-tenant hosting capabilities beyond what Blackboard Learn currently offers. (Learn is reportedly going to come into parity in this regard with version 9.2.) This is particularly important for multi-campus systems or consortia that host their LMS internally. That means these large customers are not likely to have made the move to Blackboard yet. So, for example, UMassOnline (77,108 students), which provides LMS support for distance learning to five University of Massachusetts campuses plus a handful of other colleges throughout the state of Massachusetts, is on Vista (and is in the middle of an LMS platform evaluation process). These multi-campus systems and consortia are the ones to watch very closely.
The ANGEL demographic is somewhat different. Its strengths were in community colleges (13% market share in 2009, according to Campus Computing Project) and private four-year colleges (10.3% market share in 2009). Again, these categories don’t necessarily indicate contract size. For example, the SUNY Learning Network hosts ANGEL centrally for something like two dozen community colleges. And Monroe Community College—a member of the SUNY Learning Network—has about 19,000 students by itself. Miami-Dade College, another ANGEL customer, has about 170,000 students. The other outliers that I know of in terms of large customers (regardless of segmentation) are Penn State, with 87,000 students, and Michigan State University, with 47,278 students. (SUNY and Penn State are both in the process of respective LMS reviews; there’s no public data I could find on whether Michigan State or Miami-Dade begun any such evaluation at this time.) But overall, my sense based on anecdotal evidence is that the ANGEL customer base probably doesn’t look very different from the CE customer base, in both campus size and contract value. With a handful of exceptions, ANGEL customer attrition could look a lot like the Blackboard Basic and WebCT CE customer attrition that Blackboard experienced from 2006 to 2010—assuming that they leave in the same proportions.
Numbers of Customers
In addition to the kinds of schools that could potentially migrate, the number of schools that migrate from 2011 to 2014 may be different than from 2006 to 2010. We’re not going to find that out based on the number of forced migration candidates, though. The number of combined WebCT and ANGEL customers that need to migrate in the next four years is roughly equal to the number of WebCT customers that migrated off of the legacy platforms in the last four years so, if everything else holds equal, the rate of attrition shouldn’t change that much. What we don’t know is the degree to which economic pressures combined with the increased perception of viable alternatives in the market—or, for that matter, changes that Blackboard makes such as improving customer service, which has been a big push for them of late under Ray Henderson’s leadership—will change the rate of attrition.
Once again we don’t have hard data and are forced to look for anecdotal evidence for the answer to this question. But one kind of anecdotal evidence that would be particularly potent would be customers that are not on legacy platforms moving away from Blackboard. As far as I can tell, the historic attrition of Blackboard Learn Enterprise customers has been very low. Again, customers don’t tend to move from their LMS unless they feel they are forced to do so. If mainline Blackboard Enterprise customers are moving, it likely means that either the economics are driving them or they have had such catastrophic product or customer service failures that they don’t think they can afford to stay with the vendor.
Are there any data points indicating that that this kind of attrition is happening? Well, there are a couple that I know of:
- University of North Carolina Chapel Hill (28.916 students) are moving from Blackboard to Sakai in 2014.
- Miami University of Ohio (20,126 students) is moving from Blackboard to Sakai in 2011.
- CSU Long Beach is in the process of moving from Blackboard to Desire2Learn over the current academic year.
- The tri-college consortium of Bryn Mawr, Haverford College, and Swarthmore (combined student total of about 4,600 students) is moving from Blackboard to Moodle in 2012.
- The 14 schools in the Penssylvania State System of Higher Education, or PASSHE (119,513 students) was on a mix of Blackboard, WebCT, and eCollege—but mostly Blackboard—and they recently switched to Desire2Learn. (I’m not certain how many of those Blackboard campuses were on Enterprise, so take this one with a grain of salt.)
This is obviously not enough data to establish a trend. But any defection of a Blackboard Enterprise Learn customer is significant because there is no forced migration and because the barriers to exit are high. To gauge whether there is an acceleration of customer migration starting, I would watch for RFPs coming from Blackboard Learn Enterprise customers, and I would watch schools like Brigham Young (26,928 students), which has been heavily involved with co-designing and piloting Agilix BrainHoney, and Arizona State University’s (70,440 students) deal with Pearson LearningStudio (a.k.a. eCollege). If these schools begin to move to other platforms as their main LMSs, it would be a strong sign that WebCT and ANGEL customers are also likely to move to other platforms in numbers that are higher than in the past.
It’s harder to identify a leading indicator that might suggest the attrition rate is going to be lower. You’d have to monitor school announcements as they come out. If more than 50% of the announcements from WebCT and ANGEL schools are for upgrades to Blackboard Learn Enterprise 9.x, and particularly if the big Vista-using consortia start announcing moves to 9.x in numbers, those would be signs that Blackboard may be lowering attrition rates from their historical norm and holding onto their high-value customers in particular.
In terms of where these customers end up if they leave Blackboard, we have very little data to go on beyond what I covered in my last post. It’s possible that the Vista and ANGEL customers will have different platform preferences than the CE and Blackboard Basic customers have had, so the numbers we have been seeing in terms of relative market share gains among the contenders could change. And, of course, there’s always the possibility of the breakout success of a player other than the big three taking a few percentage points of the market share pie. The 2011 Campus Computing survey will be particularly important to watch, I think, in telling us the degree to which the trends are holding.
The Bottom Line
Here’s what we know about what’s happening in the LMS market, based on the analysis of this post and the previous one:
- The data confirm that the LMS market is very much in transition.
- Projection of current trends over the next four years suggest a world in 2014 in which at least four platforms have comfortably over 10% market share and no platform dominates all others.
- There is no evidence to suggest that open source is either being confined to small overall market share or on its way to dominance of the market in the next four years.
- There is some evidence that schools within particular market segments may be predisposed to choose open source, while schools in other market segments may be predisposed to avoid it.
- There is good evidence that preferences for particular LMS platforms trend strongly by market segment.
- Within those broad outlines, there are a number of uncertainties related to the economy, the largely unknown switching preferences and tendencies of Vista and ANGEL customers, and the actions of the individual LMS vendors and open source projects that could change the trends somewhat from what we’ve seen in the past.
- We don’t have any evidence yet to suggest that any such changes are likely to have a very big impact on the overall projections for market share in 2014, although they could have significant impact on individual LMS players where winning or losing a few large deals could have an impact on their businesses, and possibly on the market share numbers within individual market segments.
- Anecdotal evidence suggests that there may be room in the market for one or more LMSs outside of the big four to pick up a few points of market share over the next four years.
- Given the sunset dates for WebCT and ANGEL products, most schools that are likely to participate in this change wave will start their evaluations within the next 6-18 months. That means the LMS versions that are available in calendar year 2011 are the ones that they will be evaluating, by and large.
Of course, four years is a very long time in the technology world. I expect the context of the market to be very different by 2014. Between movements toward more personal/informal learning environments, the big changes that are happening in the textbook industry as content providers and delivery platform providers collide, and the breathtaking pace of innovation that continues in the consumer web market, I strongly suspect that we’ll see a wave of new software that will begin to displace the classic LMS. My guess is that it will be mostly co-existing with current-generation products over the next few years, but by 2014 we may see it beginning to change the whole picture for educational technology infrastructure in some fundamental ways.
Buckle up, folks. It’s going to be an interesting ride.
Possibly related posts:
As Casey Green said in my recent interview with him, the LMS space is a “market in transition.” In 2005, the year that Blackboard acquired WebCT, the two platforms had a combined total of 75.6% U.S. higher education market share, and the next closest competitor had barely cracked 2% market share. Today, the situation is substantially different and changing rapidly. But the narratives around exactly what’s happening tend to be off. Typically, I hear the frame as being a contest between Blackboard and “open source.” Has “open source” (by which we mean Moodle and Sakai, the two open source LMSs with significant market share in the United States) made inroads into the market? If you read what the majority of sell-side financial analysts1 are writing, you may see the claim that “open source” is not putting a major dent in Blackboard. If you talk to Moodle or Sakai advocates, you might hear that they are crushing the company in sales. Neither account is really capturing what’s happening in the market, so I’m going to try to explain what we know about what’s really going on in a two-part series. In this post, I’ll talk about what the data are telling us so far about the recent shifts in the market, describe how colleges and universities come to decide that they need to go to market for an LMS, and assess the degree to which we may see an uptick in the number of schools that decide to look around and evaluate our options. In the second post, I’ll describe how the next four years of market transition may be different than the previous four and what signs we should be watching for to see which way the market is going to break.
What Has Happened So Far?
Let’s start with an analysis of where we’ve gotten to in terms of market share. Has “open source” (by which we mean Moodle and Sakai, the two open source LMSs with significant market share in the United States) made inroads into the market?
Here’s a graph of their growth, based on data from the Campus Computing Project’s annual survey:
In 2010, slightly more than one in five universities surveyed2 used one of the two most popular open source LMS platforms as its main, centrally supported, institutional LMS.
But that’s not the whole story. There is a third non-Blackboard LMS in the U.S. higher education market that has significant market share. Desire2Learn doesn’t happen to be open source, so it doesn’t fit the narrative. But that’s because the narrative is flawed. Here’s what happens when we add D2L to the picture:
We now see that the three largest non-Blackboard LMSs, as measured by U.S. market share, comprise over 30% of the market. That’s up from about 9% for the group in 2006, the year after the WebCT acquisition (which was announced in October 2005). But even this isn’t the whole picture, because Blackboard acquired ANGEL in 2009. What did the market look like when ANGEL was a non-Blackboard LMS? Here’s the picture, again drawn from data from the Campus Computing survey:
One of the interesting aspects of this graph is that the combined market share of the top non-Blackboard LMSs in 2010 exceeded their combined market share in 2009 even when ANGEL is dropped from the group in 2010. This is not to say that ANGEL’s market share contribution was insignificant or that Blackboard got nothing by acquiring the company. If ANGEL had remained independent in 2010, and if their market share had stayed the same as it was in 2009, the graph would have looked like this:
All in all, it’s pretty clear that non-Blackboard LMSs are growing very significantly in share, and that the growth appears to be accelerating for both open source and private source entrants. In 2009, before the ANGEL acquisition, the split between the open source non-Blackboard LMSs and the private source ones was close to 50/50.
But even that’s not the whole story, because higher education is not a uniform market. What happens if we look at the 2010 non-Blackboard market share by market segment? Let’s take a look, again drawing on the Campus Computing Project’s annual survey for the numbers:
These segments look very different from each other.3 For example, Desire2Learn has done extremely well in the community college segment, which so far has shown itself to be relatively open source-averse, but they don’t even show up in the private four-year college segment, where Moodle dominates. More generally, Desire2Learn does particularly well in those segments where open source does particularly poorly. It is possible that a significant number of schools are making decisions to either go with open source or avoid it early in their evaluation processes. If that’s true, then it may be that Desire2Learn isn’t even running into Moodle and Sakai in many competitive bid situations, since schools would have decided to filter out either one group or the other before making invitations to vendors. If, as colleges tend to do, they are copying their close peers on these decisions, then these patterns could easily propagate through market segments.4
The dominant narrative of “Blackboard versus The Open Source” captures none of this nuance. Nor does it capture the fundamental dynamic of how and why colleges and universities decide to go to market in the first place. It’s worth taking some time to examine that dynamic in a bit more detail.
What Drives Schools to Consider an LMS Migration?
Switching your institutional LMS is not like switching your web browser. It’s a huge and usually painful process involving moving over large quantities of content, developing new integrations with other campus systems, and retraining faculty, staff, and students. I don’t believe the LMS market is functionally differentiated enough that most colleges and universities are likely to feel compelled to consider migrating (or to dismiss the possibility of migrating, for that matter) based primarily on feature differences. Functional differentiators can be decisive in terms of which platform is ultimately chosen, but generally not in whether one is going to contemplate migrating in the first place. Service isn’t typically the main reason why schools move either. It is occasionally possible that a school can have such an unacceptably bad experience with product reliability or vendor customer service that it drives them to leave, but my observation is that, so far, relatively few schools find such situations to be primary drivers for deciding to consider a migration (although a bad customer service experience can be a strong aggravating condition.) That leaves two other factors: cost and forced migration.
Cost: Blackboard has never positioned itself as a low-cost provider. To the contrary, Blackboard’s executive management has indicated publicly in the past that they are more focused on average contract value than on number of LMS customers. It’s very natural for larger companies to increasingly focus on their larger, more profitable customers, since that is usually where most of their growth will come from. I argued in 2007 that this was exactly what was happening at Blackboard and, furthermore, the client loss the company was seeing showed no signs of affecting their financial growth prospects at that time, suggesting that the customers they were losing were indeed primarily the most price-sensitive Blackboard Basic and WebCT CE customers who were forced to move for budgetary reasons. But one of the risks associated with a strategy to move upmarket is that, when hard economic times hit, your customers may find cheaper solutions to be adequate. The question now is whether the current financial crisis leads more and different customers to move to lower-cost platforms.
At this point in any market share discussion that frames the issue as “Blackboard versus The Open Source,” the issue of total cost of ownership (TCO) typically comes up, with somebody asserting that open source LMSs have a higher TCO because of hidden costs. But there are several problems with this argument. To begin with, there are no studies I know of to support this assertion. In fact, what little we do have in the way of TCO analysis cuts the other way. The North Carolina Community College System found that moving to Moodle from Blackboard resulted in a 35% increase in TCO during the transition year followed by a 72% decrease in TCO in the post-migration years. Likewise, the University of North Carolina, Chapel Hill found that the total annual cost of Sakai would be $332,000, as compared with $620,000 with Blackboard. The increasing numbers of open source LMS customers who use hosted solutions and do not hire developers also provides a significant and growing body of evidence against the argument that an open source LMS must come with hidden costs. And finally, the argument completely neglects to mention the possibility of non-open source alternatives that are less expensive. Neither Blackboard nor Desire2Learn publish their prices, but anecdotal evidence suggests that Desire2Learn’s prices may be significantly lower than Blackboard in some cases. At the very least, D2L appears to be price-competitive.
All of this raises two questions. First, will more—and larger—schools be inclined to switch based on cost differences than have in the past due to new financial realities? Second, will Blackboard come under pressure to cut more aggressive deals in order to hold onto their customers? These are both pretty big unknowns at the moment.
Forced Migration: This is the big one. Blackboard is retiring WebCT in January of 2013 and ANGEL some time in 2014. Customers on those products will be migrating whether they want to or not. In that situation, the majority are going to look around to see what their alternatives are when they otherwise might have chosen not to do so. Blackboard can incrementally reduce the migration effort required to moved to the mainline Blackboard platform versus the competition, but overwhelming anecdotal evidence suggests that, at least so far, they have not been able to pass a threshold at which customers feel like moving to Blackboard won’t really be a migration. Since LMS evaluation and migration efforts typically take about two years, Blackboard probably has about twelve more months to change the equation for WebCT customers and a little more for ANGEL customers. Based on the math that Casey Green laid out in the earlier-referenced recent interview, it appears that there are a bit under nine hundred customers left on legacy Blackboard LMS products. About eight hundred seventy-five Blackboard customers will have to migrate to something in the next four years. That something may or may not be a Blackboard-owned product.
Are the Alternatives Viable?
Even if schools decide they would like to look at alternatives, they have to feel that they have someplace to go. Just a couple of years ago, there was a sense in the market that viable alternatives were in short supply. In 2006, no non-Blackboard-owned LMS had significant market share in the United States, open source was still considered to be untested by many college and university CIOs, and Blackboard was suing Desire2Learn for patent infringement, creating significant uncertainty in the market about Desire2Learn’s long-term viability as a going concern.
Since then, a lot has changed. Here’s what’s true in 2010:
- Every single market segment in the U.S. has at least one non-Blackboard LMS that has at least nine percent market share, and all but one have at least one entrant in the double digits. This includes but is not limited to open source offerings.
- Blackboard has dropped the lawsuit against Desire2Learn, and as the market segmentation graph above shows, there is strong evidence that D2L is having a significant win rate for colleges and universities that are considering a migration from Blackboard but aren’t comfortable with open source.
- As externally hosted LMS solutions are becoming more popular, the advent of cloud computing has greatly diminished the advantages that big companies like Blackboard have in terms of the relative reliability and security of the data centers. For example Moodlerooms’ hosted offering runs on Dell’s data centers.
- SunGard Higher Education, an organization that has roughly the same financial heft as Blackboard and somewhere around 40% market share in the United States for mission-critical ERP/Student Information System software, has entered direct competition with Blackboard by offering hosting and support for Sakai in partnership with rSmart, making open source more palatable to risk-averse customers.
- Datatel has formed a close partnership with Moodlerooms somewhat similar to the SunGard/rSmart partnership.
There is some historical precedent for these last two bullet points and the impact that they might have on the market. Around 2000, SCT (the then-owner of the Banner SIS) signed a partnership and reseller agreement with WebCT. According to Karen Gage, who was the Vice President of Marketing for WebCT at the time, that partnership accounted for somewhere between 10% and 25% of WebCT’s LMS sales during the first few year or two of the relationship. Sales dropped off considerably from there and the partnership was ultimately ended—and anyway, the LMS market is quite different today than it was in 2000—so we shouldn’t read too much into this data point. But it certainly is enough of an indicator to give us reason to believe that these partnerships will have some impact on whether schools at least decide to go to market and evaluate their LMS options.
There’s an interesting question about the degree to which other entrants can break into this market. I’ll just mention two possibilities. First, Pearson recently bought Fronter, a European LMS (one that impressed me with their demo, by the way) and has created a new brand for their combined eCollege/Fronter product called LearningStudio. They also signed a deal with Arizona State University to support a small number of distance learning courses for the college that might be a leading indicator of the company getting more aggressive about going after the traditional higher education market. (Right now they have very high penetration among for-profit universities, but only about 1.3% share in the traditional not-for-profit U.S. higher education market.) Second, startup Instructure just recently signed a deal for their Canvas LMS with the Utah Education Network (UEN), a multi-institutional consortium that reaches about 109,000 college students and 40,000 K12 students. That’s a pretty big deal for an LMS startup, and it may presage a thirst for new approaches in the LMS space (in terms of both product design and support/pricing models) leading a percentage of the market to be more risk-tolerant than they have been in the past.
Where Does It Go From Here?
The bottom line is that there has been a dramatic increase in the perceived viability of the alternatives at a time when both forced migration and economic crisis are putting pressure on schools to minimize costs across the board, including LMS costs. We have to weigh the impact of these factors against current market trends. As a baseline, I tried to extrapolate the market share movement in the previous graphs out to 2014. What I did was I averaged the last four years of market share change and, since I wanted to capture the fact that changes in the market have accelerated over the last four years, I double-weighted the last year’s change. (Primitive, I know, but I’m not a statistician.)
Here’s what the graph came out looking like:
This projection has Moodle at around 31%, Desire2Learn at about 20%, and Sakai at about 12% in that year. By extension, that would put Blackboard with market share somewhere in the low- to mid-thirties by 2014, with a few percentage points left over for other options.
There’s a pretty substantial margin of error in this exercise. My completely unscientific guess is that we’re at something like plus or minus four percent (absent major unforeseen developments). There’s a lot that could happen within those lines that could have a significant impact on the various platforms and the vendors that support them. In my next post, I’ll get further into the weeds to see what signs we should be looking for in order to divine what’s actually going to happen over the next four years of LMS market share in more detail.
- Sell-side analysts are financial analysts who work for major brokerage houses and provide stock analysis to retail investors. Comments by analysts that you read in business news articles are typically from sell-side analysts.
- The survey excludes for-profits and colleges with less than 500 students.
- It’s worth noting here that these segments don’t tell you a lot about contract size or even school size. For example, Los Angeles Community College District has over 141,000 students.
- It would be interesting to see the degree to which these trends cluster geographically, if we had that kind of data.
Possibly related posts:
When Blackboard acquired ANGEL back in May of 2009, there was a lot of noise about how the acquisition was going to change the company. I wrote a post then called Three Tests for the ‘New’ Blackboard, which outlined some indications I was going to be looking for to see whether there was substance behind the hype. The first sign I got that something was changing happened within days (hours?) of my publication of that post, when Ray Henderson publicly accepted my challenge on Twitter. How well have he and Blackboard done since then?
Really well, actually:
- Challenge 1, drop the patent suit: Done. To be honest, I did not expect this to be the first one ticked off the list. But it was. Blackboard and Desire2Learn settled in December of 2009.
- Challenge 2, support IMS Common Cartridge, including export: Done. I wasn’t following this too closely, so I don’t know exactly when this was released, but some time this year Blackboard provided full support for IMS Common Cartridge, including export.
- Challenge 3, support IMS Learning Information Services: In Progress. Yesterday, Ray Henderson declared in a blog post that Blackboard is “committed to supporting” LIS. To my knowledge, this is the first time that Blackboard has made an unequivocal, public commitment in writing to implement the standard. This declaration has been backed up by activity in the LIS working group that indicates Blackboard is actually taking steps to implement the specification.
If Blackboard succeeds in implementing LIS by the 2011 IMS Learning Impact conference, then Ray will have met all three challenges within 24 months of coming to Blackboard. That’s pretty impressive.
Update: I received an email response to this post from Ray (who is at an IMS meeting today), which I reprint in part here with his permission:
- Common Cartridge: we actually have NOT shipped this, just demo’d it. My public statement was to show progress at the 2 IMS meetings this year, and ship by end of year. We’re on target for that.
- IMS Basic LTI: this was another area I clarified earlier–that we’d ship LTI. We got conformance cert at this meeting. And so we’ll ship that too, by end of year.
Related story: I mentioned in my blog a mega relationship between Bb and McGraw. We really are using basic LTI as a production technology — and one for a major strategic partner — in 2011. Adoption is key, and I’m delighted to see it brewing up.