Tuesday, March 22, 2011

Article: Blackboard's Next Phase

Article from Inside Higher Ed

"Blackboard built its e-learning empire on its learning management system, trading legal blows with some competitors and gobbling up others as it raced to satisfy demand for a technology that had rapidly become de rigueur in higher education.

"That period of conquest is now over. Last fall, close to 95 percent of institutions had some learning management system in place, according to the Campus Computing Project. Accordingly, Blackboard’s business strategy is changing: with the company adding four new, separately licensed products to its menu in the last three years, Blackboard expects that it will soon no longer rely on Learn, its popular learning management system, to bring home the bacon.

"Learn brought in approximately 55 to 60 percent of the company’s $450 million in revenue last year, John Kinzer, Blackboard’s chief financial officer, told analysts in a conference call this month. But the company expects its other products — which focus on mobile learning, synchronous communication, and learning analytics — to fly off the shelves, relieving Learn of a sizable chunk of its burden.

“Over time, clearly the other products like mobile and collaborate and analytics are growing much faster,” Kinzer said. “So we’d assume that over a three- to five-year horizon that percentage is going to be much lower than that, probably down into the 20- to 30-percent range.”

"While Blackboard officials insist that this doesn't mean the learning-management platform will be viewed as any less crucial to the company, Kinzer's projection nevertheless marks a large shift in the company's identity.

,,,,,,, "Meanwhile, colleges that only want — or can only afford — Blackboard’s learning management platform should not worry about having their interests marginalized, Berg continued. While the new products might be expected to be big new revenue streams, they are still designed to be “wrapped around” Blackboard Learn, he said. “Without a core LMS product sale to a potential customer, Blackboard has almost zero opportunity to upsell its other products,” said Berg.

"Of course, that raises the question of why Blackboard didn’t just bake its analytics, mobile, and synchronous communications tools right into the learning-management system. Ray Henderson, president of Learn, said the company decided to sell those products separately so that the company could invest more money in them without having to raise the licensing fees on Learn — a tack that has gotten Blackboard in trouble with customers in the past.

"Selling the applications separately allows the company to make them sophisticated enough to keep up with competitors while not simultaneously blowing up the price of Learn and shutting out customers who can’t pay for the fancy new tools, Henderson said. More products don’t just mean more revenue streams for Blackboard, he said; they mean greater choice for customers.

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