Skip to content

This kids, is why hallucinogenics and the internet don’t mix

I had to do a quick double take on this article (first, to determine if it was April 1, anywhere in the world): Evolution Unbound: Blackboard embraces open source. This is what I imagine the experience would be like if one dropped hallucinogenics and browsed the web – a feeling of incredulity and weird confusion that can only come from time and reality being featured in a will it blend video.

I’m not surprised that Blackboard is interested in openness. They’ve made overtures in the past. At the EDUCAUSE conference in October, they were clear that they wanted to partner with the open educational resources movement. I discussed this in a post on the race to platform education. At that point, Pearson had announced open class (look Ma, free LMS!). I’m still convinced that the only reason Open Class makes sense is because Pearson can mine the data of student interaction with their content – a critical piece they were missing. Perhaps Open Class will allow Pearson to sell more content, but that is secondary to having insight into what students actually do with the content. It’s Apple-esque in a way – control the learning process from end-to-end.

Blackboard obviously makes its money from selling their LMS. How do you respond to Open Class? Why, give away what your competitors are trying to sell, of course. Blackboard touted its open education resources initiative in response. One way or another, dammit, we’re gonna compete on openness.

Imagine my surprise to read that:

Today we’ve announced the acquisition of two of these firms: Moodlerooms Inc., a leader in North America, and NetSpot Pty. Ltd., an international leader in Moodle services located in Australia…our meetings were productive in outlining areas where Blackboard can best contribute to the Moodle project as we set out on a journey.

And the pleasant understatement:

Longtime participants in the open and community source communities may be concerned about our corporate intentions, and how we’ll conduct ourselves given that we are governed by an interest in business growth.

(haha. said the fox to the rabbit.)

I’m trying to understand the economic value point is in this move for Blackboard. I’ve seen a few folks call this a “good business” move. I don’t agree. I liked Blackboard’s acquisition of Elluminate because it made sense to broaden their platform and offer an integrated solution. I was a bit confused by the company going private, but felt that it made sense if the new owners started to integrate their numerous education offerings. Education, after all, is a huge business and growing rapidly.

This current move, however, I don’t understand. Blackboard is making a mistake.

It splits the LMS market by adding another layer. Currently, you can a) buy an LMS like Blackboard or Desire2Learn or b) host your own or c) go with a Moodle-partner. With this acquisition, Blackboard now has a place at a & c. Hosting an LMS can be difficult. A small school or college simply doesn’t have the resources to host their own LMS. I’ve taught in numerous different Moodle installs (recently as a course in emerging tech to a school in Africa) and the spam and fake accounts are a big issue. Why not pass that off to a trusted vendor?

Well, that’s what Moodle Rooms did. So what does Bb gain?

It’s inconceivable that Bb got into this game for hosting revenue. Why, if you’ve spent years promoting your platform as the best one for complex implementations, do you suddenly start hosting an open source alternative? It seems that they’ve acquiesced significant ground to Desire2Learn with this move. Bb looks scattered and unfocused by moving outside of their core (or even integrated) revenue model. Are they losing that many clients in their main LMS?

Bb=Go Daddy? That makes no sense economically. Unless they plan pricy hosting options. This would then result in a rush of new low cost hosts.

Alright, so if hosting makes no sense as an economic model, what can Bb gain?

I can only see a few options:

1. Bb can stem the flow from their main platform (i.e. Oh, if you don’t like Bb, why not try our Moodle install! I already feel sorry for the salespeople navigating this discussion).

2. Data. Data is an economic value point. If Bb is hosting Moodle, depending on the end user agreement, they may be able to gain significant value from data and this data might inform the development of their main platform.

3. Move Moodle Rooms clients into their other offerings. I love Bb Collaborate. Best synchronous tool available. By far. Maybe Bb is trying to flesh out this revenue stream? What about Bb Analytics? Learning analytics are currently a buzz-wordy concept. This as an optino for-sale add-on might make sense.

My final assessment: It’s a mistake. It leaves the impression that Bb doesn’t have the confidence to compete on their own product.

There may be small benefits that Bb can gain from the acquisition, but any benefit will be offset by the message it sends about their main LMS offering. The only way that this acquisition makes sense economically is if Bb is moving OUT of the LMS space…or at least repositioning themselves so that the LMS is no longer their main offering. What we have here is a message that a tired product can be augmented by offering hosting for open source products.

D2L wins. Bb looks unfocused (and a bit scared).

What am I not seeing?

13 Comments

  1. gut reaction (without any information on the actual reasons for any of the involved companies) – it smells like a talent acquisition, not a technology or product deal. There are likely people at each of the 2 acquisitions who have expertise that Bb needs access to.

    Monday, March 26, 2012 at 4:05 pm | Permalink
  2. I wonder if the meetings with Martin in Perth have something to do with it… “outlining areas where Blackboard can best contribute to the Moodle project as we set out on a journey.” Maybe they are secretly trying to ruin the competition from the inside out? :)

    Monday, March 26, 2012 at 4:08 pm | Permalink
  3. Jen wrote:

    I don’t think it’s a mistake. You’re missing the piece about them changing strategies about end-of-life for ANGEL. Now all the schools, such as mine, in the search for ANGEL replacement will pause a moment. Almost every school I’ve spoken with is looking at some combination of Bb, MoodleRooms, D2L and Instructure. Most ANGEL schools chose ANGEL to get away from Bb. Bb isn’t doing very well in the ANGEL replacement projects, and neither is MR, though many hoped for better. MR hasn’t had the resources or leadership to be a viable competitor.
    The 2 biggest pieces of this are the continued ANGEL support, and the creation of an open source division. The edtech startup world is experiencing tremendous growth right now. Bb can now make acquisitions without having to roll them into the Bb Learn product. The new division can offer a menu of options, lightweight offerings that can pair with existing services. Or they can begin hosting Canvas implementations so the only option is to sell to Bb.

    Monday, March 26, 2012 at 4:12 pm | Permalink
  4. Perhaps it’s a setup for something else.

    Perhaps they’re readying the ship to (eventually) sell to one of Oracle, SF, SAP, etc.

    The talent/learning/HCM space is consolidating fast.

    I’m betting on more action sooner rather than later.

    Monday, March 26, 2012 at 4:13 pm | Permalink
  5. Reuben Charis wrote:

    Talent acquisition – I don’t think so. BB has always swiftly let go of the talent (even the very talented) of the companies they acquire. Customer acquisition, yes, they like that.

    End of life – people should remember they have played these games before – WebCT went through several dire “ends” before it finally died. BB has always bought competition, announced great sounding partnerships and quietly killed off the acquisition in a few years, as soon as they could with the outcry below a dull roar.

    And people are always surprised when they do it again…

    Competition – there are many other Moodle Partners – are they all worth millions?

    Monday, March 26, 2012 at 4:40 pm | Permalink
  6. John Patten wrote:

    I think D’Arcy is correct. I seem to remember a lot of work being done by MoodleRooms, and some of the other names mentioned in the aquisition, in support of the recent Moodle 2.0 version. It seems Bb has taken a chunk of the talent that had helped roll out Moodle 2.0. Hmmm…?

    Monday, March 26, 2012 at 4:54 pm | Permalink
  7. Chris Beks wrote:

    I think it’s your option #3, based on Ray Henderson’s blog post today:

    “our strategic shift towards a focus on the full student lifecycle rather than the LMS niche begs an important question: should we expand our offerings to include multiple LMS products, particularly the open source products that are now more widely adopted? Our answer is yes. The long game for Blackboard is to bring the full complement of our solutions across the student lifecycle to more institutions.”

    After going private last year, the main focus will need to be on gaining new customers. They already have offered all of their additional products, besides their LMS, to the current customers. New ones are hard to come by.

    But if you can attract new customer (let’s say from a different LMS product) and get them to buy into your other non-LMS offerings, than you can expand your business rapidly. As you said above, their Collaborate product is an excellent tool.

    Blackboard, Inc. is no longer focused on LMS. That was good for the past decade or so. At this point, all their other products (Collaborate, Transact, Connect, Mobile, Analytics) are just as important, or even more important, than Blackboard Learn.

    Monday, March 26, 2012 at 5:20 pm | Permalink
  8. Jon Dron wrote:

    It’s not data they want, I think: it’s well over 1000 customers with over two million users who have jumped ship or avoided getting on it in the first place. According to MoodleRooms That’s about 1/8 of Moodle installations on the planet (their figures need checking).
    The objective seems to be, as usual, lock-in, whether via direct conversion of clients or, more likely at first, adding compelling ‘extra-value’ features like Collaborate etc, that will make full migration impossible. It’s the same old dirty tricks in new clothing. They can’t buy Moodle or Sakai to kill them so they are doing the next best thing: capture a good chunk of their users and try to cut-off their escape path.
    Saves the cost of coding a decent competitor.

    Monday, March 26, 2012 at 6:36 pm | Permalink
  9. Brian Stewart wrote:

    Bb have acquired channels of delivery, rather than the ownership of the application. This gives them far less control over their newely acquired customers. Although they may seek to gradually increase this over the coming period.
    The questions regarding this, for those whose hosts have been taken over, will be:
    Will the contract conditions change?
    Will prices increase?
    Will Bb degrade Moodle service through lengthened upgrade cycles and a lack of effort to integrate with other services and systems, particulrly Open Source ones.
    Will Bb create barriers to exit, for example by enforcing data restrictions?

    For other Moodle users the issue is whether this will have any significant impact on the community, or on Martin Dougiamis’s desire to continue in the role as its talisman.

    From Bb’s perspective, they could be undertaking a horizontal integration play, as Jon has suggested. Where “owning” a bigger chunk of the market, albeit with an alien version of their core product, provides them an enhanced bulwark against their main commercial competitor D2L. This will require their shareholders to take a similar view and the purchase price to be seen to be worth the ticket.

    Monday, March 26, 2012 at 8:29 pm | Permalink
  10. Frances Bell wrote:

    Of all the things that Blackboard does badly – integration must be one of the worst. Those of us who suffer its use on a daily basis marvel at the way ‘newly purchased’ functionality is nailed on to the creaking architecture resulting in puzzlement for students who can’t understand why when they click on someone’s name, they get an email instead of a profile.
    The basic architecture of the Blackboard LMS seems to me to be way past its shelflife. I will be sampling Blackboard 9 in a couple of months so may have to eat my words but somehow I don’t think so.
    I agree with commenters who think this is a purchase of customers. Combined with Jon Dron’s comments on lock-in, perhaps BB are focusing on integrations of their other components such as Collaborate with alternative customised OSS LMS components for those customers who reject the BB LMS. The other integrations that matter to large institutions are those with other products such Student Information Systems.
    I’ll be interested to see how Moodle evolves in response to this. The old model was of Blackboard buying competitors and smaller innovations to incorporate functionality. Key aspects will be BB’s financial contributions to Moodle through being a Moodle partner, and the exchange of code. Customisations like Joule http://www.moodlerooms.com/lms-solutions/ use Moodle as their core so I would have expected their source to be available. Is this so and if so, where is the source code? A quick search of Moodle.org forums revealed some support for Joule happening there.
    So my questions would be:
    1. Will innovation be a 2 way street between Moodle and (Blackboard) Joule via exchange of code?
    2. Where will support for Joule really be taking place? at BB or on Moodle.org

    Tuesday, March 27, 2012 at 12:57 am | Permalink
  11. Geoff Cain wrote:

    This is like Darth Vader deciding to be a Boy Scout leader! I am a little relieved in a way because I was considering Moodle Rooms for a while as an alternative to Sakai. At least Sakai is a bit safer from Bb by being supported by a foundation. There are so many things wrong with this, I don’t know where to start. It makes as much sense as corporate medical care!

    Tuesday, March 27, 2012 at 10:37 am | Permalink
  12. Phil Hill wrote:

    George, great post, especially given the timeframe :} I agree with your observations and analysis, but I think this was not a mistake by Bb. Continuing a strategy that was not working would have been a mistake.

    More here:
    http://mfeldstein.com/blackboard-confronts-erosion-of-market-share-makes-a-major-change-in-strategy/

    Tuesday, March 27, 2012 at 11:38 am | Permalink
  13. As to what try might be up to, think IBM move from mainframes to highly profitable services!

    Tuesday, March 27, 2012 at 7:09 pm | Permalink