Reaction: LMS Market Trends and Michael Feldstein
Michael has two excellent blog posts about his vision regarding the state of the LMS market and his expectations of the trends in the LMS market over the next four years.
http://mfeldstein.com/the-evolving-lms-market-part-i/
http://mfeldstein.com/the-evolving-lms-market-part-ii/
Not surprisingly, we see things a little differently so I added a comment to his post which I replicate here.
I think that if you re-drew your market share graphs with Moodle stacked on top, it would be clearer that Moodle has real, significant growth, and Sakai and Desire2Learn are growing very gently in terms of customer counts. 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 – the low-end of the marketplace (historically Bb Basic, WebCT CE, and Moodle) is not where the real money is at and so even if the number Blackboard client numbers may have declined, revenues continue strong because the remaining customers (a) buy more, and (b) pay well. And any new customers they get are high-end schools.
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 that represents the schools with real money to spend.
I am not suggesting Moodle is an inferior product in any way. I just think Moodle’s 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 large and increasing volumes of low-marginal-revenue customers and an outstanding franchise model. 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.
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, Desire2Learn 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. Not surprisingly you paint a pretty gloomy picture for Blackboard. I feel that the race has just begun and that Blackboard, D2L, and Sakai have an equal shot at winning starting now. The winner of the race will be that LMS that throws themselves at making their user’s happy rather than looking furtively to the left, right or over their shoulder at their competition.
I would suggest that Blackboard has just as much chance to surprise and delight their current and future customers if they put their mind to it. And the game is theirs to win as long as they hold the largest market share. If Blackboard combines a dedication to making their users truly happy with their product – and with their current entrenched market position – they can easily out-run Sakai and D2L. Of course the question is, “will they make that commitment and stick with it?” or will they “coast on their market share and end up the Lotus-123 of teaching and learning”. If I take that Lotus-123 analogy way-too-far, that would mean that D2L becomes Microsoft and Sakai becomes Open Office :). And if I take it even further, years later when Oracle buys …
Sorry about that digression in italics – back to my story. My feeling is that Blackboard literally has no other choice but to work hard to please their customers. It is the only way to maximize shareholder value at this point in the marketplace where we are moving towards a buyers market. Remember how the US finally “won” the cold war….
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 teacher-and-learner-centered mousetrap ever seen and stop imagining that unseen forces are inexorably driving the market to one advantage or another.
Do you have any thoughts on the future of LMS providers like eCollege (now part of the huge Pearson Publishing empire) or Epsilon (which also has significant content assets). Also, what is your view of the low-cost providers like Scholar 360, WebStudy or it’s learning. We looked carefully at these last three LMS providers and determined that they have more tools and features included out-of-the-box than Moodle. They also have pricing that compares very favorably with the cost of running Moodle or contracting with a 3rd party Moodle provider.
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.
I don’t know anything about Desire2Learn’s current product or future plans, but Blackboard is definitely moving forward, maybe not in the cleanest way, but they are making steady, gradual progress towards some future vision with each new release. As for “sitting on their hands”, Sakai 2.x has been stalled for the past three years while most of the serious developer talent in the Sakai community has been throwing efforts down the drain of the ill-advised total rewrite that is Sakai 3.
After three and a half years of work, Sakai 3 still is totally unsuitable for even the most basic of its use cases, much less for use as a serious LMS. All it even attempts to do now is manage sites, users, and content, and it can barely limp along in automated testing with user counts a tenth or less the scale of the universities it’s supposedly targeting. It’s harnessed to an immature and unsuitable platform in the form of Sling and Jackrabbit, and now the server team is having to look into ways to route around the severe weaknesses of those underlying technologies. There’s supposed to be a release in June, but that’s impossible at this point, although no one is admitting it.
Even if there is a release, it still won’t be an LMS. No gradebook, no test engine, no assignments tool. Meanwhile, the design team is spending their time on coming up with “badges” to reward big uploaders and trying to compete with Facebook. I guess everyone is hoping Lance will come through with the magical hybrid system to tie back into the Sakai 2 tools, but making Hybrid work is going to take so much work that it would have been easier to paste the Sakai 3 UI on top of Sakai 2 in the first place, which is what should have been the plan all along.
Instead there are dozens of people working towards a system dedicated to a NoSQL/REST/Ajax/”Web 2.0″/Social Networking ideology that has no relation to how large-scale computer systems actually work or what students and instructors actually want from their LMS, and that in the end just isn’t going to work. Unless the Sakai/Jasig leadership figures this out, and rededicates itself to cleaning up the seriously flawed, but *working* Sakai 2, Sakai is going to be the loser when research schools committed to “open” give up on the stale product that is Sakai and just switch to Moodle already.
Paul, I think that as standards like IMS Common Cartridge and IMS Learning Tools Interoperability gain greater market penetration, hosted solutions become increasingly feasible and the economies of scale of running in the cloud will affect the marketplace greatly. I think that the biggest problem with hosted solutions is that they get to a size where they are making money and have a nice size company with 50 or so employees and then they get comfortable. The don’t want to customize or adapt to the market place and if some customer wants something unique, it is “too bad”. hey lose a few customers here and there and then they gain a few so they can keep on keepin’ on. I hope that as w start seeing tools and content standards that allow teachers and students to wander around without losing their investments – these hosted solutions begin to gain a real advantage. When the hosted solutions can be both cheap and flexible – they have a decided advantage. Today most hosted systems are too inflexible to meet the needs of most top-100 schools. But keep your eyes out as they start announcing support for IMS BLTI and IMS CC – those will be game changers.
Finn Q (your name *sounds* like something if spoken quickly and run together) – glad you kept any identifying information off your post :) Being anonymous makes one bolder. I would make the following observations: (a) If I have anything to say about it, the Sakai CLE (2.x) will kick some ass in 2011 (SI 791 – Open Source Software) and (b) any rewrite is painful and difficult – I remember the pain of Sakai 1.x and the pressure to deliver and then realizing in late 2004 that Sakai 1.x sucked and rewriting much of its core framework in the first half of 2005 to create Sakai 2.x. It is really hard to balance the need to deliver in a timely manner along with the need to get it right. I think that we the Sakai community will be best served if “OAE gets it right” rather than “OAE is done now”. Because if we become too impatient – we will be once again talking rewrite a few years later.
Charles, the hosted systems that we reviewed had their API available which enabled users to bring in third party tools. Very sweet. Additionally, the two that we have worked the most with, it’s learning and eCollege, roll out updates on a quarterly basis. We did a lot of work with Angel and Blackboard as well and were impressed with the way that system was finally being developed.
I am an unabashed fan of a externally hosted LMS that has a 24/7 Help Desk as it saves the smaller institutions from having to buy a lot of hardware and have scarce staff resources dedicated to babysitting the system. We have used externally hosted LMS since 1997 and have seen a marked difference in course quality between organizations that host internally and those that opted for externally hosted systems. The latter group had more resources left to invest in training, instructional design and quality course content development.
Paul I greatly prefer it if all the systems you mention compatible standardized extension points (my standard refrain:) ) – but that said – external hosting is the best choice for a majority higher education schools.
However, some schools want to assert themselves and bend their environment and ultimately bend the whole market to cause positive progress for everyone. One of my founding purposes of Sakai was it was a coalition of the strong who together could change the market – not own the market – just change the market. Thankfully for the past 10 years I have worked at just such a visionary school so I get to be part of the emerging changes.
It is really hard to balance the need to deliver in a timely manner along with the need to get it right. I think that we the Sakai community will be best served if “OAE gets it right” rather than “OAE is done now”. Because if we become too impatient – we will be once again talking rewrite a few years later.
I think the premise here is faulty. You aren’t going to “get it right” when you’re starting from scratch. The only way to can create a working complex system is to start with a working simple system and then improving it. Sakai 2, for all its faults, works. It’s easy to pick out the aspects of its design that are problematic or elegant from experience running it with real data and real users. There’s a big list of low-hanging fruit that talented developers could be tackling–improving administrative tools, making archive/restore work across the board, fixing the anti-normalized structure of most of the database, cleaning up dead and redundant code, standardizing how static files are deployed, supporting Java 6 and Tomcat 6 or other app engines, revising the permissions system for better performance and management, fixing the impossibility of sharing session info between instances. I could go on. How much better off would Sakai be if all the effort so far expended on the OAE project had been invested in Sakai 2?
I get the feeling that the non-technical community around Sakai really thinks there’s something interesting that’s going to be delivered in June 2011. Unless I’m missing something huge, though, there’s nothing there yet except a way to share files among groups of people. What a “site” or a “group” even means is still up for debate, it seems. I can’t square the buzz amongst the pedagogy geeks and management with the unrealistic roadmap or with my own common sense, much less with the entirely different reality reflected in reading the discussion lists and attempting to use the product.
I know these comments are incredibly negative, but after all this time, this is all we have to show, and instead of rethinking the strategy or even admitting we’ve come up short, we seem to be doubling down on this mistaken idea that if only we start from scratch and use only the purest and most elegant technologies available, we’ll really get some traction this time. It’s not happening.