News, Views and Careers for All of Higher Education
Oct. 13, 2005
Merger mania hit the higher education technology market again Thursday, as the leading provider of learning management systems, Blackboard, Inc., said it would acquire its top competitor, WebCT, Inc., for $180 million. When the two join forces in the next few months, the combined company will bear the Blackboard name but continue to support both companies’ products for the foreseeable future, to keep disruption to current clients to a minimum, the two companies said.
The announcement, which came late in the day on Wednesday, surprised many higher education technology experts, although most of those reached said the merger made sense in a market in which the two leading players each have relationships with between 40 and 50 percent of colleges, according an estimate by Eduventures, an education analyst. The announcement by the two companies said that together, they would have about 3,700 clients, many of which are colleges and universities.
“When you’ve see penetration rates for the two big players like that, it seems inevitable that — especially for a public company like Blackboard — sometimes the only way one is going to grow at the exponential rate expected is to gobble the other up,” said Cathy Burdt, Eduventures’ lead analyst for postsecondary solutions.
For college technology officials still dealing with the aftermath of last year’s high-profile merger between Oracle and Peoplesoft, the Blackboard/WebCT announcement is likely to cause at least a few jitters. But officials of both companies sought to emphasize their intent for a smooth transition aimed at creating a unified “community of practice,” a phrase repeated several times in the news release and a teleconference held by Blackboard officials.
Blackboard’s Web site included a separate page, entitled “Blackboard’s Client Commitment,” that said the two companies would seek to retain 100 percent of their clients, “develop, innovate, upgrade, improve and support both Blackboard’s and WebCT’s products,” and “over time,” develop a new product incorporating the best of both companies’ work.
“This merger makes tremendous sense for our clients, shareholders and employees,” said Michael Chasen, Blackboard’s president and chief executive officer. “It marks an unparalleled opportunity for two successful, mission-driven organizations to unify with a singular focus on being the premier partner and platform for educators on a global basis.”
Added Carol Vallone, Chasen’s counterpart at WebCT: “Both companies are passionate about the academic market and, alongside our respective clients, have truly pioneered the category together. Given the alignment of our visions, technologies, and overall strategies, the combination of our two companies will advance the teaching and learning technology industry, benefiting customers worldwide.”
Although Blackboard also offers enterprise software for colleges’ backend operations, it, like WebCT, is known first and foremost as a platform through which institutions offer academic courses online. The two companies emerged as the survivors (and thrivers) from amid numerous competitors in the late 1990s and early part of this decade.
Although there are numerous remaining proprietary players, including eCollege, as well as an emerging cadre of open source platforms for course management, such as Moodle and Sakai, the combined Blackboard/WebCT entity is likely to control as much as two-thirds of the e-learning market, says Burdt of Eduventures.
Reaction to the merger announcement among campus technology experts was mixed. On his blog, EdTechPost, Scott Leslie, an education technologist for the Learning Resource Center at BCcampus, an online portal in British Columbia, headlined his first post “Holy $#@! — Blackboard and WebCT to Merge": “Well, there goes any claim to being an insider! Just found out about this a few minutes ago and had no idea it was in the works.... You kind of knew something like this had to happen, but still it’s profoundly shocking now that it has.” He noted that WebCT had just begun promoting the newest version of its software, Campus Edition 6.
Other commentators wondered how long it would be before WebCT’s products were phased out entirely, and how quickly the combined company’s prices would rise, if it holds off the open source challenges and expands its presence in the market.
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I view the merger of Blackboard and WebCt as possibly a good thing for online education. This will be true only if the two companies can migrate their products into one system with the best features of each.
Randolph Cullum, at 8:37 am EDT on October 13, 2005
Perhaps now we will see that David Noble, as Cassandra, was right. “Blackboard” is now the default, the Microsoft, to which others must march. Regardless of “open access” LMS systems, the “classroom” will become as familiar to faculty as the brick space has been since Plato.
Add open access courses and the university becomes generic and faculty become production workers, K->16.
The key issue is control within “bounds” which will not only be the software, but the administration and the market (oops, students).
tom abeles, at 9:22 am EDT on October 13, 2005
There is another issue with the Blackboard takeover....here at George Washington University we developed and used a system called Prometheus—which was later sold to Blackboard. Those of us who had labored to post course materials now had to do it all over for a new format (they did work out a transition, but it still took a chunk of time)...and this early adopter, at least, decided it wasn’t worth the effort to redo the process again. So users of the system being taken over—beware! You will face the same problem, and probably sooner than later.
Chris Sterling, professor at George Washington University, at 9:35 am EDT on October 13, 2005
.. and there are probably others ..
Bart J, Little fish at Big Sports U, at 1:49 pm EDT on October 13, 2005
There is an excellent, free, open-source alternative called Moodle, originally from Australia. I use Moodle every day.
I have not looked at recent versions of WebCT or Blackboard, but I’m sure they have some useful features that aren’t to be found on open-source alternatives. But I see no reason, in theory, why open-source software should not be able to provide everything that either of these brand—or these brands combined—can accomplish.
Best,
ClioSmith, Associate Professor at Trinity Bible College, at 1:49 pm EDT on October 13, 2005
Why isn’t this a monopoly? If I remember correctly, Microsoft owns a large part of Blackboard. Blackboard can charge whatever it wants and provide any level of service it wants, and there is nothing universities can do about it. This is not good. Universities should get ready for some serious sticker shock.
James, at 1:52 pm EDT on October 13, 2005
I bet Blackboard is buying WebCT’s client base. WebCT’s underlying technology is so old, that it will probably get abandoned. If other LMS players like Desire2Learn or Angel are smart they will target every existing WebCT institution and tell them. “As long as migrating to a different technology is in the cards, why not simply migrate to a newer, cheaper, better technology?”
A problem with an open source LMS like Moodle is the need for in-house expertise. One option would be to work with a Moodle partner like remote-learner.net.
Blackboard’s pricing is so expensive that institutions will look hard at the value equation. Those that work for public schools and are stewards of community resources have real decisions to make.
Tim Kaar, Elgin Community College, at 1:53 pm EDT on October 13, 2005
I do agree with James, with this merger, many universities will have to pay a huge sum to use this platform if they want to expand on their distance learning courses—if a college switches from a “homegrown” platform to BlackBoard, they may lose potential students since tutition costs will raise. As far as I know, BlackBoard charges per registered course and not per student. Where will the students find the funding for it if they are relying on financial aid alone?
Liz_T, at 2:45 pm EDT on October 13, 2005
And to this it was safe to go back in the water! I have always said it would be great to have the better of these two CMS’ it would make an overwhelmingly robust and scaleable product. The downside is the competition has just been bullet-riddled at the OK Corral. Open source could be an alternative solution to the obviously higher prices that are coming, and more severe budget cuts that are also coming.Good and Bad, this is going to be an interesting ride! We have the top-rung Blackboard Enterprise solution at SWC and also the e-Commerce side so we are watching this closely.
Larry Lambert, Online Instructional Support Specialist at Southwestgern College, at 1:08 pm EDT on October 14, 2005
The real question I am asking is whether the acquisition of WebCT by Blackboard will improve the quality of Blackboard’s LMS. My understanding is that these two systems are not easily stitched together and that, like Prometheus, Blackboard may simply stop supporting WebCT clients after a period of time and ‘encourage’ them to switch to Blackboard. $180 million dollars ($26 from WebCT coffers, $80 million Blackboard loan and the rest from Blackboard’s coffers) will be siphoned off by the venture capitalists. $180 mil is a lot of cash so it’s too bad that it wasn’t invested into R&D to create a better LMS product. Absolutely nothing has changed! I think that as WebCT licences expire, these institutions will awake and become prudent managers of the purse by carefully shopping around among real LMS vendors out there like Desire2Learn, Angel, etc. Or they may decide to take the plunge into the whole new genre of Open Source LMSs. Or they may flock to Blackboard in the hope that size matters.
Steve, at 8:39 pm EDT on October 14, 2005
I agree with James about this merger seeming like a monopoly. I remember in my school libary days when Scholastic picked off all it competitors like shooting ducks at an arcade. It has left the market boring and the titles they sell are so predictable—-yawn! I work like the dickens to involve local booksellers. The price may be higher but so is the quality. Now this...familiar with courses in both products, I hope there is a merger ofthe best ideas and features in both but...I have seen too much of these mergers and takeovers in a lifetime. Don’t even start with me about Mal-Wart! They will name their price and you better pay the fiddler. Let’s hear it for open source!
Sharon Porter, at 3:27 pm EDT on October 15, 2005
I doubt that Blackboard will be able to simply drop WebCT’s product at some point. Institutions that use WebCT have too much invested in training and development to easily move to a different platform. Rather, Blackboard needs to move the two platforms closer to each other, take the best of both worlds (as can be applied) and build a better CMS.
If I were in their shoes, I’d be putting together focus groups of users — faculty, technical, and administrative — in the next 6 months to a year to begin talking about the two systems and identifying what needs to stay and what needs to change.
I suspect both companies are into at least the next generation of their systems (if they use an overlapping set of development teams as some software vendors do), which means we could be 2 versions out from any major changes in either platform. That said, WebCT has been steadily moving in Blackboard’s direction in terms of ease of use, so I’m betting we will see some service packs on both ends that offer some new functionality.
I do not share Tom’s pessimism (or especially Noble’s) regarding faculty and this new merger. With open source and a few other competitors, this has not sewn up the market for Blackboard yet. There are still plenty of wrong steps they could take. Even so though, I don’t see the online environment deteriorating faculty academic freedom or work rights. Many of the changes in faculty work relationships, where they have happened, have as much to do with greater desire for institutional accountability as the changing scope of learning environments, and these changes are still far from paradigmic as far as the faculty culture is concerned.
Clint Brooks, at 2:46 pm EDT on October 18, 2005
I am currently using both platforms and it did not come as a surprise to me. I agree with an earlier comment that WebCT is built on older technology. Even the new version of WebCT does not work as well as Blackboard for students or faculty. That’s how I see it.
Merwyn Strate, at 5:57 pm EDT on October 19, 2005
As I said over at EduBlogR a couple of days ago, there’s a chance that the combined company will take this as an opportunity to create a truly new, truly best-practices e-learning platform rather than simply engage in a shake-down of hte client base.
There’s ALWAYS a chance that pigs will fly.
Corrie_B, at 11:50 am EDT on October 20, 2005
Hey:I don’t really understand why everyone keeps saying WebCT is built on older technology that Blackboard. WebCT CE older editions are built on C and Perl and without a db, so that’s true, but the WebCT Vista and new CE are built on Java (J2EE) enterprise, Oracle and Weblogic. Since when is that old? Java is gonna be around for a long time...
Andy, at 5:07 pm EST on November 9, 2005
What is the latest on this merger. Which technology should we be focused on? Is Blackboard going to continue with WebCT?
BettieLou, at 4:10 pm EDT on April 3, 2006
Any school wishing to get the most out of their technology dollar should seriously consider using an open source project like Moodle. For a 1/3rd of the cost of one of the commercial products, we had our site setup, hosted, and training for our staff by Classroom Revolution. It seems smarter to spend your IT budget on support of software, instead of on the software itself.
Rob
Rob Bussell, at 8:10 am EDT on June 8, 2006
As one commenter pointed out here, the problem with open source products like Moodle is the need for in-house expertise or going with a Moodle partner (the commercial arm of Moodle) for your support services. And with Moodle’s strict enforcement of its Trademark, those two options are really the only two you have...be self-sufficient or contract with a Moodle partner.
An independent company can not advertise Moodle hosting, support, consulting, etc., without being a Moodle partner which requires them to pay a royalty to Moodle.com. And if a company can’t advertise, then you can’t find them...thus creating and advertising and service monopoly for moodle.com.
See the discussion at the link below for more detail on this topic:
http://moodle.org/mod/forum/discuss.php?d=48528
Note: If you are prompted to login, just press login as guest.
This in itself, is, in my opinion, completely counter to the spirit and intent of open source. Do you know of another open source project that sends out cease-and-desist notices like the one at the link above? There is, in my opinion, something unethical about moodle.com claiming exclusive rights to a product that has been developed by a world-wide open source community.
Moodle.com could protect the Moodle trademark, have an official partner program, and allow others to participate in Moodle hosting, support, consulting, etc. The competition would be good for Moodle and anyone interested in adopting Moodle.
So what does this mean for those considering adopting Moodle? It should serve as a warning sign to anyone thinking of adopting Moodle on a large institutional level if you are not able to provide your own support and development...what’s the difference in paying Blackboard and paying Moodle.com for support?
Remember, Blackboard was very affordable a few years ago. Now that they have a large portion of the market, it is not so inexpensive. Also, remember, even WebCT (now owned by Blackboard) started off as a non-profit collaborative project.
Beware of monoploies...they are seldom good for the consumer.
Steve, at 1:10 pm EDT on August 27, 2006
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Open-Source
There is already an open-source choice, http://www.sakaiproject.org/. Why only so universities use it, I do not not know.
Jonas!, Mastermind at The CardBoard Box Mansion, at 8:12 am EDT on October 13, 2005