The Blackboard Buyout and the Wisdom of Open Web Standards

As part of our LMS Evaluation, we’ve investigated concerns around Instructure’s viability and longevity as a business. Recent events surrounding Blackboard should lead us to question its viability with equal diligence.

First there was last week’s report that Blackboard had retained a financial services firm to help them respond to non-binding buyout offers.

Today, Michael Feldstein discusses a spate of Freedom of Information Act requests sent last week to universities who have recently switched from Bb to Moodle. The anonymous requestors wanted as much information as they could get about the process of switching LMSs– procurement notes, evaluation materials, communications with vendors, trouble tickets, and more.

Feldstein (while admitting he has no inside knowledge of the requestors or their motives) dispels fears that Blackboard is behind the requests as a means of attacking universities who switch. He says it’s more likely that these requests are coming from potential investors who are trying to understand the reasons for the erosion of Bb’s market share before purchasing the company.

He refers to the excellent summary of the Bb buyout drama by Kenneth Green in saying that, though the potential investors are unknown, they are most likely investment firms– not other large players in the education technology market (like Sungard, Pearson, Google, and others). If this is indeed the case, Feldstein speculates two possible motives which have future ramifications for Bb users:

In general, there are two types of approaches that private equity takes to companies that they acquire. One possibility is that they milk the company for cash as much as they can and then sell off the parts. That’s the kind of approach that became infamous during the big leveraged buyout boom of the 1980s. But often private equity will buy a company because, for whatever reason, they think that company is under-performing and that they can turn it around relatively quickly. In that case, their goal is to build up the company and sell it at a profit, either to another private investor or through an offering on the stock market. It’s a bit like flipping a house. I make no judgment here about what the likely impact of private equity purchasing Blackboard might be. My point is simply that there is no particular reason to believe they would automatically do a worse job for customers than, for example, Google might simply because they are a financial services company.

(Feldstein, 2011)

Green puts this all in context of a general downward pressure on prices in the higher ed. tech marketplace as open source and low cost LMS alternatives mature to match/exceed Bb’s feature-richness and stability. He also notes that 700 universities currently on Blackboard’s Angel & WebCT versions are forced to make a choice to upgrade to 9.x or transition out to another system. As these schools are looking at the value propositions offered by the various competitors, “some current Blackboard LMS clients will move to Desire2Learn, Moodle, or Sakai, LMS applications that have gained market share in recent years. And still others may opt for one the newer LMS platforms such as Epsilon or Instructure that are beginning to gain attention and traction.” (Green, 2011)

This all shows that the higher ed. LMS market is in the midst of a massive transition from a state of hegemonic domination by a few vendors to a marketplace of vigorous competition by the many. Open source systems are reaching maturity and feature parity with proprietary ones, and budget-conscious universities are finding equal or greater value in lower-cost alternatives to Blackboard. This competition is only going to be good for consumers, but it comes at the cost of increased short-term uncertainty.

It is in the midst of this uncertainty that the wisdom of open web standards really shines through. These standards guide the development of websites, browsers, applications, and file formats throughout the internet to ensure interoperability between sites and services without proprietary restrictions and incompatibility issues. In a volatile market like the higher ed. LMS market ca. 2011, one refuge is the fact that open standards like HTML, XML, SQL, and others will allow us to freely move our data with us, whichever LMS we choose to adopt down the road. This will make it so we can attach our institution’s viability to open standard technologies themselves instead of on the changing fortunes of LMS vendors.

Related articles

• Blackboard considering buyout offers (teleread.com)
• Instructure Canvas LMS: Go open source, get serious investment capital (zdnet.com)
• Blackboard May be the Target of a Takeover (scholarlykitchen.sspnet.org)
• Blackboard Shares Popped: What You Need to Know (fool.com)
• Instructure Aims to Knock Down the Learning Management System Walled Garden (readwriteweb.com)
• Interview With Desire2Learn CEO John Baker (downes.ca)
• VLE Review Survey (ilsmatters.wordpress.com)

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