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Not Dead Yet

November 8, 2013

The death of the learning management system has been routinely predicted over the last few years, but if a new market forecast is to be believed, commercial vendors have little to fear. The industry will continue to expand over the next five years, though most of the growth will come from outside the higher education sector.

According to a report by the market research and consulting company MarketsandMarkets, the industry is anticipated to post a year-over-year growth rate of about 25 percent for the next five years, expanding from $2.55 billion today to $7.83 billion in 2018. North America will continue to be the largest and most profitable market for LMS providers, but Asia and Latin America “are expected to experience increased market traction.”

The growth won’t come from the higher education sector alone, however, but “the increasing adoption of e-learning, businesses emphasizing... continuous learning practices, accountability mandates, and the market trend of employing cloud technology to streamline the learning process.”

Wrote higher education consultant Phil Hill, “The LMS ain’t sexy, but it’s still important.”

Enterprise software developers are positioning their products to address the variety of uses the report identifies. Blackboard has long described its Learn suite as “more than a learning management system,” and when Desire2Learn unveiled the newest version of its software last month, the company dubbed it “the world’s first fully Integrated Learning Platform.”

The vendors themselves were predictably enthusiastic about the market forecast. Desire2Learn CEO John Baker said in a statement that his company “is in the right place at the right time to take advantage of this great opportunity,” and Misty Frost, vice president of marketing at Instructure (which develops Canvas), said the figures are “not completely out of the ballpark.”

“These projections aren’t surprising when you think about the way that learning platforms and associated technologies can strengthen current models and support new forms of education delivery,” Matthew Maurer, Blackboard’s vice president of strategic communications, said in an email. “We’d expect this trend to continue as education providers look for ways to improve results, broaden their reach and try to meet changing expectations and preferences from students and parents.”

Independent analysts are less confident in those predictions, however. George Kroner, an enterprise solutions engineer at University of Maryland University College, said he does not think commercial vendors can squeeze more profit out of the saturated higher education market in North America.

“If we were talking about a global scale, perhaps,” Kroner said. “If we’re including all these tangential learning technologies out there, including those in the corporate space, I’d say yes.”

Kroner previously worked as an engineer at Blackboard. Since the vast majority of college and universities in the U.S. already have a system in place, he said software providers will instead fight to woo the institutions looking to switch.

Kenneth C. Green, founding director of the Campus Computing Project, said in an email that he also thinks major revenue growth in the U.S. is unlikely.

Green’s own research, the annual Campus Computing Survey, backs up the assertion that more institutions are taking their systems to the cloud, and the same report also suggests LMS use in higher education is hitting a plateau. About 62 percent of courses used their institution’s LMS in 2013, compared to 58 percent in 2011.

“The U.S. market remains competitive, but the battle is for clients who already have a LMS, not for new institutional clients that might be making an initial purchase,” Green wrote. “[M]y view is that revenue growth would be incremental, with some uptick for extensions (mobile, analytics, hosting services, etc.).”

Vendors may find new clients in the K-12 and corporate sectors, Green and Kroner said.

“Many of the firms serving the corporate market are full-service providers and help corporate clients customize training and other programs using the LMS,” Green wrote. “In this content, they do ‘razors and razor blades’ -- the LMS application and also (what can be revenue rich) content development work.”

The international market contains more “green fields,” as Green put it, but commercial vendors will have to combat a growing trend that favors open-source solutions like Moodle and Sakai. Still, Green noted, “The growing private, for-profit sectors in other nations may make other choices.”

 

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