Casey Green's analysis of the news that Blackboard is in play is a must read.
Unfortunately, my gut seems to match Casey's "hyperactive inference engine" that "the probable bidders are investment firms rather than companies that currently play a major role as content or technology providers to the campus market.". I say "unfortunately", because I also agree with Casey that: "An investment firm might be less sensitive to complaints about rising prices than a company that already has well-established business relationships in the higher ed market."
I think a sale of Blackboard to a buyer outside of the consumer technology and information space is both a wasted opportunity (for the companies I'd actually like to see buy Blackboard), and a long-term negative to us in higher ed. Casey starts the discussion by asking:
"What does the higher ed community want and need from a learning management system and from LMS providers?"
"What does the LMS currently do well – and what must it need to do better?
"What do the individual LMS providers do well – and what must they do better?"
These are good questions, and I'll be interested to read the comments on Casey's post.
I would answer these questions by making the following observations:
- Blackboard should be bought, but it should be bought by a company that wants to play a larger and longer game in the education space.
- The value of Blackboard is less about the annual subscription revenues thrown off by the revenue model, but the accrued knowledge about the education market and the services and technology that this market will need as it transforms around technology based delivery platforms and globalizes.
- I've long believed that either Microsoft or Google are better fits to bringing in Blackboard, as Blackboard would inject an educational mission and higher ed knowledge into the DNA of either company. Microsoft or Google would not need to make much of a return on investment with the purchase, and indeed I don't think they would. What Blackboard would do for Microsoft or Google is to push them to enter the expanding and changing higher ed market on a global scale, and to play a part in creating new markets and opportunities as opposed to responding to them. There are long-term revenues to be made in the higher ed space, but creating that value will be a difficult and long-term process.
- The potential downside risks for higher ed are significant if Blackboard is to be purchased by an investor group. A new owner of Blackboard could squeeze additional short-to-medium term revenues by both raising costs and skimping on service and R & D. Whatever you think of Blackboard, all of us should recognize that Ray Henderson has brought a cultural change to the organization that is customer and education focussed. Would that culture persist under ownership that is not so closely tied to the higher ed community?
- Google, Microsoft, and Cisco are sitting on piles of cash that will either get squandered on purchases that are not strategic, or returned to investors as dividends. Fully re-orienting up the value chain as education providers rather than suppliers might be the last best hope of the large publishers to remain relevant. I fear, however, that none of the large technology or publishing companies has leadership with the vision and guts to want to be a part of creating a new higher education for the 21st century. A sale of Blackboard to an investment company is not a good thing for our community.
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