Blackboard's Big Buy

July 8, 2010

Blackboard announced on Wednesday it is buying out two software companies in an effort to bolster its real-time collaboration features and satisfy a generation of professors and students increasingly shaped by social media.

The company, infamous to some in higher education for its habit of swallowing up smaller fish, said it is buying Wimba and Elluminate, top providers of software that lets students work together online, for a total of $116 million.

The newly acquired companies will become Blackboard Collaborate: a new platform in the Blackboard family devoted to “synchronous” learning — interactions that occur in real time, rather than at the convenience of each participant.

The move is a new direction for Blackboard, which has built its empire on asynchronous features. The company’s learning-management suite includes some asynchronous tools, but none as good as Wimba’s or Elluminate’s, said Ray Henderson, president of Blackboard Learn, in an interview with Inside Higher Ed. Blackboard decided it was more economical to simply acquire those companies -- and their customers -- than try to build competing tools, Henderson said.

At a time when consumer media has shifted toward a blending of asynchronous and synchronous features -- think of Facebook and Gmail with their popular chat features -- Blackboard is trying to get on board with social media and the communication habits it is shaping, Henderson said. And from a pedagogical standpoint, “There is significant academic research that says student collaboration, peer tutoring, group work prepare students better … for the real world than traditional assignments,” he said. The demand for technology that facilitates such interactions, Henderson added in a blog post, is likely permanent.

As for Wimba and Elluminate, the top brass at those companies are probably happier about the deal than anyone, said Trace A. Urdan, a senior analyst at Signal Hill, a Baltimore-based investment firm. When those companies started taking money from professional investors several years ago, it became clear that they would need to figure out how to generate some returns before long, he said. (For one executive, the deal may bring a sense of déjà vu. Carol Vallone, CEO of Wimba, was CEO of WebCT when Blackboard absorbed that company in 2006.)

“When you accept money from a professional investment firm, they get on to the board, and they’re going to want an exit,” said Urdan. Generally, that means either going public -- which neither company was robust enough to do successfully, he said — or getting bought out. Another option might have been to merge with Angel, the former Blackboard learning-management competitor, and make a run at Blackboard, but when Blackboard bought Angel in 2009, “this [was] really the only alternative,” said Urdan.

The Blackboard-Wimba-Elluminate deal does create a bit of an awkward situation for Blackboard competitors such as Desire2Learn and Pearson’s eCollege, which have partnerships with Wimba and Elluminate. Many of these companies' client institutions use Wimba and Elluminate alongside their non-Blackboard learning-management tools.

Henderson said he spoke to the heads of two such companies Wednesday evening. “We’ve told them we want to continue to sustain those integrations and continue to invest in them,” he said. While “they may approach that with some skepticism,” Henderson said he believes the other learning-management vendors will keep supporting Wimba and Elluminate products even as Blackboard takes ownership of them.

John McLeod, a Desire2Learn spokesman, said the deal was “not a shocking turn of events.” Desire2Learn will keep supporting its existing integration with Elluminate, he said, and will continue working on an integration with Wimba as planned. Officials at Pearson and Moodle, an open-source course management system, had no comment.

There was plenty of Twitter chatter following the announcement, which comes — not accidentally — a week before Blackboard’s annual user conference in Orlando. Predictably, much of the commentary referred to Blackboard’s reputation as a steamroller. “Betcha can’t eat just one!” cracked one Twitterer. “Have an elearning tool that isn't part of the Empire? watch out, it's only a matter of time!” warned another. Exclaimed a third: “NOOOOOOO!!!”

Alan Greenberg, analyst at the e-learning research firm Wainhouse Research, offered a more measured point of view via his own Twitter stream: “Some educational orgs will be pleased, some not,” he wrote. In any case, the move shows Blackboard is “serious re: collab.”

For analysis on the deal from Inside Higher Ed's own technology guru, read Joshua Kim's post on our Technology and Learning blog.

For the latest technology news from Inside Higher Ed, follow IHEtech on Twitter.

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