On 18 June 2004, Blackboard became the first academic e-learning system vendor to go public since the dot-com boom. The IPO raised $77 million; about two-thirds of this will go to Blackboard and the rest to shareholders.
Blackboard's IPO generated the highest first-day premium seen in a technology IPO during 2004, closing 43 percent above its initial offering price of $14 per share. Blackboard's customers will welcome any product improvements and new initiatives that the IPO cash may fund.
But don't see Blackboard's IPO as proof that the academic e-learning system market has stabilized. Although Blackboard has reported modest profits in three consecutive quarters since mid-2003, it has not yet had a profitable fiscal year. Neither has its privately held archrival WebCT. These companies dominate the higher education course management system (CMS) market. Both still face resentment over large price increases in 2002 and are struggling to convince budget-constrained colleges and universities to make bigger investments in e-learning infrastructure. Quality problems during the introduction of Release 6 of Blackboard's flagship learning system also contributed to customer dissatisfaction.
These developments have made higher education institutions wary of vendor lock-in, which has opened the way for newer, smaller entrants into the CMS market. For example, CyberLearningLabs and Desire2Learn recently won several major multicampus contracts. The open-source Sakai project, led by a core group of four research universities, has signed up about 40 partner institutions, many of them Blackboard and WebCT customers.
Blackboard remains a powerful contender in the CMS market. It has a large customer base, investments in a more open and modular platform architecture and a portfolio of products for learning content management, portals, and student transaction cards. But long-term leadership in academic CMS remains uncertain.
The Blackboard IPO has brought some excitement into the academic e-learning market, but long-term viability of all vendors in this sector remains unproved.
Recommendation: Institutional e-learning administrators should:
Analytical Source: Ron Yanosky, Marti Harris and Michael Zastrocky, Gartner Research
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