LMS Consolidation - Blackboard Acquires Angel Learning

By David Roe (@druadh20) May 20, 2009 Comments

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LMS Consolidation - Blackboard Acquires Angel Learning What is it in business that brings out the worst of people when the subject of mergers and acquisitions raises its head? Initial reactions generally speaking tend to be negative and dominated by ‘bigger is badder’ prognostics that may or may not be accurate.

Such is the case this month with the announcement that Blackboard, a provider of Learning Management Suites (LMS) is to take over its (smaller) rival ANGEL Learning.

To date, much of the reaction to the US$ 95 million deal has been at best skeptical and at worst just plain bad. However, Nicole Engelbert, lead analyst of public sector technology at Datamonitor, the data analytic and forecasting provider for the tech sector, says the real issue here — and possibly the one that could make this the ‘deal of the year’ - is how competitors react to the news.

Recent Blackboard Acquisitions

Let’s put this in perspective. On May 6, Blackboard announced that it had reached an agreement to buy ANGEL Learning in a deal worth US$ 95 million in cash and stock. But this is not the first time in the past few years that Blackboard, based in Washington DC, has ventured out into the market place to buy out competitors or solutions it believed would enhance its own educational suites.

In 2008, it announced the acquisition of the NTI Group (now California-based Blackboard Connect Inc), a SaaS provider of mass messaging and notification solutions for educational and government organizations.

More significantly perhaps in terms of this recent announcement was the acquisition of WebCT in 2006. It is this deal, and the aftermath that has prompted much of the negative comment regarding the ANGEL deal.

At the time many educational institutions were running WEbCT. Many also say that following its acquisition by Blackboard development and technical support for the product almost disappeared.

Now, many current ANGEL users fear that Blackboard’s takeover will create untold difficulties — not to mention expense — with platform switching, especially as many institutions have only recently signed-up to three year contracts with ANGEL.

ANGEL Commitments Guaranteed

However, Michael L. Chasen, Blackboard’s president and chief executive, told the ANGEL User’s Conference (AUC) in Chicago on May 14 that the company learned from that acquisition and promised that this time it would be different.

Specifically, he has committed to two actions to reassure ANGEL clients:

Ray Henderson, former Number 2 with ANGEL will be running Blackboard’s eLearning division. Once the deal is completed later this month Henderson will be installed as President of Blackboard Learn, and will have responsibility for product development, support and services overseeing both ANGEL’s and Blackboard’s eLearning products.
Blackboard will honor all ANGEL contract commitments, and release two more versions of the software including a bridge to an eventual Blackboard product incorporating Angel features.

Deal Of The Year?

This is where Nicole Engelbert says that this could be the LMS deal of the year. If Blackboard has, in fact learned from the WebCT deal, then the issue is not going to be how the newly constituted Blackboard performs, but how its competitors react.

Blackboard even in the current economic climate is performing well with its financial results for the first quarter, posting a narrower loss of US$ 37,000 compared with a loss of US$ 4.4 million in the first quarter of 2008.

Reduction in Market Players

In this scenario, Engelbert says there are thee important issues to watch out for. The first issue that the market will respond to, she says, is how the industry reacts to what superficially looks like a reduction in the number of players in the market.

However, while the breakdown of the number of vendors suggests that competition is shrinking, this does not take into account the emergence of strong commercial vendors and an extremely lively open source community.

Currently, there are three proprietary LMS solutions (Blackboard, Desire2Learn, Pearson eCollege) and two open source solutions (Sakai, Moodle), as well as a number of other service providers.