Blackboard buys Moodlerooms...And no, this isn't an early April Fools

Is this a major play for market share, a genuine effort to promote development and cross-pollination in the LMS market, or a bit of both?
Written by Christopher Dawson, Contributor

My first reaction when I saw this news today was something along the lines of, "Wait, what? lolz! Gotta retweet that one!" Then, of course, I realized that it was true. Blackboard announced the acquisition of both Moodlerooms and Netspot today, along with the creation of a new "Open Source Services Group", headed by none other than Charles Severance, founding Chief Architect of the Sakai Project. Is this another case of Blackboard just buying up its competitors, a major horizontal play, or something else entirely? More importantly, is this a good thing or a bad thing?

Far less surprising than Blackboards announcement that it had just acquired two of the largest providers of the open source Moodle LMS was the reaction from competitors. Josh Coates, CEO of Instructure (maker of the Canvas LMS; many outside of the ed tech space may remember him as the founder of Mozy) characteristically didn't pull any punches, telling me Monday night that,

It looks like Blackboard is giving up on innovation and instead is focused on commoditizing the LMS. Moodle, Sakai, Angel, BB 9.1 - it's all the same to them now. They want to make their money by offering generic IT service and software. Given Blackboard's decline in LMS market share, i suppose it's the only option they had.

Of course, Blackboard, which was itself recently acquired by a private equity firm for a cool $1.64 billion, said precisely the opposite in a press release:

“Both Moodlerooms and NetSpot have built strong reputations for high quality service and support, which aligns with our deep focus in these areas and our overall commitment to providing LMS services and hosting globally,” said [Ray] Henderson, CTO and President of Academic Platforms at Blackboard. “This direction allows us to provide the choice of an open source alternative with the benefit of a team of leaders from the open source community to guide our sustained contributions and citizenship in that community.”

Leaders from Moodlerooms, NetSpot and Blackboard signed a Statement of Principles affirming that their work will continue to include regular contributions to the open source community in the form of code contributions, financial support to the Moodle Trust, and support for community gatherings including Moodlemoots.

Moodle founder, Martin Dougiamas, was measured in his response, and was quoted in the Blackboard press release:

“The decision of Moodlerooms and NetSpot to work under Blackboard may sound very strange at first to anyone in this industry...but it’s my understanding that these three companies have some good plans and synergies. I’m happy to say that Moodlerooms and NetSpot will remain Moodle Partners, and have promised to continue...participating in the community...and contributing financially to Moodle exactly as they always have.”

So is this a good thing? Well, maybe. All signs point to Moodlerooms and Netspot being allowed to continue operating in a largely independent fashion and to continue offering Moodle-based services, unlike when Blackboard acquired Wimba and Elluminate to add real-time collaboration and teaching tools to what became their Collaborate product. Their relationship with Angel customers (Angel was another LMS acquired by Blackboard) has been rocky at best, although as part of Monday's announcements, Blackboard committed to better supporting the Angel LMS.

What appears to be happening here is instead a horizontal play for market segmentation as well as new outlets for Collaborate and Edline (also, like Blackboard, recently acquired by Providence Equity Partners) which I expect will be more tightly integrated with the customized Moodle offerings from Moodlerooms and Netspot. To some extent, Josh Coates may be right: Blackboard has been losing market share and allowing Blackboard to dominate the high-margin, upper end of the LMS market while offering open source solutions for lower-margin market segments is an effective business strategy to recapture users. If Lexus, Toyota, and Scion can all be money makers for Toyota Motors, it makes sense that Blackboard Learn and Moodle can both be money makers for Blackboard.

Blackboard's deep pockets also ensure that financial contributions to the overall Moodle effort can remain strong, assuming that Blackboard doesn't decide to head in a different direction than the one it outlined on Monday. The more money that flows into Moodle, the better, given that, although growing in market share, is getting fairly long in the tooth and will have an uphill battle to compete effectively against the like of Instructure, Pearson, and Desire2Learn. What initially looks like it could have been a real blow to the competitive landscape may, in fact, enhance it, although this remains to be seen.

However, all skepticism aside, there does appear to be a real shift in mindset at Blackboard after their acquisition last year. I'll be keynoting their BBWorld DevCon this year. I say this by way of full disclosure, but the check's already in the mail and the contract is signed. I could have absolutely blasted this deal as more of Blackboard's same old competitor acquisitions and still gotten paid. I also bring this up, though, because they asked me to keynote as an educational technologist, not as a developer or employee of a Blackboard Partner (I'm both, more disclosure fer ya). They're hoping to bring forward a message about the effective use of tech for learning and the role of developers and companies like Blackboard in making it happen; my talk will be far more general than any they've had before, at their request.

Sure, this is marketing. Marketing is all about messaging and perception and Blackboard is in the business of making money. I get that all too well. But this isn't a strategy with which Blackboard has ever bothered in the past. I'm curious to see how this will all shake out, but I actually have the feeling that schools and the development communities built around educational applications will come out on top. Here's hoping I'm not wrong.

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