Learning Management Systems Industry Consolidation

Is consolidation in the LMS business really happening?  There certainly have been some significant acquisitions lately.  Here are some examples:

• Oracle purchased Taleo (an HR/Talent Management provider) for $1.9 billion.  Taleo had previously purchased Learn.com (one of the top 10 LMS's) for $125 million.
• SAP bought SuccessFactors (another HR/Talent Management provider) for $1.9 billion (interesting how these numbers line up).  SuccessFactors had previously purchased Plateau (another of the top 10 LMS's) for $290 million.
• IBM bought Kenexa for about 1.3 billion and Kenexa had previously purchased Outstart (another top 10 LMS) for $38.9 million.

These major technology corporations are moving into the HR software business that is now seen to include talent and learning management.  Oracle got into the HR software business when they purchased PeopleSoft years ago but they were probably looking for something more up-to-date. SAP has always touted itself as the ultimate ERP but it was built from the financial side and was always a little weak on the HR side so they are clearly looking to enhance their capability.

• SumTotal Systems (probably the top corporate LMS) bought GeoLearning (another top 10 LMS) for an undisclosed amount.  Bersin estimates that this increases SumTotal's share of the $1 Billion market from 9.5% to 12.5%.  SumTotal Systems is an LMS that has expanded into the talent management market and its purchase of Geolearning was the elimination of a competitor. 

Bersin by Deloitte estimates that the total LMS market is about $1 billion and that none of the top ten LMS's had more than $150 million in revenue.

Here are two links to some discussion about these acquisitions:

• http://www.bersin.com/blog/post.aspx?id=fa8cc8f3-7ffd-4566-a415-4fd869ee2b2c
• http://www.bersin.com/blog/post/Taleo-Acquires-Learncom--A-Shoe-Drops-in-the-LMS-Market.aspx

It is interesting that Microsoft has not made a strong effort to enter the LMS or the online education world.  They do offer a number of tools which are well hidden on their website.  They offered the earliest online meeting tool Netmeeting many years ago but then dropped it.  They purchased Placeware several years ago and now call it Microsoft Live meeting.  It is more suitable for business meetings than for webinars.  They just don’t seem interested.

Google has made some tentative steps into it.  Of course, the Google search engine and YouTube are probably the most used tools in education.  They offer Google CloudCourse, Apps for Education and numerous other tools.

Apple has long positioned itself as the choice for graphic arts and education and now offer Apple and iBooks author but have not ventured into the LMS market.

In the education market, mainly Blackboard and Pearson have been buying other companies. 

• Blackboard bought WebCT quite a few years ago, then Angel, then Elluminate (a virtual classroom/web conferencing tool) and Wimba, then Edline, and then MoodleRooms and NetSpot (Moodle support companies). 
• Pearson has recently purchased eCollege, Fronter, Intellipro, TutorVista - an online tutoring service, Connections Learning/Education, Embanet-Compass Knowledge Group, and Exam Design. They purchased their Equella LCMS from The Learning Edge in Australia.  It is interesting that the large publishers who were late off the market still have the capitalization to buy an entry into the online world.

Blackboard is the dominant LMS in the education market with perhaps 75% of the commercial LMS market share.  Moodle (open source) has more users - it shows over 70 million users on its website and this may be a low estimate because of the open source nature of the product.  Desire2Learn is probably third.

Consolidation is happening but it is largely at the high end of the market. There are still 100’s of smaller LMS’s that come and go on a regular basis.  I list a total of nearly 700 at www.trimeritus.com/vendors.pdf.