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5 Reasons Microsoft Will Buy Blackboard
By Joshua Kim September 7, 2009 9:08 pm EDTThe top 5 reasons why we will see Microsoft buying Blackboard by the end of 2010:
1. The education market will continue to grow and is an important sector for a technology and platform company to have a presence. The CMS is increasingly at the heart of the campus educational experiences and is integrated with other campus services. The opportunity to offer schools a vertical and integrated solution (from server OS, to communication/collaboration, to storage and the CMS) will be attractive to many institutions. A good business case can be made that Blackboard will provide reliable earnings into the future due to ongoing subscriptions from the large customer base, with opportunities to leverage the existing sales force for new customers while up-selling to other services and platforms. Microsoft has the scale in marketing and sales to grow the CMS business internationally.
2. Buying Blackboard will instantly address the problem of Microsoft losing relevance in higher education. Google's Apps for Education program is rapidly gaining traction, crowding out the traditional Exchange based contracts. Students and faculty increasingly prefer Apple products and the Apple OS for high-end machines, with Linux and the Google Chrome OS posing a significant threat for low-end computers. Purchasing Blackboard will immediately make Microsoft relevant on campus, particularly if the purchase allows services to increase and costs to be driven down due to the scale and existing products that Microsoft can bring to the business.
3. The CMS market will evolve towards the cloud. Multi-tenancy (many customers running on one instance) allows cloud applications to scale, radically reducing per unit cost by distributing inputs such as power, cooling, backup, maintenance etc. over many users. Educational institutions that have existing local Blackboard instances will strain to meet the financial and people resource demands as complexity increases. Growth in the CMS market will largely need to be in the cloud, as both secondary schools and international educational providers will not be able to afford to local run and maintain the CMS. Microsoft will be able to leverage the enormous investments the company has made in its cloud infrastructure to both increase the capabilities of the CMS and drive down costs per institution.
4. Microsoft could improve the Blackboard experience by bundling in cloud based services such as personal storage, robust presence awareness and collaboration, and integrated calendaring, messaging and e-mail. Web-based productivity tools (Office Live - documents, presentations, spreadsheets) could also be integrated into Blackboard for more powerful authoring and sharing of content. Bundling all these services seamlessly into Blackboard would erode the momentum that Google has been gaining on campus with Google Docs. Integrating Microsoft's search technology into Blackboard (search is terrible in Blackboard) would be great way for Microsoft to leverage this technology within a vertical market. Allowing students and faculty to tag content that is open, and then having a universe of open content from Blackboard to search for and display in Blackboard (or even from Bing) would represent an advance over Google in search.
5. Education is an important core value for the Microsoft culture. Extending Blackboard to schools and universities throughout the world with locally appropriate pricing (made possible by Microsoft's data center scale) will contribute to and extend Microsoft's mission of empowering people through technology. Bill Gates' effort to offer great lectures to the world through the Web with project Tuva can be integrated and expanded into a Microsoft owned Blackboard business. Think of the depth of educational content that Microsoft could capture, share, and distribute in conjunction with a cloud based Blackboard sitting on a universal database of learning materials. For years Microsoft has had a presence in offering learning content, an effort that never gained any traction in higher education. Using Blackboard to both aggregate and distribute learning content on a worldwide basis would build on efforts such as MIT's Open CourseWare, and be a counter to efforts by Apple and Google in this space.
I wonder if anyone from Microsoft is going to read this post? Microsoft needs to find a way to join a larger conversation in higher education beyond their installed SharePoint / Exchange base. The truth is that Microsoft simply has not felt very relevant to innovations in learning technology for the past few years. One signal that they care about this space would be to find ways to engage our community in debate and discussion.
What do you think? Is Blackboard too small a company to take advantage of the opportunities they have created by rolling up the for-profit CMS space? Is Blackboard an outlier in a world of consolidation within the technology industry? Is Microsoft the right company to purchase Blackboard? Would this be a good or bad thing for higher education? What do you think the odds are that I'm correct that we will see a Microsoft purchase of Blackboard by the end of 2010?
