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What Happens If OpenClass Succeeds In Disrupting LMS Market

The following was originally posted at e-Literate blog

During discussions over the past week in person and over blogs, I’ve had three people ask essentially the same question – will Pearson’s OpenClass LMS offering and associated corporate strategy lead to more competition or less competition in the LMS space for higher ed, or how will the competitive landscape change? Obviously the nature of this question is speculative with no concrete answers, but I do think that technology market trends can help us with an educated guess.

Assumptions

Before I give my answer to the question, it would be worth clarifying the assumptions behind the predictions.

  • Assumption 1) Pearson’s OpenClass is meant as a disruptive innovation, as Michael Feldstein described:

A disruptive innovation in the Christensonian sense is one that generally starts at the bottom of the market. It isn’t better than its competitors, but it is usually cheaper and/or simpler. Sometimes it serves a segment of the market for which the existing product was too expensive. Over time, it gets better and displaces the higher end product.

  • Assumption 2) If OpenClass is successful, then the actual definition of LMS, digital content and associated ed tech markets will blur and change as I noted in a previous post.

What I think is important to watch, however, is not whether OpenClass ends up being a free version of today’s LMS, but instead whether OpenClass can change the rules of the LMS game and move the market to a new model of learning platform. If OpenClass becomes a more successful CourseSites or a even-more-free Moodle (although not open source), then I would argue that it will be a failed strategic move by Pearson.  To be successful, OpenClass must change the game, and that leads to the more interesting questions to ask, in my opinion.

  • Assumption 3) This is a platform strategy as described by Michael. ”Pearson is attempting to shift from being a product company to being a platform company, in the way that Google and Facebook (and, increasingly, Apple) are platform companies.”  This platform strategy could even break down silos such as academic technology and student affairs, as described in this post on Inside Higher Ed (note, this post does not say that OpenClass will move this direction, but the platform strategy does open up possibilities).

How amazing would it be if Adrian, Pearson et al. integrated student affairs functionality into OpenClass? Let’s start with a robust CRM component. Add a dash of analytics and we might be looking at the future — today. C’mon Adrian, you know we’ve been waiting patiently for this. Think of 37 Signals, but for higher education…for all of us, sans silos.

  • Assumption 4) We do not know yet whether OpenClass will succeed in disrupting the market, or perhaps if another company will be able to implement a similar strategy. However it turns out, Pearson is not planning for OpenClass to be just another LMS.

If Disruption Does Not Occur

This case is more straight-forward. If OpenClass does not fulfill Pearson’s potential to disrupt the LMS / ed tech market, then we will have a new, free LMS option to consider. We will have more competition at least in the short term. I do not see that any existing LMS vendors would go away, although several could become less dominant.

The bigger question would then be whether another large company jumps in to attempt a different version of a free platform strategy.

If Disruption Occurs

If OpenClass is successful, however, it will move the learning platform more towards a consumer decision and less of an institutional decision. This is a spectrum, not a binary choice, so this does not mean that institutional decision-making will go away, just that we will have more faculty-based and even student-based decision-making available compared to the recent history of LMS adoption. In this case we will end up with a more competitive landscape focused on learning tools and digital content, agglomeration on the learning platform itself, and far less dominance from the traditional LMS. My predictions are below.

  • Learning Platform – There is typically room for only a handful of platform providers based on recent technology markets.  Think Apple / App Store and Google / Android in the smart phone markets, with other platforms rapidly disappearing.  Think Facebook and LinkedIn and Google+ with social platforms. My guess is that the ed tech market is only big enough to support two “platforms”, or maybe three long-term. Keep in mind that we’re talking about free platforms that are monetized elsewhere (content stores, premium support, increased adoption of content). There are not many companies that have the scale or the additional revenue potential to justify the investment of millions of dollars to support and update a free learning platform.
  • Traditional LMS – There will remain a market for traditional LMS offerings, but this market will likely specialize and focus on online programs, government / military schools, and schools with specialized needs that cannot be met by a free platform model. I suspect that open source LMS solutions will focus once again on schools that truly want free as in freedom, as described in Chuck Severance’s book, at the expense of schools who have gone open source purely for financial reasons. The traditional LMS would be far less dominant in ed tech than it is today.
  • Ed Tech Competition – What will happen, at least in my opinion, is that the nature of a free platform will move the ed tech competition into learning applications, content tools and disaggregation of content (think Inkling). Yes, there already are existing and new offerings here, but I think we would end up with more competition and greater ability for these applications to scale.  We could even see existing LMS providers disaggregating some of their tools and competing in the space, in conjunction with the free learning platforms.
  • Content Providers – Publishers as well as OER and self-publishing providers will need to be more clear on the value they provide, as the platform will give greater access to learning content from multiple sources. OER already has a compelling value proposition – open and free (there are those words again). Publishers will need to provide more value-added tools and services, such as Cengage MindTap, and not rely as heavily on their distribution channels.

One way to look at these predictions is that the general nature of ed tech competition will move farther away from enterprise-class, institution-wide applications such as current LMS solutions, and closer to learning tools and content that are more discipline-specific.