Merger mania in and around eLearning

First, on Monday, WebEx buys intranets.com for $45M in cash then today SumTotal buys Pathlore for $29M in cash and $19M in stock. And then I hear that back on July 27 Premiere Global Services announced that it was buying Netspoke for $23.2M in cash details. So a virtual meeting company buys a collaboration company. A LMS company buys another LMS company. And a communication services company buys a collaboration company. Looks like the convergence that Elliott Masie has been talking about taking place is finally happening. Anyone familiar with my posts and company knows that I am a big believer in the power of collaboration (and ideally done to such a level of integration that it results in mentoring not just with ‘experts’ but also with your peers) so it is heartening to see that finally we are moving past ‘simplistic’ collaboration (i.e. like stand-alone web meetings) in learning with WebEx+intranets.com and PGS+Netspoke while the fragmented LMS sub-industry is getting so much needed consolidation with SumTotal+Pathlore (and remember that SumTotal is the March 2004 merger of Docent and Click2learn). All of this comes of the heels of SkillSoft releasing SkillSoft Dialogue, their version of a virtual classroom and NETg buying KnowledgeNet last year for their virtual classroom technology/LMS resulting in their Knowledge Now suite. Are we finally getting to the point where educational content is merging with collaboration technologies which is merging with learner management infrastructure? Collaboration is important as it allows learning to become a continuous process and acts as a quality feedback loop while helping to generate new content out of the resulting interactions, all of which sits on top of the learning management system. It has been long neglected in the eLearning industry due to it’s complexity (trust me I founded scholars.com and struggled with the scalability of it’s mentoring model long after SmartForce bought it) for it has been far easier to manage content objects than collaboration objects. I always said while at SkillSoft/SmartForce/CBT Systems that the value of SkillSoft is not the 5000+ hours of training but the fact that you could potentially tap into the collective knowledge of their 3 million users. Of course the Internet bubble burst and they went back to the tried-and-true model of producing generic content. Anyway … sorry for the rant but I have been concerned about the health of the eLearning industry over the last 2 years and I am glad to see this much needed consolidation taking place. Hopefully it will result in some truly innovative stuff versus people scrambling to get into liferafts. Think social networking analysis, workflow learning, collective intelligence, presence awareness, expert locating, communities of knowledge (made up of smaller communities of practice) … Or as BusinessWeek recently put it – The Power of Us. If you haven’t read their cover story on how mass collaboration is shaking up business you should as they talk about how large scale collaboration has changed the delivery of services like auctions (eBay) and product like books (amazon.com) which makes you think about how mass collaboration could change the sharing of knowledge which until recently has been done on a small scale, typically geographically driven, basis or through static content. PS – for those that care it is interesting to note that the 2 collaboration acquisitions were basically done at 2x trailing 2004 revenues (Netspoke) and 3x projected 2005 revenue (intranets.com) while the LMS acquisition was done at 2x trailing 2004 revenues (Pathlore). These multiples are indicative that there is a resurgence of interest and hence increased value.

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