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eLearning Industry Trends

eLearning Industry Trends. Tom Barron Senior Consultant Learning on Demand (LoD) SRI Consulting Business Intelligence June 17, 2002. Mergers, Acquisitions, Closures: July- December 2001. Eduneering Merges with KnowledgeWire. KnowledgeMax Merges with Sideware. Viviance merges with

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eLearning Industry Trends

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  1. eLearning Industry Trends Tom Barron Senior Consultant Learning on Demand (LoD) SRI Consulting Business Intelligence June 17, 2002

  2. Mergers, Acquisitions, Closures: July- December 2001 Eduneering Merges with KnowledgeWire KnowledgeMax Merges with Sideware Viviance merges with K-World Mergers Forum Corp acquires Interactive Media EDT Learning acquires Learning Edge Precision Response acquires Avaltus Smartforce buys Skillscape and IMPAX DigitalThink buys LearningByte Docent acquires gForce SkillSoft acquires Books24x7 Acquisitions Wiley acquires Hungry Minds Serebra acquires BitLearning KnowledgePlanet Acquires Peer3 Assets FT Dynamo Knowledge Navigators McGraw-Hill Lifetime Learning Memestreams Closures Nov July Aug. Sep. Oct Dec Industry Consolidation

  3. Industry Consolidation — 2002 Pace Seems to Slow… Mergers, Acquisitions, Closures: January-June 2002 SmartForce Announces Merger w/ Centra SmartForce, Announces Merger w/ Skillsoft SmartForce, Centra Rescind Merger Mergers Element K Acquires VLab BlackBoard Acquires Prometheus Acquisitions iLearning Acquires Caliber Assets Aegis Research Acquires Mindsim NYUOnline Closures Jan Feb. Mar. April May June

  4. Predictions —Industry Consolidation “I wouldn't be at all surprised to see AOL Time-Warner (AOL) make an acquisition in the learning market.” –Martin Maleska, managing director at investment banker Veronis Suhler “The time is now ripe for significant consolidation in distance learning (involving) companies the Nasdaq is looking at delisting.” –Credit Suisse First Boston senior analyst Brandon Dobell. Several education technology companies with a single product are “looking to be acquired” by companies such as Siebel. –Louis Pugliese of Novak Biddle Venture Partners. Source: IIR Training Investment Forum (Mar 02)

  5. Education Investment Decline:VC Investment in Education Slows

  6. Education Investment Decline:…Even As a % of Total VC Investments

  7. Tech Investment Decline:European VC Funding Drops Sharply • Total €1.18 billion ($1.09 billion) in VC funding in Q1, down 32% from €1.75 billion in Q4 of 2001. • Investment in information technology fell 42% to €611 million, down 80% from its peak in Q2 of 2000. • German venture investment plunged 76% to €106.2 million in Q1, while in Sweden it fell 64% to €68.51 million. • French investments climbed 24% in the first quarter to €242 million. In UK, VC edged up 2% to €446.2 million. • Source: Survey by Ernst & Young and VentureOne (Apil 02)

  8. Financial Performance-Flat or declining revenues Total Revenues (Millions)

  9. VC Funding:Major VC Funding Wins • Powered Inc. — $9M (June 02) • Outstart — $11M (May 02) • Hyperwave — $18M (Feb 02) • Infocast — $7M (Dec 01) • Element K — $20M (Dec 01) • Interwise — $34M (Oct 01) • Pathlore — $10M (Sep 01) • Cenquest — $6M (Aug 01) • Vuepoint — $11M (July 01) • GlobalLearningSystems — $10M (May 01) • Knowledge Impact — $24M (May 01)

  10. Belt-tightening-Smaller Industry Expos Big names Not exhibiting at ASTD Conference (June 02): • Avaltus • DigitalThink • Docent • EDS • Geolearning • Indeliq • Interwise KnowledgePlanet LogicBay Oracle Outstart Placeware UNext WBT Systems

  11. Use of eLearning:Still in “early adopter’ realm CIO Magazine Web Survey: Does your company have an e-learning initiative underway? 83.01% 90 80 70 60 Total: 1324 votes 50 40 30 16.98% 20 10 0 Yes No

  12. Growing “ROI” Testimonials • Cisco Certification Program • IBM - ‘Basic Blue’ mgmt training: 3-yr savings of $88M; costs of $5.03M; 2284% ROI • Federal Law Enforcement Training Center • Dow Chemical, $34M annual savings • KPMG Study (12 multinationals) • Procter & Gamble / Toyota ROI Predictions

  13. Growing Role of Fed. Govt • Major buyer of eLearning during tech buying slump • Government-wide adoption of SCORM interoperability model • Piloting use of XML/SCORM metadata repositories • Pursuing Learning Object content design in content for Army and National Guard • Exploring more sophisticated eLearning technologies through CLEO lab

  14. Exploring the Waters • “Outsiders” debuting eLearning products/services: • PeopleSoft — bare-bones LMS platform (4/02) • SAP — LMS platform (4/02) • Polycom — synchronous eL platform • Virage — streaming media eL platform (Feb 02) • Yahoo! — streaming media eL platform (Oct 01) • Higher Ed eL providers (UOPX, Blackboard) targeting corporate sector

  15. Significant Alliances • Sun - National Retail Federation • RealNetworks - LearnKey (reseller agreement) • AOL - Fathom (consumer eL offering over AOL) • Hyperwave - Compaq • Docent - Interwoven • SAP - Siemens

  16. Market Strategies • “Fast implementation” assurances • Alliance-based integration assurances • Focus on hot business units - sales and customer service • Hot verticals: financial services, regulated industries (e.g., pharma, petrochemical, healthcare) • Hosted (ASP) offerings (often targeting mid-market

  17. Looking Forward-Growing Use of Learning Objects • IT firms using LOs for customer eLearning • Large-scale LO development initiatives underway (Citibank, U.S. National Guard, Cisco, others) • High level of awareness and use of LO’s found in LoD/ASTD survey • Part of larger push toward object-based knowledge management

  18. Looking Forward-Key Developments in Coming Year • HIPAA privacy regulation expected to spark growth in health-care • Growth of “automated” learning content development systems • DRM emerging as critical to success of Learning Object “economy” • More simulation-oriented off-the-shelf content • More consolidation on platform side

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