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The
e-Learning Value Pyramid
The SunTrust Equitable
report breaks down the different learning markets and then build up
what they perceive to be the value chain in e-Learning in the form
of a pyramid.
The opportunities in the
education and knowledge arena are impressive. With U.S. spending
on education estimated at more than $700 billion, the industry is
the second largest, behind healthcare. As we look at technology
product and service providers focused on the education and
knowledge markets, we have divided the industry into four sectors
based on the customers targeted. These include K-12 (K-12),
post-secondary (P2), corporate training (CT), and lifelong
learning (LL).
The opportunities in each sector
are striking. Spending on the K-12 marketplace has surpassed $380
billion, with more than $30 billion spent annually on childcare
and $352 billion spent on K-12 education. By our estimates, this
is the largest of the four sectors. Although smaller than the K-12
market, the post-secondary sector eclipsed $230 billion in
1997-98. The Internet is already changing the landscape of the P2
sector. Despite being significantly smaller than the K-12 and P2
segments, we believe that e-learning will penetrate the corporate
training market at a faster rate than the K-12 and P2 sectors. An
increasing amount of education is provided in the workplace. The
CT market has realized substantial growth, reaching an estimated
$62.5 billion in 1999 compared to $60.7 billion in 1998. Notably,
this excludes the estimated $40-plus billion spent by the
government on training. The newest arrival to the education
industry is the lifelong learner. This market size is much
more difficult to quantify than the segments mentioned above. It
would include individuals who purchase self-help books,
participate in seminars (in person or online), or are just seeking
to acquire new information or knowledge. We look for the LL sector to develop into
a prominent segment within the e-learning marketplace as the
Internet encompasses a larger presence in our daily activity.
Given the tremendous
opportunities that exist in the education and knowledge
marketplaces, there has been a surge in companies targeting these
markets. A tidal wave of capital has crashed upon the providers of
e-Learning technology products and services. Specifically, we have
identified more than $1.2 billion distributed to e-learning
companies and more than $302 million in public equity raised
during 1999. With roughly $300 million raised so far in 2000 and a
current backlog of nearly $370 million in equity expected over the
next several months, it appears that the e-learning public equity
market is just beginning to emerge. At this time, we have
identified more than 100 companies focused on the learning and
knowledge markets. These companies provide a wide array of
products and services to the four customer segments of the
education and knowledge industry. In an attempt to evaluate the
dynamics of the e-learning and knowledge technology market, we
have divided the industry into five categories. These include:
Content/Publishing, Tool-R/Enablers, Learning Service Providers (LSPs),
Knowledge Hubs/Portals, and Educational e-Tailers. Although we
have segmented the industry, in many cases companies fall into
several of the categories mentioned above. For example, a company
that provides a web-based learning program to a client may also
have supplied the content and the platform.
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Of the five segments
focused on the learning and knowledge markets, we believe that
content is the most critical component of learning through the
Internet. In order for skeptics to be swayed to use the Internet
as a tool to enhance learning, they must become comfortable that
its content does not distract individuals, but increases the
enthusiasm for knowledge. Learning tools and enablers are also
important in the process. Providers of learning platforms and
knowledge management systems are instrumental in the effective
delivery of content. These companies supply the infrastructure
needed to deliver content. The knowledge hub, e-Portals and
learning service providers are the distribution channels for
content providers. They distribute content through a platform to
the end user. In order to be successful, these knowledge hubs and
LSPs must make painstaking efforts to ensure that their customers
consistently receive fresh content; otherwise they will fail to
expand their customer base. Completing our pyramid of e-learning
are companies focused on educational entailing. In many cases,
representatives of the other categories also partake in entailing
as a complement to their primary product or service. There are,
however, single focused e-tailers as well. Companies such as
bigwords.com and ecampus.com cater to the P2 sector through online
textbook sales.
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