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The E-Bang Theory Illuminismo Volume 2

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The E-Bang Theory Illuminismo Volume 2 Banc of America Securities Montgomery Division Equity Research Education Industry Overview September 1999 The e-Bang Theory Illuminismo Volume 2 Howard Block, Ph.D. Brandon Dobell 415.913.5771 415.913.3697 [email protected] [email protected] 1P]R^U0\TaXRPBTRdaXcXTb CONTENTS Chapter 1—Introduction ...................................................................................................................... 1 Introduction ............................................................................................................................................ 3 Benefits of E-Learning ........................................................................................................................... 7 Chapter 2—Self-Paced E-Learning .................................................................................................... 9 E-Library ................................................................................................................................................ 10 Self-Paced E-Learning (SPEL): Pronounced “Spell” ............................................................................ 17 Chapter 3—Asynchronous, Collaborative E-Learning (ACEL) ................................................... 27 Asynchronous, Collaborative E-Learning (ACEL): Pronounced “Excel” ............................................ 28 Hardware ................................................................................................................................................ 38 Chapter 4—Synchronous, Collaborative E-Learning (SCEL) ..................................................... 41 Synchronous, Collaborative E-Learning (SCEL): Pronounced “Skell” ............................................... 42 The Top People-to-People Training Companies ................................................................................... 50 Chapter 5—The Ripple Effects of E-Learning ................................................................................. 53 E-Learning and a New Business Model ............................................................................................... 54 E-Learning Benefits to the Business Model ......................................................................................... 57 The Ripple Effects of E-Learning .......................................................................................................... 59 Other Ripple Effects .............................................................................................................................. 66 Chapter 6—Best of E-Learning ........................................................................................................... 69 Death of Classroom-Based Learning (C-Learning) .............................................................................. 71 This is Not Your Father’s Classroom .................................................................................................... 75 Distance Education: A Means to an End, No More, No Less .............................................................. 79 Chapter 7—O!K-12 .................................................................................................................................. 83 Netting the Big Kahuna ........................................................................................................................ 84 Government Effort to Increase Access and Use ...................................................................................93 Chapter 8—Land of the Giants ........................................................................................................... 99 The Land of the Giants: The Future of E-learning .............................................................................. 100 Chapter 9—The E-Learning Investment .......................................................................................... 111 The E-learning Investment ................................................................................................................... 112 Example of the Leverage From the “Live” Connection ........................................................................ 115 Comps ..................................................................................................................................................... 116 An Exciting Opportunity? ..................................................................................................................... 127 Investment Risks ................................................................................................................................... 130 Trends in Transactions .......................................................................................................................... 132 Quantitative Picture of the Education Market .................................................................................... 136 Company Reports .................................................................................................................................. 145 Advantage Learning Systems, Inc. .................................................................................................... 147 Apollo Group, Inc. .................................................................................................................................. 165 Asymetrix Learning Systems, Inc. ..................................................................................................... 181 Caliber Learning Network, Inc. ......................................................................................................... 187 CBT Group PLC ...................................................................................................................................... 193 Devry, Inc. ............................................................................................................................................... 215 Provant, Inc. ............................................................................................................................................ 229 RWD Technologies, Inc. ........................................................................................................................ 245 Sylvan Learning Systems, Inc. ............................................................................................................ 259 The E-learning Glossary ....................................................................................................................... 283 1P]R^U0\TaXRPBTRdaXcXTb LIST OF FIGURES Projected WWW Content Growth ............................................................................................................. 22 Public and Private Higher Education Institutions Offering Distance-Learning Courses ..................... 32 IT Training Market by Delivery Segment, 1996-2002 ............................................................................ 47 The Market for Web-Based IT Training ................................................................................................... 48 IT Versus Soft Skill Share of the Corporate Training Market, 1998 ..................................................... 49 Number of States With Standards in K-12 Schools ................................................................................64 U.S. IT Training and Education, Instructor-Led Training Revenue, 1996-2002 .................................. 72 K-12 Telecommunication Expenditures ................................................................................................... 94 K-12 Classrooms With Access to the Internet ......................................................................................... 95 PC Penetration in U.S. Homes ................................................................................................................. 106 List of Public Companies With Online Learning Initiatives .................................................................. 117 We would like to thank the following people for their assistance in creating this report: Kirk Feldhus, Debra Kurshan and Asma Nassery. ∗ All prices throughout the report are as of 8/30/1999. 1P]R^U0\TaXRPBTRdaXcXTb CHAPTER 1 INTRODUCTION “Our progress as a nation can be no swifter than our progress in education” - John F. Kennedy Howard M. Block, Ph.D. (415) 913-5771 1 1P]R^U0\TaXRPBTRdaXcXTb This page left intentionally blank. 2 Howard M. Block, Ph.D. (415) 913-5771 1P]R^U0\TaXRPBTRdaXcXTb Introduction The landscape of learning has never looked more promising for companies in the business of education. Politics, economics and technology are key growth drivers. u The economy is quickly becoming dependent on human capital, which forces all of us to increase our aptitude at managing and productively employing human capital, a task incumbent on our learning systems. u Political initiatives are inviting more businesses inside the schoolhouse door than ever in the history of public education. These initiatives include charter school legislation and voucher programs. u The inexorable technological revolution continuously overhauls the workplace, thereby forcing workers to treat learning as part of their basic job description. Technology is not only a driver for more learning, but it is also an enabler of electronic learning (e-learning). E-learning is quickly establishing its presence in corporations, institutions of higher education and K- 12 schools. Questions are abundant, however. Where
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