Corporate, Education Quality, High school / Secondary 2, International, Mergers & Acquisitions, Publishers, Required, Startups, Students, Technology, University & College - Written by on Wednesday, November 16, 2011 13:30 - 0 Comments

Heard: A leading education company disrupts itself to save itself.

by petervanallen via Flickr under CreativeCommons

The democratization of technology is not just fueling revolution around the world but it is also initiating collaboration between powerful companies and new companies.
New York-based start-up Knewton is combining its adaptive learning to textbook giant Pearson’s higher education courses.
Knewton uses an algorithm to track how students learn, tailoring courses incrementally based on a student’s individual strengths and weaknesses. The system is intended to grow more intelligent as more students use it, much like Google’s (GOOG) search results.”Pearson’s close to 9 million college-age digital students will work within Knewton’s system, creating a massive amount of coveted data on how student learn online.
Of course collaborations have to be mutually beneficial.
Pearson will get semi-exclusive access to Knewton’s adaptive learning technology. And Knewton, which recently raised $33 million in venture capital funding in a round led by Pearson and Founders Fund, will get a share of proceeds based on the number of Pearson’s (PSO) online students. “Pearson is a network effect wrapped up in a bow,” says Jose Ferreira, Knewton’s founder and CEO.
There is no doubt that the online education industry is growing rapidly. By 2015, the online education will be worth $50 billion, according to research firm Ambient Insight.
Pearson is just one of the player in the industry.
News Corp (NWS) purchased a 90% stake in Brooklyn-based Wireless Generation for $360 million last November. Apollo Group (APOL) purchased Carnegie Learning Technology, an adaptive learning company, in a $75 million deal this past August. And companies like NBCUniversal and even Disney (DIS) have begun to dip their toes into the online learning business.
Pearson has also done its work. It has completed six acquisitions this year so far, according to investment banking firm Berkery Noyes. Digital age has yet to efficiently influence education industry. But the change is happening. Companies like Pearson and others are acting even when they have to partner with startups.
“It seems like they [Pearson] are saying, ‘if we are going to get disrupted, let’s disrupt ourselves,’” says Bill Tucker, managing director at Washington, D.C.-based think tank Education Sector.


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