Blackboard on July 7 announced plans to buy Elluminate and Wimba, both of which support online learning.

Blackboard on July 7 announced plans to buy Elluminate and Wimba, both of which support online learning.

The world’s largest technology companies have been on a buying spree, spending billions of dollars to snap up smaller companies. And often the buyers say they’re doing it for their customers—businesses, hospitals, government agencies, and schools, and colleges.

As tech companies get bigger and bigger, they say, they can offer a broader variety of products and make it easier for their customers to do one-stop shopping.

Yet if you ask the customers, you hear a different story. Often they get new headaches with multibillion-dollar deals by the likes of Oracle, IBM, SAP, Dell, and Hewlett-Packard. When you add the challenges that come with any corporate acquisition, it’s not hard to envision a reverse trend eventually building: a drive to split up tech companies that have grown too large.

In other words, the tech consolidation of the past few years could turn out to have wasted shareholders’ money.

“The demand is not coming from the customers,” says Gopal Khanna, who oversees a $600 million technology budget as chief information officer for the state of Minnesota. “On the contrary, I’m best served when there’s a phenomenal amount of innovation happening. … Sometimes creating behemoths slows down that innovation engine.”

Technology companies have spent more than $350 billion buying other companies worldwide over the past three-and-a-half years, according to Capital IQ, a division of Standard & Poor’s.

Hewlett-Packard Co., the world’s biggest information-technology company by revenue, has been one of the most active, in a hunt for more profit in markets other than printer ink. So has Oracle Corp., which wants to sell more types of business software and now makes computer servers after its $7 billion pickup of Sun Microsystems Inc. IBM Corp. plans to drop $20 billion over the next five years on acquisitions to strengthen its services and software divisions.

Even the education-technology field has experienced a number of high-profile mergers and acquisitions, most notably involving learning management system (LMS) provider Blackboard Inc. In the latest of these deals, Blackboard on July 7 announced plans to buy Elluminate, based in Calgary, and Wimba, based in New York, both of which support online learning and collaboration through the use of web and video conferencing software. The deals would be worth a combined $116 million if approved by the boards of both companies.

Blackboard’s announcement marks the latest in a string of acquisitions for the Washington, D.C.-based company. In the last few years, Blackboard also has snatched up rivals WebCT and Angel Learning, among other companies.

In a six-page fact sheet about the deals, Blackboard said it would continue to support the products of both Elluminate and Wimba, including their compatibility with other LMS software. “We’ll honor all existing contracts for Elluminate and Wimba clients,” the company added. Employees from the two companies will be part of a new Blackboard division called Blackboard Collaborate, to be headed by Elluminate’s current president, Maurice Heiblum.

As with other technology companies involved in acquisitions, Blackboard says it wants to give customers more options, better prices, and smarter service. It’s somewhat like buying internet, cable TV, and telephone service from one company instead of three: You’ll save money by buying the bundle, and when you need things fixed you have only “one throat to choke,” in tech-industry parlance.


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