Editors Note: This is the Executive Summary of a report #2103-64 ©1999 by Frost & Sullivan, an international marketing consultant and training company based in London and Frankfurt. Frost and Sullivan monitor the teleommunication industry for market trends, measurement and strategies. Their web address at www.frost.com has executive summaries of additional reports. Further information can be obtained from the web page or by email from Jennifer Minx at firstname.lastname@example.org.
he concept of distance learning has emerged many years ago with correspondence classes. It later evolved into videotapes and other non-real-time training methods. While these learning methods certainly had their place in the overall training process, their effectiveness was relatively low since the self-paced, non-interactive teaching often failed to retain attention of students, resulting in very high dropout rates.
The outlook for distance learning has changed significantly with the advances in the telecommunications and computing technologies that allow interactive, real-time training. The affordability and effectiveness of the new solutions has made them popular among a variety of end user markets. The most prominent users of distance learning solutions include educational institutions (both K-12 and universities), corporate market (including financial institutions, automotive companies, pharmaceutical/health care and others) and government.
Chart 1.1 shows the market segmentation of this study.
Distance Learning Systems and Services Market:
Note: All figures are rounded. Source: Frost & Sullivan
Summary of Major Findings
Figure 1-1 shows the revenues and compound annual growth rates (CAGR) for the total distance learning markets as well as its two major segments - equipment and services markets. In 1998, the total distance learning market generated $771.6 million in revenues. Over the forecast period from 1998 to 2005, it is expected to grow at a rate of 21.0 percent.
The growth of the distance learning market is affected by the influence
of the following market drivers:
The main restraints of the distance learning market include:
The distance learning market is in the development stage, with the number of technology options available on the market and the customer interest in the concept rising quickly. The providers are aiding the demand by supplying a variety of services including help with content development and comprehensive support services. As the competitiveness of the marketplace forces more employers and employees to continue to enhance their skills, the demand for distance learning is likely to grow even more in the future.
Analysis by Major Segment
The main drivers accelerating growth of the distance learning systems
The main restraints with negative impact on the growth of the distance
learning market are:
The distance learning systems market is growing rapidly, with a number of new developments particularly in the Internet-based IDL (Interactive Distance Learning) and Broadband segments. The satellite segment is highly mature and therefore its growth is much slower. As the number of technology options continues to rise, the competition within the market continues to intensify as more potential customers are considering distance-learning solutions.
Distance Learning Services Market
The distance learning services market is expected to anticipate a healthy
growth due to the following market drivers:
Major restraints include:
The demand for distance learning services is increasing due to the growing installed based of distance learning equipment as well as increased use of the existing equipment. Among the prominent customers are schools (both K-12 and universities) as well as corporations (financial, industrial, and pharmaceutical) and government.
Distance learning is becoming increasingly more popular and as a result, customers from other vertical markets are likely to adopt distance learning in increasing numbers in the near future. The growing intensity of competition provides an increasing number of service options to customers, allowing them to choose a service that is most suitable for their specific environment.
The terrestrial-based services market is dominated by telecommunications carriers, including major interexchange carriers (AT&T, MCI WorldCom and Sprint) and local exchange carriers (regional Bell operating companies). The ongoing wave of mergers and acquisitions is alternating the competitive landscape, with more M&A activities anticipated in the future.
The content development and delivery services market is still underdeveloped, as most market participants are small private companies with relatively small exposure. The majority of providers focus on the Internet as a delivery medium, but a lot of content is still delivered by satellites as well.
In the narrowband market, the majority of transmission still takes place over ISDN (Integrated Services Digital Network) or private lines. The adoption of H.323 standard has brought upon the interest in using IP (Internet Protocol) for video transport. Pilots of IP technology have been taking place for a couple of years and the technology is slowly moving into full deployments. In another two years, a notable portion of distance learning services is likely to take place over IP.
In the broadband market, ATM (Asynchronous Transfer Mode) is becoming a preferred transmission technology. The older JPEG standard is being replaced by MPEG-2, which significantly cuts the bandwidth required for comparable video quality.
The interest in distance learning is growing rapidly, both in the education and corporate markets, and there are a number of market niches that yet have to be served. By concentrating on a specific vertical market, even a new or a small company can build a significant market presence. Many potential customers are looking for end-to-end solutions, which can be best provided through partnerships with high visibility players such as service providers or training companies. While long sales cycles and limited customer awareness still impede market growth, these issues can be overcome through customer education and improved marketing and sales efforts.
About the Author: Mr. Alpa Shah is a telecommunications industry expert. He may be reached at www.frost.com