Like any product on a competitive market, the development of online courses follows a S-curve. Initially, development/delivery costs were high and performance/acceptance was low. After "crossing the chasm", the performance/price ratio of online courses raised very rapidly due to competitions, and more players jumped into the market. Further competitions among more players lead to rapid commoditization where the only thing that seems to matter to customers is the price. This is the current situation where intense price competitions have moved online courses from an expensive novelty to a cheap commodity, and the market of traditional distance education has already reached the tail end of the S-curve.
Rather than keep offering even "cheaper" alternatives to compete with the already "cheap" products on the tail end of the same S-curve (which will only drive everyone "over the cliff" sooner - an act of collective destruction), a new strategy that can create a new S-curve for the online education market must be found.
So, rather than being "cheaper", how do you compete with "cheap" on the market?
Well, it turns out that the best winning strategy is the so-called "free" strategy - that you offer the same product "for free" to the same market. This for sure will kill all players who are still fighting on the price war. That happened many times in different technology markets, such as Internet Explorer by Microsoft, and is exactly what is happening with the online courses market today. A new S-curve of online education, which completely takes the price consideration away, is now born.
This "free" movement of online education started a few years ago when the MIT Open Course Ware (OCW) initiative (see http://ocw.mit.edu/index.htm) was first created. Digitized course contents including lecture notes, exams, and videos from leading faculty at MIT are made available online to all, free of charge and no registration required (by the way, no degree offered either, which is a point that we will discuss further later). Since product price doesn't matter anymore on this new S-curve, players can focus on competing with each others on product performance, and hence the market share.
In order to "cross the chasm" again on this new S-curve, MIT teamed together with Harvard, the two best brands in global higher education, to create the new edX partnership (see http://www.edxonline.org/) which is a joint venture builds on MITx and Harvard's existing distance learning programs with the aim to "benefit campus-based education and beyond". Many were shocked by this alliance between two traditional rivals across the Charles River, believing that the ground of online learning has started to shake and a new ground for higher education has been broken. The fact is that the ground was broken already a few years back when MIT created the OCW which started a new S-curve of online education. The current edX partnership between MIT and Harvard is just an attempt to cross the chasm of this new S-curve.
Now that the chasm has been crossed, what's next?
According to the rules of market competitions, when the chasm is crossed, the focus of the debates on the market will shift from "is this for real" to "how can I be part of it". Players will no longer wonder if online courses can/should be made free for all, but rather they will rush into this new market with the typical "me-too" strategy. For sure, more universities will begin to offer free online courses and more multi-university consortia will be formed to expand their market shares. This is a very good thing for the customer, because more high quality courses will become available (and affordable for sure).
But for the players in the field, i.e., universities that create and offer these courseware, has the ground of online education really been shaken? Surprisingly, the answer is "no"!
The old S-curve of these traditional "pay-to-play" online courses is now been (or soon will be) completely subsumed by the new S-curve of free online courses exemplified by the edX partnership. But it is important to note that, at least for now, this free-courseware movement has not altered the paradigm of education and learning in any fundamental way. This free movement is for sure a major and significant evolution on the means/methods of delivery course contents to learners; but it is not yet a true revolution on the end/goals of education which must focus on delivering a fresh and richer new learning experience to students on university campuses. It makes much more superior product offers to satisfy the current customer needs (e.g., taking courses from good teachers) on the same market. The free movement has indeed created a new S-curve (hence a new ground is shaking); but it is on the same "plane" as that of the old S-curve of "pay-to-play" online education (hence the ground was not alternated fundamentally, and no new ground was broken).
So, what should/can players with a revolutionary mind do? How do you compete with something that is already "free" to all? Next, we will explain that traditional universities cannot continue doing business as usual by pretending that nothing has happened, because the strategic inflection point of higher education has been passed this time around. We will then present a strategy that can competes with, and perhaps more importantly, complements, the "free" by creating a new S-curve which lies on a different plane than those old pay-to-play and new free-for-all models of online education.
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