Rosetta Stone’s CEO Steve Swad is accelerating the company’s transition into a cloud-based learning experience. What used to be one of the marquee items of Rosetta Stone will soon only be a memory: the airport and mall kiosk.
Not even two years ago, under Rosetta Stone’s former CEO Tom Adams, the company invested in new experience kiosks where people could test the software and retail stores targeted at an audience in Hollywood and Capitol Hill. But according to the press release
Rosetta Stone’s kiosks had come to represent a shrinking portion of the company’s overall sales mix, especially as their revenue contribution was eclipsed in 2012 by growth from the web channel and the rising popularity of digital downloads. The company has closed over 100 kiosks since 2011, and by exiting its remaining locations, it sheds a low-margin channel and positions itself to invest in more profitable channels going forward.
With the closure Rosetta Stone is going to let go 245 full and part time sales representatives who worked in the kiosks, following the goal of turning the company into a more nimble and innovative player to compete its smaller however quickly growing competitors babbel.com and busuu.
London-based busuu just shared the news that it has surpassed 30 million users, now adding 40.000 new users per day. It also launched a new iPad application for young Spanish learners. According to TechCrunch busuu shows strong growth in emerging markets like Brazil, Russia and Turkey, markets that are also of high interest for babbel.com which just raised a $10 million Series B round in order to expand its services globally.
With Rosetta Stone’s focus shifting away from physical locations and products and last week’s acquisition of Livemocha this is going to be a very interesting year in the language learning space. Now that Rosetta Stone really goes all in it is certainly getting harder for busuu and babbel.com to keep on grabbing market share.
Of course, Rosetta Stone needs to come up with a compelling low cost alternative of its products, probably using the Livemocha brand, I could imagine them to start by offering a version of their Mobile Companion application branded as Livemocha, likely with less features to make it different from the premium Rosetta Stone products.
Talking about premium products I am pretty sure that with the transition in to the cloud Rosetta Stone’s physical CD-Rom and DVD courses are the next thing that will disappear. Reminiscent of Livemocha’s rivalry with Rosetta Stone, let’s watch Livemocha mocking the emblematic yellow boxes in a 2011 commercial.
Picture by San Diego Shooter