Check out: http://duolingo.com The video on the homepage is well-worth watching. Fascinating stuff.
Duolingo has a brand new business model for language learning software. They teach you a new language for free because while you are learning, you indirectly help them translate websites from one language to another. Duolingo makes money from the websites who pay them to have their content translated. The founder has already sold two startups to Google. His last startup is used by hundreds of millions of people every day.
My bet is that Rosetta Stone will have to continue dropping their prices. What do you think?
If Rosetta Stone can team up with sing2learn.com then they will be the true number one co. in the world. Why? A ONE Minute Look at Why Sing2Learn Is So Special! A. Learners apply our step-by-step approach starting from listening, mimicking, and speaking. (Using DVD animation to change how we learn and teach in a powerful and effective method) B. Music with pattern, repetition, story, picture, and DVD animation are combined to teach. (Using DVD animation to change how we teach and learn in a fun way) C. With a complete 8-knowledge-level product line, any age group can learn. (Anyone from a toddler to an adult at any language level can learn with the Sing2Learn products) D. With a variety of products, you have numerous resources to practice your skills. (Anyone can learn anywhere at any time) E. As a very accurate assessing tool, learners and teachers can see progress. (ensure student are in the right level; covering listening, speaking, reading, and writing) F. Finally, in each lesson, Q&A is provided for role play. (This not only builds student interest, confidence, and their foundation but also ensures they can communicate in real life; Interactive with native speaker)
Sing2learn may have some great mechanisms to learn a new language. If so, other language learning software companies will copy their ideas.
I think the broader issue is that several new web competitors have entered the market and they are significantly undercutting Rosetta Stone on price. Rosetta's whole business is set up around high prices. Look at what happens to their earnings if they only charged say $10 for each product. Right now, Rosetta Stone costs more than say Microsoft Windows, which is an entire operating system! This is what is attracting all these web startups into the space.
What would you rather do? Higher thousands of programmers and have them work for years to replicate Windows? Or high a few programmers, and clone Rosetta Stone in a few months?