With the arrival of the internet things started to change and slowly we realise that we do live in exponential times where the internet is displacing books as primary source. As early as 1999 Sugata Mitra showed how kids teach themselves and based on further studies makes his case for The child driven education (on a related note my firstborn Anthony remarked: " Couldn't learning be like Fruit Ninja? I just play and learn at the same time"). Mitra's core insight is that learning is a self-organising system. His vision is: " An educational technology and pedagogy that is digital, automatic, fault-tolerant, minimal invasive, connected and self-organised." Short of Summerhill that reads like the anti-theses of how schools run today.
eLearning hasn't been a stellar success in the past. E.g out of 47 large players in the market in 1999 only 6 are still around (IBM/Lotus is not one of them). Or is it the sign of a highly dynamic market? The tendency however seems to be clear: there is a loggerhead fight between OpenSource / OpenAccess and commercial content providers. It looks very much that OpenSource is winning and the money is to be made by running and maintaining these systems rather than selling software licences.
The larger market is in educational content, where the lines between general applications and eLearning applications are blurring. Today one can organise and conduct complete learning experiences using Wikipedia, a bookmarking service (delicious, digg, Lotus Connections), a collaborative platform (Google groups, Lotus Live) and Chat. Only the task assignment and skill verification seem to warrant specialised systems. (Someone has yet to explain the difference between enterprise content management and learning content management. One of the most successful (in terms of impact and attention) learning content providers, The Khan Academy uses youTube to manage their content. Universities like Standford use standard CMS to make their lectures available online. Textbooks are now available under Creative Commons licences from multiple sources: Open Educational Resources, Wikibooks, OpenTextbook.org, Textbook Revolution and many more
So LMS seems to be an endangered species. There are however promising developments under way: self organising, socially connected, mobile learning experiences.
Tools I would watch (in no particular order): Canvas LMS, Moodle, JotterLab, BigBlueButton, JamBok, SpaceED or Rypple. Keep updated on eLearning Learning.
The biggest inhibitor for progress here might be a large frightened body of educators who need to reinvent themselves. The late Arthur C. Clarke told Mitra in an interview:" If a teacher can be replaced by a machine, he should" (Would that be a task for Watson? #tongue -in-cheek). I would translate his remarks like: " Human educators should work in the area beyond the mechanics of learning, they can be guides, counsellors, encourage the struggling and help the bright to excel".
Education IMHO is the key to most of the problems (short of greed, but moral education could fix that too) our planet is facing, so we see a struggle between the inertia of the current system and the nascent possibilities of progress for the better. Of course one question stings: if less and less people are needed, what do do with them? We might not like a possible answer for that (It does have a happy end, go read it). We live in interesting times.