An executive at one language-learning firm tells us:

It is clearly a move into the right direction as the market for traditional learning software is drying up while the online and mobile markets are almost exploding. Rosetta Stone has a good starting point with one of the strongest brands in language learning in the US but in the end the quality of the product will decide about success of failure. It is interesting that they didn’t go for one of the market leaders in the industry and future will tell if both companies can manage their turn-around together. For Babbel as a rapidly growing company in the online and mobile language learning space, this acquisition is a good development because it will help to promote the possibilities and advantages online learning agains traditional methods. And for now, it’s not about competition and market share but about market development.

Analyst Jeff Meuler at Baird Research writes:

RST Announces tuck-in acquisition; 2013 guidance unchanged. RST acquired Livemocha, an online language learning platform, for $8.5mn cash. We view this primarily as a technology and learning community acquisition, consistent with the company’s strategy to focus on improving and expanding its products/technology in 2013, both organically and via acquisition. Notably, despite likely (in our view) initial up-front EBITDA dilution (was generating losses as a stand-alone organization), RST’s 2013 guidance is unchanged, due partially to stronger underlying organic performance. Increasing price target.

It’s definitely a strange takeover.

Perhaps Rosetta Stone is hoping to use Livemocha as a platform to move beyond the pricey, standalone software bundle and provide a less-expensive, web-based alternative.

@Donovan, what are your thoughts about the Livemocha platform and how it fits in the language learning ecosystem?

@Donovan - apologies we are just now seeing this but below is part two of our blog post on the 5 Biggest Reasons Why Rosetta Stone’s Acquisition of LiveMocha Was a Mistake.

Reason #5 is that neither company meets the biggest need of today’s language learner: the ability to learn from a native, anytime and anywhere. This is something that 75% of the people we interview have noted (that’s everyone from middle-aged parents to college students and institutions alike). We delve into this greatest need and analyze how both RST and LM are marginalizing this service:

http://lingolive.wordpress.com/2013/04/08/rosetta-stone-buys-livemocha-5-reasons-why-this-was-a-mistake-part-ii/

It’s definitivey a bad idea. Old Livemocha lessons were good, not perfect, but fun and good. The new lessons are low-quality with low quality audio, approximative translation provided by google (sometimes the translation is so bad it’s impossible to understand.) It is not possible to follow the lesson when you begin a language with scratch with the new livemocha, and there’s a lot of spelling and grammar mistakes in the lessons. Rosetta Stone has never been good for teaching the grammar, not a wonder the quality is lowering from Livemocha to Rosetta stone, even if I loved the visual way of teaching in the Livemocha and Rosetta lessons, they removed all the visual stuff that was the reason for the success.