Academia invents much of the technology that revolutionizes other industries, but it has been conspicuously shy about upsetting its own apple cart. There are many reasons, but when you corner people on the question, it all comes back to comfort vs. uncertainty. Individually, everyone sees the potential, but collectively, there is great fear that higher education will be commoditized away -- that faculty won't matter in a technology-based model. The outcome is uncertain and there is a natural hesitancy to dive in. Teaching is considered a prestigious, creative process, inextricably integrated into research and engagement, all fueled by the organic nature of "academic freedom." Personally, I agree: Teaching is creative and important; I make similar arguments about IT -- but if that is to be preserved, the customer must be preserved.
Over the past 20 years, average tuition doubled while average income and starting salaries stagnated or decreased -- and that trend appears to be accelerating. Customers are much more open to alternatives, which means the whole industry is a prime target for an "iPhone moment." But ironically, after a decade of commoditizing and demoting technology, in a process aptly dubbed "the incredible shrinking CIO," higher ed has largely driven away the creative, highly motivated base of technologists it now needs to prevent its own commoditization. Zombifying IT through ITIL and other '90s-style engines of self-obsolescence has the same effect in all industries -- talent flees bureaucracy and joins a technology company, often returning to steal the business.
Inevitably, all universities will be technology companies that happen to specialize in education and research. It's not a question of money, or prestige, or history, it's a question of valuing and inspiring innovation. Take Kahn Academy, for example: One guy, two years, and 2,300+ videos later, anyone, anywhere with access to YouTube can get a foundational education for free. No, that's no substitute for a focused, accredited degree at the moment, but this is one guy. Imagine what two, or heaven forbid, three, could accomplish.
Perhaps, like Polaroid confronted with digital technology, you don't think there's a business model for cheap education. It wouldn't be "disruptive" if most people did. Perhaps you don't think Google would ever consider giving away a high-quality education to gain an impressionable, highly integrated and ever-growing captive audience. I think it would be foolish not to try. The philosophy of pricing and positioning a degree as a compulsory pre-career debt hassle can easily become higher ed's greatest liability. Hello, Google U.