Sakai continues to put out releases on a fairly orderly schedule, but it's lost several of the core, founding institutions as their IT departments move away from customized FOSS software hosted in local datacenters to SAAS software hosted by commercial providers.

For example: Indiana University was a core member of the Sakai Foundation that was rumored to have a $1mm+ budget devoted to heavily customizing Sakai for IU purposes and for running the software. IU seems to have moved away from the customized open-source approach to a consortial "buying club" approach to try to have influence in the commercial, higher-ed market. 10+ higher-ed institutions (many of them public institutions) have put $1mm each in a pot to try to better control their software destiny:

http://mfeldstein.com/unizin-indiana-universitys-secret-new-...

I've used both, and I much prefer Sakai. Unfortunately, it doesn't have a pushy sales team like Blackboard does.

They're still releasing some solid stuff -- but from what I understand there were some political dust-ups regarding which institutions got their priorities implemented first, which led to people dropping out, which led to a lack of momentum to draw in new institutions.

It seems to have stalled. My university used it but my last semester there they announced they were switching to a non-open source CMS. They tested out several and there didn't really seem to be any real consideration of keeping Sakai.