Adobe Buys Magento for $1.68 Billion

Adobe has today revealed they’re obtaining Magento for $1.68 billion. Brad Rencher, Adobe’s Executive VP of Adobe Digital Marketing organization, revealed the purchase over on Twitter, and through an article:

“Integrated with Adobe Experience Cloud, the Magento Commerce Cloud will bring digital commerce, order management, and service intelligence to make it possible for both B2B and B2C shopping experiences throughout the consumer journey.”

This is great news for Adobe, and pretty good news for Magento who were on a relatively weird path, but brings a little unpredictability to Magento clients in the brief term. Changing from Permira Holdings LLP, the private equity company that got Magento from eBay to Adobe means some clients may question whether they’ll be locked into utilizing Adobe’s marketing cloud at some phase in the future.

Adobe’s past experience

Adobe has actually of course done this prior to They purchased Omniture, quickly jumping them from a pure ‘desktop imaginative software application’ service to a huge gamer in the digital marketing company. Now they’re certainly taking the bet they can do the exact same with a purer commerce platform.

This does of course likewise offer obvious ‘synergies’ from a service function point of view: Adobe has a large sales & & marketing operation, culminating each year in their ‘Top’ conference, uniting 12,000 marketers who might just as easily be finding out about e-commerce item updates as they might digital marketing item updates.

Magento’s strange course

At one time, Magento was the go-to platform for any e-commerce organization seeking to re-platform. Over the last 5 years, they’ve considered that position away to IBM and Oracle at the very top end of the market, Salesforce at the upper-mid, and Shopify have consumed their way up and up from micro to small to medium services.

The contrast with Shopify is fascinating: At one stage, Magento had a little business flavor called ‘Magento Go’. eBay (who owned Magento at the time) made the odd choice to hand all those small company clients over to BigCommerce back in 2014. At that stage, Shopify was a relatively capable platform, however is still a pretty specific niche. Today Shopify’s market cap is $15.1 billion, or roughly 10x the quantity Magento simply sold for. The news gave Shopify a little shock: Shares dropped approximately 5%, however, we’d expect in reality Magento stick a bit greater up the chain for the next couple of years.

Magento remains in the somewhat odd position of having more than 650,000 websites sat on their technology, but only 60,000 of those have changed as much as the most recent version (‘ Magento 2’) according to BuiltWith, the scraper who index the innovation platforms behind millions of sites. Notably, the very first 6 months post-launch of Magento 2 was a period filled with scary stories, though it appears to have discovered its feet latterly and several extremely well-regarded e-commerce services sit on top of the platform.

Why would Adobe do this?

For Adobe it makes the best sense when you take a look at this diagram:

At the leading right there, Adobe sits there completing with the business offering full-featured e-commerce platforms as part of their main offering. If you’re a leading end Adobe consumer, IBM, Oracle, and naturally Salesforce’s people will be on to you every quarter to try and transform you across to their platforms, each of which now centers around a completely featured online shopping platform.

Equally, if you look at Adobe’s Marketing Cloud item suite, it’s fairly simple to answer the concern “What’s missing from this?” with “An e-commerce solution like Magento”:

Creative + Performance: Interesting possibilities

Whereas most of the major Marketing/Commerce Cloud companies focus the bulk of their efforts on performance marketing and direct commerce, and more ‘creative’ platforms such as Sitecore, Umbraco, Drupal are rather doing not have on the commerce side of things, a combination of the Adobe cloud & & Magento provides the opportunity for a platform to marry the business and imaginative sides of marketing and retail in a way that provides more than the amount of the two different platforms.

If they get that right it to start with offers a massively appealing story for both existing online merchants, and for FMCG and manufacturing organizations for whom ‘direct to consumer’ is an ever creeping buzzword, and more importantly, it might offer a better experience for end clients, for much of whom online shopping is home entertainment as much as it is item consumption.