On Monday, Adobe Systems Inc. agreed to buy ecommerce platform Magento for $1.68 billion. Magento brings a missing ecommerce piece to Adobe Experience Cloud, aiming to create a seamless end-to-end system on a single platform for B2B and B2C customers. The deal, Adobe’s third largest to date, is expected to close the third quarter of Adobe’s fiscal year. At that time, Adobe will gain access to Magento’s mid-market and large corporate customers across a range of verticals, giving them a bigger slice of the ecommerce industry.
I’ve often referred to a “pre-Magento” and a “post-Magento” age for ecommerce platforms. MarketLive, ATG, and IBM WebSphere were leaders, but, before Magento, there wasn’t a clear leader in the SMB space. Magento single-handedly shook up the landscape from large to small, offering enterprise-class capabilities never before available to SMBs and mid-market. By doing this, it provides complete freedom and flexibility to the upper end of the market at a total cost of ownership that was a fraction of the leaders at that time. It went from challenger status to leader in a short time, which resulted in a giant target on its back.
With regard to enterprise capabilities, cost of ownership, and flexibility, Magento set the bar so high that it was unmatched in the market for some time. Since then, other leaders such as Hybris, Shopify, and Salesforce Commerce Cloud (formerly Demandware) have collectively raised the bar each year and challenged each other to offer better solutions to the market.
For ten years, we’ve worked closely with Magento through various stages of leadership, ownership, and strategies. We helped create and launch the Magento U training program–as well as several certification programs–and have built our partnership through a trusted, honest, and stable relationship. To us, the news of the acquisition came as no surprise.
Of the many scenarios that could have played out, we have long felt that it was the strongest move for both Adobe and Magento. Adobe has been trying to fill the void of digital commerce in its solution for years. More specifically, the business has been looking for something that could support the complex needs of the enterprises it serves. For years, Adobe has sought to bolster with a robust solution, and quite frankly, Magento was the obvious, leading option available.
Consolidation Is Trending
This acquisition falls into one of the trends in the marketplace we’ve seen happening with the need for clients, especially at the enterprise end, to consolidate platforms and technologies. Across many organizations, the desire to have less variety of systems, fewer vendors, less cobbled together integrations is causing a digital transformation. For that reason, technology companies have been consolidating to adapt to the market. For example, SAP acquired a suite of solutions including Hybris, Salesforce acquired a collection of solutions including Demandware and CloudCraze, and MarketLive and Mozu were put together with complementary solutions to create Kibo.
The marketplace has moved and will continue to migrate away from “point solutions” towards integrated solutions. Magento as a standalone entity was a point solution. Magento, as part of Adobe, will become an integrated solution offering clients a more comprehensive array of capabilities with fewer systems, vendors, integrations, and headaches. Let’s not kid ourselves though, it takes time for that to move from hype to reality, but that reality just got a whole lot closer and will be the focus of Adobe and Magento going forward.
The Most Recent Step
Only three short years ago, Magento was under the eBay umbrella, a time that I have often referred to as the “lost days.” Since the Pirmira acquisition, there has been a marked improvement. If measured by enterprise value alone, the company has dramatically improved under the leadership of Mark Lavelle. It wasn’t all sunshine and rainbows, mostly because Magento doesn’t shy away from lofty goals.
The Magento 2 launch was shaky, and the business faced increasing threats from other platforms, but the team persevered. Ultimately, they stabilized Magento 2, launched B2B and Magento Cloud, acquired a leading BI solution in RJ Metrics, and embraced the community. All were essential moves that point to the success in the future. These were key, strategic initiatives that position Magento for continued growth and success in the marketplace. Joining forces with Adobe is only the latest move.
At a business level, I’m excited for what the future holds for Magento and Adobe as one organization. We’re also eager to work much more closely with our “sister company” iCi Digital who is a leading Adobe Experience Manager partner. At a personal level, I’m really proud of what the Magento team has accomplished over ten years, and specifically in the last few. Mark and his leadership team have done an incredible job taking Magento out of the “lost days” and into the position it’s in today, not to mention the countless others that we’ve worked with at Magento since almost the beginning (people like Udi Shamay, Efi Shabtai, Shira Shimoni, Brittany Mosquera, Piotr Kaminski, Ashley Jordan, and many more). Many people have contributed to Magento’s success over the years, and none more than Roy Rubin and Yoav Kutner of course.
Magento has finally found its home with Adobe, and we’ll continue to work alongside them to ensure a prosperous future for each company and our clients.