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Adobe Buys Magento: Top 5 Changes to Expect
A New Chapter in Magento History
On May 21, a bright orange news banner on Magento website shook the community with really big news: Adobe is buying Magento. According to the Adobe’s press release, the acquisition is scheduled for the third fiscal quarter of 2018. Taking into account that Adobe’s fiscal year starts December 2, 2017, the deal will conclude somewhere by the end of August 2018.
Structurally, Magento will become a part of Adobe Digital Experience. Its CEO, Mark Lavelle, will remain the head of Magento, a position that he has been working at for almost 3 years. He excitedly commented in the official Magento Commerce blog post “our future together with Adobe is unlimited”.
Adobe believes that the Magento platform will bring invaluable online shopping expertise to their Cloud Platform customers. And we will see whether the new acquisition is good news for the ecommerce crowd.
What Will the Future Bring?
Understandably the Magento community is worried about what future brings. So far, the reactions range from enthusiasm to doom-and-gloom. Personally, we are very excited about what future brings. The acquisition will allow both Magento and Adobe work together and complement each other’s products, opening up new opportunities for online retailers. However, we decided to put on our analytics hat and shed some light on what to expect from this deal.
The Net is divided. Two equally active camps have emerged. Let’s call the first one The Optimists and the other one The
According to personal beliefs, users either like the news or hate it. We’ve taken a quick look at Twitter and the opinions are all over the place.
While some are glad…
…others only see the bad
Forming your own opinion in the digital age is not easy. The temptation to join one of the camps is big. As with everything in life, Magento acquisition is not black-and-white. Let’s dig into history.
The Company of Countless Owners
Magento is a technology company that has seen its fair share of foreign acquisitions. Founded in January 2008 by Roy Rubin and Yoav Kutner, in June 2011, just 3 years later, it was already purchased by eBay for around $180M.
Same as Adobe, eBay planned to make Magento a nice addition to its nascent X.commerce ecosystem.
Their plans fell apart in November 2015. As a part of eBay/PayPal split, Magento became private with the help of Permira, a global investment firm.
In 2017 Hillhouse, one of the largest Chinese investment companies poured $250M into Magento Commerce. They became the second biggest shareholder of Magento after Permira itself.
This last transaction brought Magento to approximately $700M in valuation. Even more impressive that 1.5 years later Adobe buys Magento for more than twice this valuation, $1.68B.
During these years Magento team was under the control of an extremely varied management. Nevertheless, its leadership succeeded in preserving the integrity and vision of the company and grew Magento community year after year.
And the community is the cornerstone of every Magento experience. It contributes to every aspect of Magento platform, from code creation to web design to enhancing your website with extensions.
In large measure Magento owes its success as a platform to the community: developers and users that invest their time and resources to create, improve, and test countless features and lines of code every day.
Why Did Adobe Buy Magento?
Today’s global ecommerce market is fractured into a few dozen successful platforms with no clear leader. Currently, the major players are working very hard to win the lion’s share of the market.
Ecommerce platforms market share. 2018 grouped rough estimate [Source: BuiltWith]
This is exactly why Adobe is interested in teaming up with Magento. The new product suite will cover most of user requirements in digital commerce – online marketing, advertising, analytics, and now sales.
Magento will complement Adobe Experience Cloud in more than one way. With this addition, Adobe will become more competitive against Salesforce. In 2016 their team added Demandware to Salesforce CRM for the same reason.
Adobe and Magento. What to Expect?
Integrating Adobe and Magento products seamlessly is quite a challenge for the company. It will not be an easy task, either. Magento has come a long way as an open-source, community-driven platform while Adobe builds solutions in a more restricted, company-centric way.
Some of the critique towards Adobe is justified. It has the reputation of cutting down products that are no longer aligned with Adobe’s business strategy.
The long list of abandoned web tools includes Adobe Fireworks (in 2013), Adobe Flash (in 2017), and most recently – Adobe Muse / Business Catalyst, with the end of life announcement in March 2018. Well yes. This list can be discouraging.
But the pessimists always preach doom. Adobe pays $1.68B for Magento Commerce. This is their largest acquisition in a decade. The company will be extremely careful about their next steps.
Top 5 Predictions For Magento Community
We remain optimistic about the outcome of this partnership. We think that Magento users should, too. Here are our 5 predictions for the future of Magento:
- Magento will remain an open-source platform, free for all ecommerce users. Whatever the pessimists might think, Adobe will not cut this version down. Their goal is to build up Magento market share and upgrade successfully growing online stores to Magento Enterprise – thus making them paying customers.
- Adobe will integrate Magento with Cloud Experience. Obviously. Magento fills an important gap in Adobe’s toolset which lacks a comprehensive ecommerce solution.
- Magento will grow faster. Again, obviously. Unless Adobe does something incredibly wrong, access to new resources, both financial and technical, will allow Magento team to significantly accelerate the development pace.
- Magento will focus more on large clients. Magento is already a platform of choice for such giants as JCB, Coca-Cola, Rubie’s, Accent Group, and others – but it’s tailored to small and medium businesses. Adobe is more interested in competing with Salesforce and other comprehensive CRM solutions for larger customers. That’s why we will see renewed effort of adding more functionality to Magento Enterprise customized for, well, enterprise clients.
- Adobe will try to upsell smaller Magento users their Cloud features, probably letting them try Cloud Experience for free to convince to upgrade. If their integration with Magento and payment options are good enough, we are convinced that even smaller shops will pay a modest fee to get access to Cloud Experience.
Only time will tell if our predictions are true. Aitoc will watch the situation very closely. For now, we look forward to great things that Adobe and Magento are capable to achieve together.
Aitoc is a young team of passionate professionals delivering robust Magento 2 extensions. Founded in 2001, Aitoc has produced over 100 modules for clients worldwide. The company continuously evolves, now offering a full range of custom ecommerce development services.