Earlier this week, Adobe announced that it would be acquiring Magento. Let’s take a deeper look at how this transaction benefits both companies and what this purchase will change and look like in the future.
Benefits for Adobe
The main thing that will really change is the fact that Adobe had a hole for ecommerce in their cloud that will now be filled in a great way by Magento. It will be a great part of their platform working in favor of B2B and B2C interactions. Brent Leary, the man who owns the company CRM Essentials, has said that this will be a fantastic addition to the Experience Cloud Adobe has. He stated that this will basically provide consumers with the full circle of what they need from the company.
This may also create a much closer relationship between the pairing of Adobe and Microsoft – these companies have actually had several partnerships together previously. However, since Microsoft also has the same need for ecommerce that Adobe is now filling with Magento, it could strain things between them as well. Only time will really tell here.
The competition that Adobe has had going on with Salesforce the last few years should sway in their favor as well, now that they have filled the ecommerce void that they had previously. In 2016, Salesforce bought Demandware for over 2 billion dollars to fill that hole for themselves as well. However, Adobe will certainly still have to put up quite a fight, as the company is rapidly on their way to exceed $10 billion dollars in revenue in 2018.
Benefits for Magento
The company sold for almost $1.7 billion dollars. Their increase in value has gone up considerably since they were purchased last by eBay in 2011, which was said to be a much smaller deal of about $180 million dollars.
Hillhouse Capital Group invested $250 million dollars in Magento last year, and they will most likely be seeing a large investment in just over a year as well.
Potential Downsides
As far as anything that could be considered a negative for this purchase, the only aspect that really comes up is the fact that Magento has mostly focused on SMB customers. This is different than Adobe’s target customers, which are the enterprise.
The competitors to Adobe, mainly Salesforce and SAP, have both purchased companies that were geared more towards enterprise. However, it is believed that it was the best choice they could have made at this time.
However, Magento definitely has some big-ticket customers as well. Cindy Zhou, who is the principal analyst at Constellation Research, has said that Magento really is the platform of choice when it comes to commerce. For a lot of very large and mid-size companies like Coca-Cola, this has been a great decision.
At this point, it is unclear whether or not the community product will stay open source, but we will likely know more about that a little later on.
We are definitely looking forward to seeing what the future looks like for both of these companies, and to observe how the compliment and assist each other as time goes on.
