Adobe has bought the popular e-commerce platform Magento for the tidy sum of $1.68 billion. A remarkable move, as this is the first time that Adobe, which has mainly focused on marketing solutions thus far, has acquired a true e-commerce player. For Adobe, Magento will form part of the Experience Cloud, an extensive cloud platform for digital marketing solutions.
Magento was owned by eBay from 2011 to 2015. When investor Permira Funds transferred $200 million to eBay in 2015, Magento continued on as an independent brand. As it turned out, this newfound independence was to last only three years. The deal between Adobe and Magento is most likely to be finalised by the autumn of this year. It is as yet unclear whether the Magento name will be retained or will disappear in the future.
The future of Adobe and Magento
How will Magento continue under the Adobe banner? Are there big changes to come or will most things stay the same? The news of the announcement certainly had an immediate impact on the stock markets. Share prices for Magento competitor Shopify promptly fell by 5 percent. Nevertheless, neither Adobe nor Magento have made any firm statements on the future path following the final takeover. Even the experts, then, will be left to scry in their tea leaves for the moment. In spite of this, some analysts have sketched out a few possible future scenarios, which we will run through briefly below.
The worst-case scenario: the end of Magento Open Source in its current form
A large part of the Magento environment is based on open source. Adobe, on the other hand, is known for its strict licensing policies. The current situation allows for choosing the open source version and then supplementing that with apps and plugins from third parties to build in any remaining functionality needed. It could be that Adobe takes a dim view of this and decides to drop the open source edition in favour of the (paid and licensed) Magento Commerce. This would mean that use of Magento will be all but exclusive to major players with plenty of financial elbow room from then on. In this case, the open source edition would also be monetised through third-party extensions and the Magento Marketplace.
That said, most experts consider such break away from the trend unlikely. They argue that the large and skilled Magento community, a major force behind the e-commerce platform’s success, would then be unable to continue in its current form if the open nature of Magento were to disappear completely.
But what is more likely: extending and complementing the current product
Many Magento experts have already expressed their opinions on the sale. Most of these, such as Jamie Huskisson (CEO and founder of the British Magento web agency JH), Karen Baker (CEO of ShipperHQ & WebShopApps) and e-commerce specialist Yannick Röling of Dutch Magento builder Experius, don’t seem to think the world has ended. In their view, Adobe’s purchase of Magento will mainly lead to advantages. They say this with the following considerations in mind:
- Retailers with a Magento online store will have access to a broad spectrum of new functionality and supplementary technologies in the future. Integration with Adobe’s tools will in all likelihood offer plenty of possibilities to plug the gaps in Magento’s feature set. These could be aspects such as advertising and content creation, but possibly also a marketing component such as product management.
- Partnerships and the overarching scale of Magento will grow at a rapid pace.
- Open source certainly won’t disappear completely. The main reason for that is that this element of the platform, along with the large and dedicated community, lies at the heart of the brand’s success. What’s more, the experts mentioned above even think that retailers will have a range of new functionality and tools at their disposal without having to pay extra for them.
- There might even be a Magento 3 platform on the cards …
- With a strong brand like Adobe behind it, much larger brands are more likely to choose Magento. This will ultimately serve to benefit the quality and scalability of a Magento online store.
- By acquiring the world’s most popular e-commerce platform, Adobe will become the leader not only in content creation, marketing, advertising and analytics, but in e-commerce as well.
- There is also a realistic chance of seeing a standard headless setup. This would mean the online store front is presented through Adobe, with a Magento platform backend.
- The merger of Adobe and Magento will lead to existing weaknesses in Magento and various Adobe software being addressed. Together, both brands can accommodate all the requirements for online sales and marketing.
- Magento will never become a full SaaS solution – this was tried before with Magento GO, after all, and it didn’t work out so well. The possibilities for customisation turned out to be a very important component of Magento.
The initial comments from Magento CEO Mark Lavelle also seem to point in the direction laid out above. They suggest that the sale of Magento to Adobe will lead to a platform with more features that also retains the majority of the old benefits (the large community and the ability to remain open source).
It remains difficult to make any firm statements on the course Magento is set to take in the near future now the company has been taken over by Adobe. Will Magento target higher market segments more exclusively, or instead focus even more on the middle segment? And to what extent will Magento Open Source remain supported? These are questions that will only be answered for certain in the coming months/years.
Nevertheless, the expectation continues to be that Magento Open Source will just carry on, in part because Adobe will probably want to profit from the hugely active and adept Magento community. Moreover, pooling the knowledge of Adobe and Magento may lead to new systems and functionality that takes the entire e-commerce landscape to a new level.