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Adobe to acquire Magento - what are the reasons and what will change

Posted in E-commerce on May 22nd 2018
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COO and Co-Founder

Adobe will acquire Magento, as announced on May 21st, 2018 by both companies (Magento press release; Adobe press release). The purchase, said to be valued at $1.68 billion, is expected to be finalized in the third quarter of Adobe's 2018 fiscal year, with Magento CEO Mark Lavelle still leading the company after the acquisition, reporting to Adobe’s executive vice president and general manager Brad Rencher.

Why has Adobe acquired Magento?

Magento’s acquisition by Adobe makes a lot of sense. Adobe currently offers digital solutions under the Adobe Experience Cloud, which provide advanced advertisement, analytics, content management and marketing capabilities. By adding commerce to its portfolio, Adobe will be able to provide a one-stop shop solution to its enterprise-level customers, seeking to establish itself as a leader once again in the digital landscape across all channels. Thanks to this acquisition, Adobe's clients will be able to leverage a more holistic approach when delivering experiences across the entire customer journey.

In fact, this is definitely a vote of confidence on Magento by a historical player of the Valley. That's an opportunity to gain more traction and accelerate sales in a segment of the market that sees strong competition with Oracle and Salesforce.

How will Adobe integrate Magento into its ecosystem?

The second question is: how will Adobe integrate Magento into its ecosystem? It is not hard to imagine that Magento will join the ranks of the digital services offered via the Adobe Experience Cloud. In particular, Magento is currently behind with CMS capabilities, so that's an opportunity to integrate better with Adobe’s current offerings, again targeting enterprise-level customers.

What is not clear yet is the how Magento will be licensed in the future: historically supporting the open-source model previously called Community Edition (CE), Magento will enter an ecosystem that does not have a good history, nor a culture of open source. We actually have concerns about the future of the open source project, knowing that Adobe is working mainly on closed source enterprise solutions, given that the last commit on was over 3 years ago.

How will this affect current and future brands using Magento?

Thanks to this acquisition, we believe that brands will be able to leverage a more holistic approach when delivering experiences across the entire customer journey. Thanks to these enterprise-level solutions, brands will be able to rapidly deploy multiple services across the world, engaging with clients at multiple touchpoints.

Another major change that could happen is Magento going cloud only, ditching the self-hosted solution, and join the other cloud-hosted solutions by Adobe (and their competition), benefiting retailers with a global footprint. At the same time, it raises concerns about China, which due to its specificities and different digital landscape, would not benefit from a central cloud solution.

What about China?

While the cloud-only solution would certainly benefit global players, at the same it may need to be adapted to China, which due to its specificities and different digital landscape, would not benefit from a central cloud solution. The future of Magento in China is not clear at the moment, but we can take educated guesses. What we know so far is that last year they received a 250 million USD investment by Hillhouse, a Chinese investment firm. We can foresee a stronger commitment to penetrate the Chinese market deeper, joining forces with the Adobe solutions. If Magento goes cloud-only, they should deploy a local cloud to be used in China to serve local retailers better and to achieve best in class performance.

About the authors

Aurelien Rigart

Vice President and Co-founder of IT Consultis

Aurélien is an enthusiastic serial entrepreneur, coach for startups and other Entrepreneurs, board of Director of EO (Entrepreneur Organization) and French Tech Shanghai. He has founded and currently manages several successful ventures. He is always very keen to meet new people and excited to learn from other success-driven entrepreneurs. As Vice President and co-founder of IT Consultis, a team of 60+ people in 3 countries, Aurelien is responsible for the development and expansion of the company, leading the strategy, sales, and marketing departments.

Thomas Guillemaud

COO and Co-founder of IT Consultis

As the COO of ITC, Thomas manages all operations and promotes the adoption of new technologies and philosophies within the company. In addition to raising the efficiency of each project, he invests his time in coaching and mentoring the project management as well as the development team, ensuring they all have standardized knowledge and skills to successfully meet client's expectation.