Adobe has just purchased Magento for $1.68 billion.
This deal is not a big surprise. People were predicting it a couple years ago, when Magento started partnering with Adobe. Karen Baker, a figurehead in the Magneto Community, wrote that the community had been expecting something like this.
This also isn’t the first time Magento has been sold. Back in 2011, Magento was sold to eBay. That deal is generally considered to be a failure, and eBay sold Magento in 2015. Hopefully, Adobe will turn out to be better owners of Magento than eBay.
Let’s look at this deal from several angles …
This seems like a lot of money
Automattic purchased WooCommerce for $30 million. That looks like an incredible bargain. Magento sold for more than 53 times the price of WooCommerce.
Dries Buytaert estimated the sales to be 10x annual revenues.
This is big, even by Adobe’s standards. It’s Adobe’s biggest deal in nearly a decade.
The impact on Magento
You can look at this glass-half-full or glass-half-empty.
On the positive side, Adobe has a very clear need for an eCommerce platform. They have all sorts of content management and analytics tools, but eCommerce has been a big missing piece. Adobe is not going to neglect Magento.
Adobe doesn’t have a good history with acquiring and growing open source software. Many Magento users don’t seem happy. But it doesn’t hurt to have long-time open source figures like Matt Asay saying all the right things (Matt is currently “Head of Developer Ecosystem” at Adobe).
On the negative side, Magento has now had four completely different owners in 7 years: Varien, eBay, a private equity firm, and now Adobe. Those are four very different organizations with four very different goals and visions for Magento.
Perhaps the most accurate thing we can say is that Magento is moving to the cloud. Malcom Wild has a really good overview of the deal on Linkedin:
Product wise, it will all move to the Cloud, that’s Adobe’s heartland and Magento were moving that way too.
If you read the Adobe press release, they use the word “cloud” repeatedly. If you keep following Magento, you’ll hear the words “Magento Commerce Cloud” many times over the next few years.
Where does that leave the open source Community edition? Here’s Karen’s prediction:
I’d not be surprised if the Community edition is slowly demoted and then removed in the next 3-5 years.
Jokingly, we might also see a change to the Magento logo:
— Talesh Seeparsan (@_Talesh) May 21, 2018
The impact on Drupal
Outside of Magento, this deal has the biggest impact on Drupal, and in particular, on Acquia.
- A big rival just got stronger. Acquia have often mentioned Adobe as their toughest rival, and this move makes Adobe stronger.
- Acquia lost a partner. Acquia had been forging deeper and deeper links with Magento.
- Good news for Drupal Commerce. Now that Magento is in the hands of a rival, it’s probably time to look again at Drupal Commerce?
Dries probably suspected this sale was coming. Within a few hours of the sale, he published a 1,300-word reaction:
For a long time, Magento operated as Open Source in name, but wasn’t very Open Source in practice. Over the last couple of years, the Magento team worked hard to rekindle its Open Source community. I know this because I attended and keynoted one of its conferences on this topic. I have also spent a fair amount of time with Magento’s leadership team discussing this.
Finally, this might be good news in at least one way for Acquia. $1.6 billion is a big price tag. If Acquia does file for an IPO, or get acquired, the sale price probably went up this week.
The big picture
Adobe does not mess around with the small and medium size businesses. Back to Malcolm Wild again:
Adobe products are a premium offering. A huge emphasis is placed on specialism, certification and experience, with a pinnacle of a few partners sweeping up huge license deals across the Adobe product portfolio. Whereas Magento has a large number of small to medium system integrators and pockets of great retail consultants, all doing lots of smaller deals and deploying the Magento solutions fast.
Magento is becoming an Adobe product, so Magento will be even more enterprise-focused than it is now.
That’s great news for everyone who works with Magento now. There’s likely to be more money, more opportunity, and perhaps more acquisitions. When Drupal was growing quickly, we saw several acquisitions of Drupal agencies.
Still, it’s likely that Magento’s marketshare will continue to shrink as it moves up-market. This acquisition is good news for Shopify, WooCommerce, Big Commerce and perhaps others like Prestashop and Drupal Commerce. We’ve just published a large new class on WooCommerce and have a new class on Shopify launching this week. Here at OSTraining, we’ll keep rolling out new Magento training, but I expect rivals will keep grabbing marketshare.