Industry Insights

Adobe & Magento Come Together to Deliver Compelling Experiences

Just this Monday, Adobe released some really big news. The company has reached a definite agreement to acquire Magento Commerce, a market-leading open commerce platform company for $1.68B in a bid to capture a bigger slice of the digital-commerce industry pie from Inc. and Oracle Corp.

This is said to be one of Adobe’s third largest acquisitions to date. “Adobe is the only company with leadership in content creation, marketing, advertising, analytics and now commerce – enabling real-time experiences across the entire customer journey,” says Brad Rencher, Executive Vice President and General Manager, Digital Experience, Adobe. “Embedding commerce into the Adobe Experience Cloud with Magento enables Adobe to make every moment personal and every experience shoppable.”

Earlier this year, Adobe held one of the world’s largest digital marketing events in Las Vegas, Adobe Summit 2018, which was said to attract more the 13,000 people and featured more than 200 sessions. At the event, Adobe’s call to action was “Make Experience Your Business”, focusing on their Experience Cloud platform which is exactly what this acquisition brings to the table.

In the press release by Adobe it stated “The addition of the Magento Commerce Cloud will enable commerce to be seamlessly integrated into the Adobe Experience Cloud, delivering a single platform that serves both B2B and B2C customers globally. The Magento Platform brings together digital commerce, order management and predictive intelligence into a unified commerce platform enabling shopping experiences across a wide array of industries.”

It’s comes as no surprise that consumers and businesses now expect every interaction to be shoppable – whether on the web, mobile, social, in-product or in-store. This is the future of commerce – Experience-driven commerce.

At the Adobe Summit, Brad Rencher, Executive Vice President and General Manager of Adobe Experience Cloud made a statement that really holds true to that “Making experience your business is good for business,” Brad said during the main presentation. “So, if you and your company have not placed it at the top of your agenda, you need to get started — especially if you want to stay in business.”

Mark Lavelle, CEO of Magento commented on the news saying “Adobe and Magento share a vision for the future of digital experiences that brings together Adobe’s strength in content and data with Magento’s open commerce innovation. We’re excited to join Adobe and believe this will be a great opportunity for our customers, partners and developer community.”

Mark also released his own announcement on the news stating With Magento’s position as the world’s most popular commerce platform and Adobe’s leadership in designing and delivering great digital experiences, we will enable every business to create and deliver compelling real-time experiences, engage with customers across every touchpoint, and transact anywhere across the entire customer journey for both B2C and B2B.

We stand at the forefront of a tremendous opportunity:

  • To offer even greater value to customers, partners and developers across their commerce investment
  • To accelerate our product roadmap enabled by the breadth and depth of Adobe’s product capabilities and cloud technology
  • To tap Adobe’s global operational scale to accelerate our penetration into new verticals and geographies
  • To harness the creative passion of our Community towards our mission of using technology to connect and empower people
  • The acquisition is expected to close in the Adobe fiscal third quarter, subject to regulatory approvals and other customary closing conditions."

What Others are Saying in the Industry

Are the days numbered for standalone companies? We were interested to hear what other industry veterans had to say about the acquisition.

First, we spoke with Tjeerd Brenninkmeijer, EVP at Bloomreach to hear his thoughts on the biggest implications with the acquisition, what it means for the industry and other standalone ecommerce companies and if the acquisition makes sense surrounding the different types of frameworks.

What do you think the biggest implications are of this deal?
First of all, an acquisition like this was long to be awaited since Adobe missed out on acquiring Hybris (that was bought by SAP) and DemandWare (bought by Salesforce). Magento was the third choice if you would say so, being built on a PHP framework and more focused on SMB. Despite all this, Adobe is most likely going to push Magento to their commerce customers and prospects who (unless they replatform on it) will ultimately be more interested in a more independent digital experience platform - like BloomReach, which is the only other Java based leader in the Gartner MQ for WCM, offers a more modern stack and is easy to integrate with third party commerce platforms.”

This acquisition furthers the consolidation we have been seeing of various systems to form more end to end systems, do you think this trend will continue and what does it mean for the larger digital business industry as a whole?
“The consolidation within the field of big suite suppliers actually goes against a broader trend of global brands moving away from proprietary software stacks. The reason for this trend is that they are lacking the agility and speed of innovation that is needed in today's fast paced world. What modern brands need is an agile platform based on microservices that separates front end from back end. In order to deliver the compelling, content-rich experiences their customers are asking for, they have to move quick and cannot spend endless time and effort on development. Therefore they are looking at best-of-breed solutions that integrate well with other platforms. Simply put: Magento is not the future of enterprise but commerce-as-a-service is.”
Where does this leave other standalone ecommerce companies like Shopify who saw their stock take a dip yesterday following the announcement?
“The stock dip of Shopify is a short term effect because they are now not longer a possible acquisition target for Adobe. In the longer term, standalone ecommerce providers that focus on agility and open APIs to easily integrate with third party systems have a great future ahead of them. Also Magento will most likely focus its R&D efforts on the Adobe integration as well as on enterprise instead of SMB. This will create a gap for other vendors like Shopify to step in to.”
Many people have mentioned that this acquisition doesn’t make sense because of the language/framework is PHP vs Java – What are your thoughts on this?
“As already mentioned, being PHP based Magento isn't the most logical commerce platform for Adobe to acquire. While one could certainly argue that with the trend of moving everything to the cloud programming languages are becoming less relevant, integrating a PHP-based platform into a Java stack still seems like taking the hard road and will inevitably lead to compatibility issues - even when moving completely into the cloud. Certainly not something you would expect nor accept from a big and expensive software suite.”

There was also a lot of action on Twitter including Scott Liewehr of Digital Clarity Group tweeting out this comment and many other thoughts about the acquisition on his Twitter page:  

What Does This Acquisition Mean For Shopify?

According to CNBC, Shopify (Magento’s rival in the ecommerce space) saw their stock fall as much as 5.5 percent in extended trading following the recent acquisition announcement.

The Ottawa based ecommerce company’s stock sank the most in six months Tuesday despite beating estimates for first-quarter revenue, profit and full-year revenue. Gross merchant volume, the total amount of goods sold on all Shopify-run sites, grew 64 percent from a year earlier, compared with an 81 percent increase in the same quarter last year. That metric has become a key number that investors have been zeroing in on.

Shopify, who went public in 2015, is one of the most valuable publicly-traded cloud software companies, with a market capitalization of over $15 billion at Monday's close. The stock, which is up 43 percent this year, slumped to $137.60 in extended trading after the announcement.

Investors who used to push up the stock after consistent quarterly revenue growth are now diving deeper to look at what kind of users are driving expansion. The shares fell as much as 10 percent, the most since October, to $119.61.

Despite the concern over future growth, Shopify beat quarterly estimates on most metrics. Revenue was $214.3 million in the three months ending March 31, versus the average analyst estimate of $202.4 million. The Ottawa-based company reported a profit of 4 cents a share, far outstripping the average projection for a loss of 5 cents.

Was this only a short term affect or will we see this rise and fall over the months or even years to come?

Ending Notes

How Adobe will embrace Magento's Open Source community is possibly the most intriguing part of this acquisition —  for myself at least. Many people have their own opinions on the language and framework compatibilities so it will be interesting to see if it will inevitably lead to compatibility issues as Tjeerd mentioned above.

This acquisition also signals a big win for PHP. It’s said that Adobe now apparently owns $1.68 billion in PHP product, and this helps validate PHP as an enterprise-grade technology.


Gabriella Pirrone

Gabriella Pirrone

Gabriella is the Digital Marketing Assistant for CMSC Media. She brings a wealth of knowledge from not only a CMS perspective but also content, SEO and eCommerce. She enjoys everything social media and staying ontop of the latest trends in the digital marketing world. 

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