Adobe Acquired Magento: Our Observations of the Implications

With 4,000+ clients utilizing our GlobalLink translation management software, Translations.com has the benefit of working with a broad ecosystem of tech partners. This ecosystem gives us a reliable pulse on what is happening in the marketing technology (MarTech) world.

Since it was announced, we have discussed Adobe’s acquisition of Magento with a great number of industry experts. Here are some of our primary observations from these conversations.

MICROSOFT

Who starts an article about Magento and Adobe with Microsoft? For me, Microsoft is top of mind in this deal. Adobe and Microsoft have been strategic partners for over two years. There are a number of synergies between the two businesses.

The one synergy I keep thinking about is the 2016 announcement about Adobe delivering its cloud services on Microsoft Azure. With over 50% of Magento’s clients on Commerce Cloud, one can’t help but think that these sites will ultimately end up on Azure.

Of course, a Magento Commerce, Microsoft Dynamics, Adobe Sign, Adobe Campaign story also helps bolster the story told in the marketplace about the end-to-end solution offered through the partnership between Adobe and Microsoft.

Industry analysts and bloggers have been speculating for a while now about whether or not Microsoft would ever acquire Adobe. One can’t help but think that Adobe’s pockets being $1.68B lighter and their now higher valuation for a buy-out makes that possibility less certain.

SMB AND ENTERPRISE

Adobe has done a wonderful job of positioning their Experience Cloud as a leader in Gartner’s Magic Quadrant. It has become the platform of choice across many of the world’s largest brands. This lineage for the company is part of why Translations.com and Adobe have had a strong partnership for nearly a decade—our clients have the same make up.

The top of the market has become saturated for Adobe. Therefore, the most obvious place to look for growth is in the long-tail—small and medium-sized businesses (SMB). Adobe has done a great deal over the past five years to offer products that meet the needs of these buyers. As Adobe has entered the SMB space with vigor, they have faced stiff competition with the folks who have traditionally dominated this space (think Drupal, WordPress, and a plethora of other actors).

The perception of Magento in the MarTech world has long been that they offer a solution targeted at the SMB space. With the release of Magento 2 in 2015, the vision for the software was that it would be more suitable for enterprise. While it has some kinks to work out for supporting enterprise clients, it is still a world ahead of Magento 1.x.

The acquisition of Magento gives Adobe immediate SMB market share while helping Magento get more exposure to the needs of enterprise clients. Both companies benefit strategically from what each brings to the table as it relates to client segments.

DIFFERENT ECOSYSTEMS

This is where things start to get a little sticky. Magento is PHP-based while Adobe is JAVA-based. While there is a popular argument that it doesn’t matter in a world where technology is cloud-based, the truth is that it does.

Taken together with the fact that these two companies mostly work in different segments of the market (SMB vs. enterprise and commerce vs. content), what you end up with is two very different ecosystems of partners (Translations.com happens to be in both).

This week, I’ve spoken with both Magento and Adobe system integrators who are now scrambling to understand if they need to start recruiting developers who know PHP or Java and are familiar with both platforms.

WHAT DOES IT ALL MEAN?

Now that we’ve shared our main observations related to this merger, what does it mean for our clients? In truth, most of our clients currently using Magento don’t use any CMS or leverage tools like WordPress or Drupal.

Some of the most common technologies we have seen in our nearly 100 clients utilizing Adobe Experience Cloud include SAP Hybris, Elastic Path, and Salesforce Commerce Cloud. Therefore, we currently see very little overlap/cross-pollination across these two technologies.

For that reason, I expect that very little will change for clients of either technology in the next 12 months. However, if history proves anything, I think it’s safe to assume that Adobe will likely invest a great deal into the Magento products to ensure they are fully capable of addressing the use cases seen in the enterprise segment of the market.

As a result, there will likely be a version that becomes available for clients that has more bells and whistles and a corresponding price tag. Current clients on Magento shouldn’t assume the cost will automatically increase—at least not in the next 12 months. Further, any increase in price will likely correspond with the added value stemming from the new features and capabilities Magento will offer.

CONCLUSION

While there is no doubt that Adobe’s acquisition of Magento helps them fill the commerce gap in their stack and allows them to better compete against the likes of Salesforce and SAP (with a little help from their friends at Microsoft), what is still unclear is how these very different companies, technologies, and ecosystems will successfully merge and go to market together.

Only time will tell.