Joe Toppe

Adobe’s Appetite: Thoughts on the Magento Purchase

May 31, 2018 / Jochen Toppe / eCommerce

Now that it’s been few days since Adobe’s acquisition of Magento, I wanted to share some thoughts.

The Facts

Adobe is acquiring Magento Commerce for $1.68 billion – roughly an 11x multiplier of their current revenue of $150 million. When Salesforce purchased Demandware in 2016, they paid $75 a share or a total of $2.85 billion – also an 11x multiplier.

And just as the Demandware acquisition was highly strategic for Salesforce, this one is highly strategic for Adobe.


For one thing, Magento fills a big gap in the Adobe portfolio.

Adobe has been assembling the leading marketing cloud, starting with the Omniture acquisition in 2009 for $1.8 billion. After adding Day Software’s CMS (now known as Adobe Experience Manager), and solutions for social (Efficient Frontier), campaign management (Neolane), audience segmentation (Demdex), and others, eCommerce was the last piece missing.

Adobe has tried to fill this gap before. They tried to acquire Hybris, which they lost to SAP. Rumor has it they also tried to acquire Demandware, losing to Salesforce.

But why Magento?

Magento has a long history with lower to mid-market firms, and the open-source distribution is quite popular. So along with one of the top market shares for eCommerce – especially when combining figures for open source and enterprise options – Adobe gains a wider client base.

But Adobe is hardly known for lower priced offerings, and it remains to be seen whether they can expand their product portfolio into this segment. (If so, it would be very bad news for Shopify.)

One thing to look at is the financial analyst meeting slides that Adobe presented two years ago. Here they claim that 66% of their Experience Cloud customers already had three or more products in 2014, and that by 2016 the figure was up to 90%. So they definitely have a track record of expanding and cross-selling within their portfolio.

The other factor is that Magento has been expanding into enterprise-level customers (including B2B) at a rapid pace, increasing its paid customer base and moving up in the market. It has shown a potential to satisfy enterprise requirements – which makes it a good fit for Adobe’s sweet spot and a forward-looking play.

As well, Magento doesn’t come with some of the baggage (i.e. other competitive solutions to Adobe’s portfolio) that other eCommerce players have. The acquisition might not even affect the partnerships with the other eCommerce vendors initially.

Impact on other eCommerce players

SAP, Salesforce, IBM, Oracle, and the others should brace themselves for a battle. Adobe is all about customer experience, so we will surely see them push a fully integrated AEM-Magento solution, with AEM taking over the glass.

The other players need to beef up their experience management capabilities and/or partnerships quickly. These platforms aren’t very good at handling non-product content (and some aren’t even good at handling product content itself), as repeatedly cited by industry analyst reports. So this capability will become ever more critical – especially for headless eCommerce vendors such as Commerce Tools, Elastic Path, and Skava.

These vendors will become even more motivated than to keep Adobe out of their sales cycle, since there’s now yet another point of competition to the mix.

So What about CMS?

When Adobe starts pushing Magento as their standard eCommerce solution, other eCommerce vendors should start pushing more of a customer experience story – one that’s not dependent on Adobe’s ecosystem.

And this, in turn, should increase the market for CMS solutions that offer more flexibility and specialize in eCommerce scenarios.

Joe Toppe

Joe Toppe

Vice President Sales and Customer Success Americas

Located in the Washington, D.C. area, Jochen Toppe is responsible for sales and customer success in America. His mission is to grow CoreMedia’s business with more highly successful customers, and make working with CoreMedia a delight for our customers and partners. He was previously in charge of Product Management at CoreMedia in Hamburg, shaping the strategic development of the company’s key offerings and corporate partnerships. Jochen joined CoreMedia from Razorfish, one of the world’s largest interactive agencies, where he helped develop Fluent™, a SaaS platform providing global enterprise marketing clients a turnkey solution to target, distribute and manage multi-channel digital campaigns and experiences. As a CoreMedia veteran, Jochen worked with CoreMedia’s professional services team, where he spearheaded implementations of numerous large-scale projects, including some of the largest traffic portals still running on CoreMedia today such as T-Online. Jochen earned a Master of Science in Computer Science and a Bachelor of Science in Computer Science and Mathematics from the University of Alabama, Huntsville.

More posts

Regaining Creative Control

eCommerce companies need to be nimble to compete, but standard commerce platforms make that challenging. Site structure and user navigation are often based around product catalog and therefore difficult to change. And major updates usually must go through agencies or IT, which is costly and time consuming. The right digital platform empowers business users with...

Read More

Why CoreMedia signed the Contract for the Web

Tim Berners-Lee’s new #ForTheWeb initiative has the potential to completely transform how we use the web and CoreMedia wants to help him make it happen.

Read More

IBM Watson Commerce V9 and Beyond

Migrating to WebSphere Commerce V9 The latest version of WebSphere Commerce has been long anticipated. A lot of major architectural changes bring the platform into a new era, but also include a lot of challenges for those updating. How do I update most effectively? How can I better insulate myself from architecture changes in WebSphere...

Read More

Post a comment


Add your name and email address to sign up for our CoreMedia Blog and Industry Newsletter and we will keep you posted about upcoming events, product enhancements and news about CoreMedia.

We promise to keep your data safe and you can opt out at any time.