The reason why Adobe purchased Magento is HUGE
Adobe Systems Incorporated or simply Adobe is popular for providing various creative and unique tools like Indesign, Photoshop, and Illustrator including PDF (Portable Document Format) used widely used for the purpose of sharing and formatting document
It was a long time ago when Abode decided to turn away from making and selling shrink-wrapped software to actually providing software services to its customers know as Saas (Software-as-a-service) which also included cloud based subscription. This served not only the people of creative community but to businesses for the sake of advertisement, marketing and analyzing by adding different tools.
With that, now the company is expanding its tool belt by adding e-commerce to it
This week Adobe declared that it will be purchasing Magento Commerce for $1.68 billion. Magento is the biggest e-commerce company present. The company is a software provider that works on cloud-based e-commerce content management system (CMS). CMS is as Adobe said “brings together digital commerce, order management, and predictive intelligence into a unified commerce platform enabling shopping experiences across a wide array of industries”.
The basic services that Magento provides include software that design and manage online stores, aid in purchasing, handling payment, shipping and returns of products.
If someone thinks Magento is not a household name they should not forget that Gartner’s Magic Quadrant identified it as leader for digital commerce combined with popular names like Oracle, IBM and Salesforce.com. Recognized last year as the leader in the field by Forrester Research, Magento provides variety of tool for Business to business (B2B) transactions as well.
Magento’s customers include very well-profiled companies like Canon, Helly Hansen, and Rosetta Stone including current Adobe customers Coca-Cola, Warner Music Group, and Nestle.
According to Adobe total revenue of $150 million was generated by Magento last year with a gross merchandise volume of $150 billion. The deal is expected to end in the third quarter and the acquisition will be a little dilutive for the 2018 Adobe’s earnings. However, no significant affect is expected of the previously issued guidance.
The acquisition of Magento is considered to be very important for Adobe as supplies the e commerce components that have been missing previously. As Brad Rencher who is the Executive Vice President and General Manager of Adobe said,
“As we looked at our current portfolio of Adobe Analytics, Advertising, and Marketing cloud offerings, we saw an opportunity to add a next-generation commerce capability to Adobe Experience Cloud. One that could serve both B2B and B2C customers, across physical and digital goods and provide the flexibility to scale to serve mid-market and large enterprise customers.”
It’s huge for Adobe to purchase Magento
Adobe said by acquiring Magento, its total available market grows by $13 billion. Furthermore, Magento’s various digital tools help Adobe compete with Salesforce. What Adobe is trying to achieve by acquiring Magento was also done by Salesforce when it purchased Demandaware in 2016.
The purchase of Magento also put Adobe in the position to match up to Shopify on the enterprise market level. Shopify helps its customer in setting up an online store by providing various easy-to-use different templates and tools to and also customize the shopping experience for the buyers in this way.
For a time till now, Magento has only focused on small or medium sized business but now having Coca-Cola on its list of stable customers show expansion of its offerings. It let Adobe with a gap in its offering and it will now be providing its services from the marketing to purchase.
This deal can be revolutionary for Adobe.