On Monday, Adobe surprised the eCommerce world with its announcement they agreed to acquire Magento for $1.68 billion.
READ MORE: Adobe Buys eCommerce Platform Magento
Since then, many small business owners that run their online store on one of the Magento open-source versions (CE) have wondered what this may mean for their business.
“Magento brings Adobe Experience Cloud digital commerce enablement and order orchestration for both physical and digital goods across a range of industries, including consumer packaged goods, retail, wholesale, manufacturing and the public sector.”
Adobe’s statement is void of any mention of small business or open source and focuses on the cloud business that Magento has expanded over the last couple years.
Monday evening, Adobe also held a conference call for investors explaining in a little more detail the decision to purchase Magento.
Adobe stated they envision Magento as a good fit to their portfolio for the mid- and enterprise markets and again highlighted that both Adobe and Magento share some customers such as Coca-Cola, Warner Music Group, Nestlé and Cathay Pacific.
The company revealed that Magento’s 2017 revenues were in the neighborhood of $150 million and that Magento currently employs about 750 people.
Executives from Adobe kept highlighting the cloud business Magento developed over the last couple of years and that the platform’s development has been Cloud-First.
They also hinted that Adobe will be concentrating on extending capabilities of the cloud platforms between the two companies.
Another area they highlighted to investors was the 300,000 plus strong developer network Magento brings to Adobe.
It’s a bit unclear how Adobe counted these developers and in a fact sheet released about the acquisition, it also mentions 1,150+ Magento partners.
Most likely, they did an estimated “headcount” of developers that work at Magento partners who are involved in active development on products and services that integrate with the Magento platform.
The Magento Solution Partner Ecosystem is explained by the company as:
“A trusted networking of consulting companies that help merchants grow their business, and create engaging customer experiences with the Magento Platform. Choose from a global network of commerce domain experts to help with end-to-end project implementations including design, customization, configuration, integration, and deployment.”
To become an official Magento Solution Partner, companies have to pony up a minimum of $5,000 per year, but levels go all the way to $100,000 per year, depending on revenues.
Many of the companies listed in the Solution Partners network are developers that provide services to online retailers and brands, regardless of platform.
Well-known solution providers such as MailChimp and ShipStation (a Stamps.com company) are represented along with digital marketing and consultancies that support enterprise-level installations of Magento.
Another group of Magento partners only sell extensions on the Magento Marketplace that expand the functionality of the core platform.
Listing in the marketplace is available at no cost, but partners share revenues of 30 percent with Magento. Magento does offer paid tiers for extensions partners which include additional support services by the company.
Here again, many of the extensions partners are larger developers that offer products and services for both open-source and enterprise/cloud editions.
Basically, in its justification for purchasing Magento, Adobe keyed in on all the areas of Magento that generate revenue.
That brings back the question, what about open-source?
“At Adobe, we are committed to the stewardship of open platforms and diverse creative communities. Long before open source was broadly embraced in enterprise computing, Adobe actively integrated open-source technologies in its software and actively contributed to open-source development.
From our involvement with the Apache Software Foundation (“Apache”) to the recently launched Adobe Cloud Platform, Adobe has fostered a passion for open and collaborative development.“
Matt Asay, Vice President of mobile for the Digital Marketing business at Adobe
That sounds a bit more promising. These words are from a blog post Matt Asay shared on Monday when Adobe announced the acquisition of Magento.
He further states other examples of Adobe having embraced open-source and utilizing open source technologies in commercial products.
Asay says, “The point is: open source is in our DNA.”
But let’s rewind to 2010.
Adobe purchased Day Software, an enterprise content management software company headquartered in Basel, Switzerland.
Day embraced open software development and also contributed significantly to Apache Jackrabbit and Apache Sling projects, among others.
But some folks in the open-source community have a skeptical view of how Adobe managed the Day Software integration:
“Unfortunately, Adobe has a history of being “Open Source”-second and not “Open Source”-first. It acquired Day Software in July 2010. This technology was largely made using open source frameworks — Apache Sling, Apache Jackrabbit and more — and was positioned as an open, best-of-breed solution for developers and agile marketers. Most of that has been masked and buried over the years and Adobe’s track record with developers has been mixed, at best.”
Dries Buytaert, Open-Source software programmer, founder and lead developer of the Drupal CMS on his blog
Adobe transitioned Day Software’s product into Adobe Experience Manager. And when one looks at Adobe’s page for Adobe Experience Manager, Buytaert’s comment about masking and burying the open-source framework appears to have some merit.
No Worries for 2018
Before any small business owner jumps off a bridge or panics, let’s bring some reality to the situation.
Adobe said the acquisition will not close until its third quarter of 2018. That is the end of the August as Adobe is on a calendar year accounting schedule.
The company also said that “upon close, Magento CEO Mark Lavelle will continue to lead the Magento team as part of Adobe’s Digital Experience business, reporting to executive vice president and general manager Brad Rencher.”
Nothing unusual about this arrangement and it only confirms the Magento team will continue to operate as a business unit within Adobe.
Of course, over time, this may change but one shouldn’t expect any major organizational changes within the first year of ownership by Adobe.
In May of 2017, Magento stated that “Magento 1 has been and will continue to be supported for the foreseeable future.”
The company also said, “we are committing to a minimum 18-month notice before we make any changes to our support levels.”
These comments seem to address the future of the CE (Community Edition) of Magento 1, which is still the most commonly installed version of Magento by small businesses.
For Magento Enterprise Editions (EE) users, the company previously announced the end of full support is June 2020 for Magento EE 1.13 and Magento EE 1.14. It also committed to providing security patch updates for all previous versions.
With these public promises to the Magento community and contractual obligations to Enterprise level customers, Adobe would be foolish to make major changes in the short term.
Certainly, the company is interested to continue the transition from a licensed Enterprise product to a hosted cloud product.
That is clear from the fact that end of support dates for Magento 2.0 EE was in March of 2018 and for Magento 2.1 EE will be June of 2019.
But this strategy predates the Adobe purchase of Magento, so nothing really new for mid-level and enterprise customers.
Therefore, for 2018, for small businesses that use Magento 1, there is no change.
The Magento 1 product was not being developed further anyway, and all updates that have been issued were security patches and very minor fixes to existing features.
Nothing more was promised by Magento to the open-source community since the company released Magento 2.
Since Magento committed to support the most recent Magento 1 EE editions until June 2020, it is reasonably to assume they will do the same for Magento 1 CE as both products share a lot of common code.
But there is one point of caution for Magento 1 CE users.
Those users that were considering moving from Magento 1 CE to Magento 2 CE this year, should really consider putting their plans on hold until there is more clarity about Adobe’s plans with Magento.
The future of Magento 2 CE is what really needs to be resolved after the acquisition by Adobe closes.
If a business is already running Magento 2 CE, nothing changes as well today. But here is where Adobe could make some changes to the product offering that may require a transition at some point.
2019 and Beyond
This gets very speculative because until Adobe takes full control of Magento, there is no way of exactly knowing their intentions.
Being open-source software, in theory, Magento CE could live on forever.
Certainly, there is a huge install base of Magento CE 1 stores and a significant number of extensions developers for CE are not Magento partners.
The installation base of Magento 1 could easily support many developers to provide years of new extensions and full support.
Some have even speculated a cottage industry could emerge that will specialize in maintaining Magento 1 CE beyond the official end-of-life period.
But, and there is always a but, eCommerce is evolving.
The industry is evolving in ways that may require a lot more computing power inclusion of features that may become standard on competing platforms.
For example, cloud-based platforms such as Shopify, BigCommerce, and Volusion can share network resources to power advanced features such as AI and AR.
These kind of advanced technologies could become a problem for open-source eCommerce platforms of all shapes if shoppers continue to move toward experiences that can’t be run on a $50 per month server.
Also, integrations providing more real-time and advanced insight (analytics) of shopping and marketing behavior may require more server power as well.
These could be offloaded to other networks, but Adobe is purchasing Magento because it has many of these eCommerce support services already and wants to provide a one-stop-shop for advanced eCommerce.
Might Adobe consider offering paid services of advanced eCommerce technologies to the open-source Magento editions in a roundabout way to monetize Magento open source?
Under eBay’s ownership, Magento tried a small business cloud version of the Magento CE product. The implementation was horrible as many CE extensions would not work with it and it was limited to a maximum of 10,000 products.
Adobe could revive the idea, but that would squarely put it into competition with Shopify, BigCommerce, Volusion, and others.
The company does offer a professional and a consumer version of Photoshop with different feature sets but share common code. Could that strategy be an example?
But with Photoshop, Adobe had a product that became a household verb (photoshopped), a practice known as anthimeria.
So when the company released Photoshop Elements, the consumer version of Photoshop, it had a huge brand awareness advantage that helped the consumer version become the dominant photo editing software today.
There is no shortage of challengers in image editing software.
But Photoshop professional and consumer versions continue their dominance at premium prices because of brand recognition and the high quality of the products.
It is a bit hard to imagine that Adobe could go this route as offering a Magento Commerce Cloud version for small businesses enters a far more crowded market.
Also, many users of Magento CE editions prefer open-source software because typically open-source invites a much larger variety of plug-ins and extensions.
With open-source there is also a perceived lower barrier of entry into eCommerce for small businesses. That may or may no be true for all industries, but the perception exits.
Even before Adobe decided to purchase Magento, Magento open-source has been ceeding market share to other open-source and cloud platforms.
BuiltWith.com maintains an eCommerce market share calculator, and according to their data, WooCommerce now has a huge lead in installations over Magento CE.
Certainly the issues with the initial Magento 2 release and the difficulty to migrate from Magento 1 to Magento 2 have contributed to more small businesses exploring other options, including hosted/cloud solutions.
Not only has WooCommerce blazed by Magento CE, but also Shopify today has over double the installation base of Magento CE.
Is this really an arena that Adobe wants to enter?
It certainly is not what the executives at Adobe are saying to their shareholders about where Magento will fit into their business.
And that might be the future that small businesses running Magento CE (version 1 or 2) have to consider.
Decision Time in 2019?
By the end of the year, hopefully, Adobe will provide a bit of guidance how they envision the future of Magento CE products.
On one hand, it would be very unwise to undo a lot of goodwill Magento has with so many developers, even if they are not official Magento partners.
But Adobe is a business and open-source is important to them as long as it supports the money making business.
They do use open-source code and technologies in commercial products.
If Magento Commerce Cloud benefits from the open-source product, they may see a value to keep open-source development of Magento going.
But we can’t forget how much Adobe dragged their feet on HTML5 and continued the development of the vendor dependant Flash, despite many on the Internet moving away from the Flash to the open HTML5 standard.
Flash appears to finally be coming to and in 2020. That is 13 years after Apple rebuffed Adobe’s Flash and instead opted to support HTML5. Others, like Google with Chrome, followed and that was the beginning of the end of Flash.
The Flash / HTML5 battle may not be a totally fair comparison, but it is just another example, just like the Day Software example, how the company’s interests are commercial software-first.
Merchants on Magento CE editions need to keep an eye on future developments. And sometime in 2019 may need to weigh Adobe’s stewardship of Magento open-source and their own business interests.
What are your thoughts on Adobe and how it may impact Magento open-source? Head over to our Facebook Discussion Group or use the comments section below.