eBay buys Magento…what does it mean?

June 6, 2011

As most of you know, eBay bought out Magento last week, picking up the 51% of the company it didn’t own.  While I have no idea what they paid for it, we do know that its initial purchase of Magento (the 49%) valued the company at 45 million.  I would bet the farm that the remaining 51% cost them at least 2-3 times as much, netting them out at a valuation of between 100-200m, and fetching at least 50-100m in this transaction.  That is, of course, pure speculation.

More importantly, the question is, what does this mean for Customers and Partners? I feel Brian Walker’s take on this at the Forrester Blog is right on the money:

For Magento users, this is a very good thing. It is time for Magento to mature as a solution and as a business. The same development approach and business practices which can support a small insurgent open source commerce platform do not scale to supporting multiple products with very diverse needs and across many maturing clients. Users of Magento’s enterprise solution have been struggling with support and product traction as Magento invested in the MagentoGo SaaS solution and tried to manage a rodeo of new and existing partners, customer acquisition, and diverse product initiatives. In retrospect this was too much to take on at once, and Magento may have outgrown their ability to deliver on the expectations. With the completion of this acquisition eBay has the ability to clarify the product initiatives, add needed investment to product development, and mature the support given to developers, partners and customers. A failure to do so will erode the Magento value proposition and see a raft of clients evaluating their long term commerce capability solution providers and platforms.  It will take time for the core challenges to resolve, so for Magento users struggling now this announcement will mean little in the short-term. For Magento users in the longer-term this should be a positive.

So, we will see….and Levementum, as a Magento partner is excited about the change, and optimistic about the future!



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