Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
Acquired by eBay in 2011, the platform takes aim at larger technology providers.
Magento, the popular open-source e-commerce platform that debuted in 2007, recently surpassed 4 million downloads of its free Community edition, Roy Rubin, founding chief executive, tells Internet Retailer.
Acquired by eBay Inc. last summer and now a part of eBay’s X.commerce “open commerce” technology platform, Magento has also racked up sales of its licensed Enterprise and software-as-a-service Go editions to thousands of retailers, says Rubin, who is now general manager of Magento under eBay. Clients range in size from merchants doing less than $1 million a year in sales to more than $100 million, he adds. Magento’s clients include apparel manufacturer and retailer The North Face, a unit of VF Corp., No. 138 in the Internet Retailer Top 500 Guide, and menswear manufacturer and retailer Bonobos Inc., No. 789 in the Second 500 Guide.
In many cases, companies and independent technology developers start off with the free Community edition to explore Magento’s open-source technology before migrating to the Go or Enterprise editions, Rubin says. The Community edition requires the company deploying it to invest time and expertise , but the Go software-as-a-service, or SaaS, version can be deployed as quickly—in no more than a few hours—by non-technical employees, depending on a site’s complexity and depth of content, he says. Open-source technology makes publicly available the core software code, enabling a community of developers to build on new features that then become available to other users. Although the source code is freely available, deploying new feature extensions may come with consulting fees.
In addition, Magento is working within X.commerce to integrate with other eBay e-commerce technology and services, including the PayPal online payment system that is also part of X.commerce and the online marketing and fulfillment offerings of eBay’s GSI Commerce unit, which eBay acquired last year. “We’re spending a lot of time working within the eBay family, taking advantage of synergies to provide a one-stop shop for an e-commerce platform and online payments,” Rubin says.
Magento is also working with large eBay sellers as well as merchants in general that don’t sell on eBay to help them explore how they can grow in e-commerce, he adds. “We’re looking at a wide spectrum of what merchants need and what assets we can provide to help them fulfill those needs,” he says.
Magento has also been growing internally. It added about 75 people to its staff within the last six months, bringing the number of employees dedicated to Magento to more than 400. (The Magento e-commerce platform was initially launched by Rubin’s Varien, which was later renamed Magento Inc.)
Outside developers, meanwhile, have built thousands of extensions to all three Magento editions, including such features integrating with back-end financial accounting and inventory management systems, e-mail marketing programs, integration with social media, and online merchandising templates for consumer electronics, jewelry and other product categories. More than 5,500 extensions are offered for sale through the Magento Connect extension marketplace, which is accessible through Magento.com. Magento Go starts at $15 per month for a site with up to 100 product SKUs, and goes as high as $125 per month for up to 10,000 SKUs. A license for Magento Enterprise starts at $12,990.00.
Rubin says the ongoing development of the Magento platform, both internally and by outside developers, is positioning Magento against e-commerce technology providers Demandware Inc., which offers a software-as-a-service platform to small and mid-size retailers, along with IBM Corp.’s WebSphere Commerce and Oracle Corp.’s ATG, platforms. In the 2011 Edition of the Internet Retailer Top 500 Guide, ATG leads all e-commerce platform vendors with 40 clients, followed by IBM with 32. Magento has three.
Gene Alvarez, a vice president and e-commerce technology analyst at research and advisory firm Gartner Inc., says that Magento, now with the financial backing of eBay and technical support from eBay’s large community of developers, could ramp up its platform and better compete against the likes of WebSphere Commerce and ATG. But he adds that Magento still needs to prove itself to large retailers—particularly those among the top 100 online retailers with $180 million or more in annual web sales as ranked the Internet Retailer Top 500 Guide.
“Magento Enterprise is the new darling for retail organizations that want software to extend and customize their sites,” Alvarez says. “And for retailers with $100 million or less in sales, it’s quite a contender.”
But, he adds, IBM and ATG still have more robust feature sets—backed by large research and development teams—that have proven to be popular among the top 100 online retailers. Magento still must prove its ability to keep sites running and growing with high-end versions of web analytics, content management, marketing campaigns, customer service and integration with back-end order management and fulfillment systems, he says. “I don’t think open-source technology is there yet,” Alvarez says.
But with a stronger focus from the thousands of technology developers that focus on eBay as well as Magento, that may not be far off, he adds.
Alvarez will speak on mergers among e-commerce technology vendors at the Internet Retailer Conference & Exhibition 2012 this June in a session entitled “Mega mergers: How to negotiate with the big as they get bigger.”