Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
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Operating under the corporate umbrella of eBay, which has a large universe of external developers as well as a large internal development team, Magento is indeed likely to become even more useful as a technology platform as more developers build new features for it, says Gartner's Alvarez. But he adds that Magento has a ways to go before it can offer the same functionality of a WebSphere Commerce or ATG, and that it must still prove itself among retailers doing more than $100 million a year in annual online sales.
More specifically, 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, Alvarez says. "I don't think open source technology is there yet," he says.
But among small and mid-sized online retailers, he adds, Magento has more than proven itself. "For retailers with $100 million or less in online sales, it's quite a contender," Alvarez says.
Skeptical at first
Winning over its clients hasn't always been easy, however. "From the very beginning, I was very skeptical of Magento," says Andrew Ruggeri, vice president of e-commerce for flatware and tableware manufacturer Oneida Ltd.'s Oneida.com.
He says skepticism over the viability of open source software was common two years ago among e-commerce executives he talked with at the time. "But the more we dug into the Magento platform, the more we could see it was really robust and flexible, and would provide us with a powerful platform that didn't cost six figures like the others," he says. "It was very robust and available at a low price. They were breaking the mold as far as e-commerce platforms were concerned."
Oneida's former platform had made it difficult to design effective online merchandising displays; for example, shoppers interested in Oneida's popular Michelango pattern of flatware had to scroll far down a web page to view all 25 product SKUs, including individual pieces as well as assorted sets of knives, spoons and forks, listed under the main image. "The site didn't have the flexibility we wanted to be able to present our patterns," Ruggeri says.
On the new site, which was developed with Lyons Consulting Group, a specialist in Magento development, Oneida now presents its Michelango pattern in a neat display of images that a shopper can zoom in on for details, and tabs that let visitors drill down by optional flatware sets or individual pieces.
Magento's content management system has also made it easier for Oneida to personalize pages for customers based on their past shopping activity, and Ruggeri says he's been impressed with the frequent Magento offers in site updates. "It has been a very evolving and always improving platform," he says. Among updates he'll consider using is a new ability to develop multiple storefronts or microsites for product categories. On his drawing board for this year is using Magento technology to develop new mobile apps.
High performance, low cost
Site performance in terms of uptime has been stellar, Ruggeri adds. Launched in September 2010, Oneida's new Magento site had a 99.9% up time in the fourth quarter of that year, then 100% up time throughout Q4 2011, he says.
At OverstockDeals.com, which operates four e-commerce sites selling kitchen and bathroom products ranging from faucets to bathtubs, Magento has let it deploy more functionality at an annual cost of less than half of what the e-retailer paid for its previous platform, says David Ems, the retailer's owner.
The new features make shopping easier, he says. Many times OverstockDeals customers will order a set of bathroom products, and a new Magento shipping module lets them choose different forms of shipping within the same order: for example, same-day air for faucets, standard ground shipping for a sink, and freight service for a bathtub. "It took an hour to plug in that shipping module," Ems says.
That kind of quick development time is also considered a big plus at eyewear retailer Warby Parker. "We're constantly looking at our web site, and when we discover something that can make a better customer experience, we now have the ability to quickly act on it," co-CEO Gilboa says.
If Magento continues to evolve as it has over its first several years, it's sure to continue getting a good look from growing online retailers.