Will Magento Thrive as a Private Company?

Posted on the 17th November 2015

On the 2nd November, eBay announced that it had sold on its eBay Enterprise Division, including Magento, to Permira Funds, and that the sale was worth $925 million. The sale is an interesting development, and could be quite promising for the future of Magento.

Mark Lavelle, CEO of Magento Commerce, the new name for the company, explains that Magento’s situation within eBay was unusual. The company and its software was often overlooked by eBay, so the software did not get the time or attention that it really deserved and needed.

During 2014, it saw revenues of $1.4 billion, which sounds impressive until you consider that this figure marks just a six percent annual growth. That is relatively modest for an ecommerce company given the explosion in ecommerce over the last couple of years. Now that the company will be operating autonomously, it is expected that it will be focusing on building an audience of eCommerce users with turnover in the range of $25 to $100 million a year. The change should not matter much in the short term for existing users, but will benefit them in the long run, as Magento is working hard on the 2.0 release – something that is eagerly anticipated by the user-base.

Slow Adoption of Updates

Many users of the Magento community edition are still using Magento 1.5, even though the official release is now up to 1.9. A major reason for this is that it is difficult for a non-technical user to upgrade the Community Edition, so store owners feel that they cannot justify the risk, downtime, or expense of bringing in an expert to do it for them. The 2.0 release may provide them with the incentive to complete the upgrade.

The one concern for some developers is that as a private company, Magento may choose to focus more on Enterprise users. This could see it neglecting the 2.0 community release and those who rely upon the community edition, thereby leaving them out in the cold. The good news is that this is rather unlikely. Magento is an open source platform and the open source ethos will die hard. Permira has plenty of experience in working with retailers and understands the world of digital commerce. Magento’s new owners will appreciate the contribution that the open source community can make, and they will not want to lose the associated input, testing, feedback and development work.