To think that they could have announced this Friday at X Change…big missed opportunity…and I would love to have heard the ensuing discussion!
This was a shocker and it certainly electrified our afternoon. I got the word about 10 minutes after the news hit the wire with a call from an analyst. I will admit to being deeply surprised with the fact of an acquisition and, even more so, with the acquirer.
I talk to investor analysts following our community regularly and so, of course, I often hear speculation about Omniture as a potential acquisition target. Certainly Omniture is, in many respects, a very plausible acquisition candidate. But while I had heard companies like Oracle, Microsoft, Google and IBM all mentioned, no one had ever surfaced Adobe. And if they had, I probably would have expressed deep doubt.
But I don’t mean that one should take my “What are they thinking?” headline in the caustic, disbelieving sense that I might apply it to a congressional debate or an Oakland Raiders draft choice. I really mean to suggest the sense of a genuine question – “what are they thinking?”
Of all the acquisition candidates touted for Omniture, I favored IBM, though I doubted them all. Omniture has always felt like a company where there is still plenty of room to grow, the management team seemed intensely engaged in that process, and they seemed unlikely to give up control of that process for anything less than an exorbitant premium.
Nevertheless, I favored IBM if there was a candidate because I saw Omniture as a classic enterprise software play. Omniture has a solution with a heavy services component, deep penetration at the high-end enterprise level, and they are a company that might benefit from the infrastructure, internationalization and services side of IBM’s business.
At first glance Adobe seems like a stretch.
Yes, there are some obvious synergies. As a multifaceted international software company, Adobe brings a certain amount of infrastructure and international markets to the table. But a deal like this isn’t about cost-cutting or internationalization and, in any case, Omniture’s big costs are focused around capital expenditures to support the SaaS model – not something that Adobe is hugely involved in.
One tends to think of Adobe as primarily a design-oriented software company and that looks like a problem because measurement and design aren’t simply different they are generally armed opposing camps. So you wouldn’t expect Adobe’s brand champions to be very measurement focused and, in my opinion, they aren’t.
On the other hand, there has been a big fight brewing for years now about who will control the web application environment. It’s a war being fought at both ends and by many of the same players. At the browser level, it’s a war to see who will own the window into the internet that consumers use and the advantages that come along with that. But on the producer side, it’s increasingly become a war to see who will own the applications that drive the web.
Adobe has long owned the design space, but they are just starting to seriously penetrate the development space and with these two disciplines merging, it seems like it's an open playing field.
Adobe is a major player in this development/design space. But it’s hardly uncontested. Owning the application space for the web is a very big business and, like most design and software development systems, there are strong tendencies toward monopoly.
Developers and designers tend to gravitate toward the winning solution (for simple career reasons) and then deployment must inevitably follow the expertise.
It’s in this space that having an integrated measurement solution would be a substantial win vis-à-vis the competition. Tagging Flex applications for example – tagging any application really – is a mess right now. And with Omniture essentially owning the enterprise analytics desktop, it would be difficult for competitors like Microsoft to counter an integrated measurement system by just rolling their own measurement solution.
Plus I suspect that elements of the culture – at last on the product side – are fairly congenial. Adobe, like Omniture, is deeply focused in the online world and its development.
I suppose that it’s the synergy in this area that probably drove the acquisition. Like most synergies, it seems attractive but it’s hardly risk free. After all, Omniture’s real community is marketing folks. They aren’t entrenched with the folks who actually run, design or build the web in the way that Adobe is. So the two companies target a somewhat different corporate audience. I think that’s a significant challenge.
Nor is it obvious to me that superior baked-in measurement will be easy to attain. There really aren’t good paradigms for application measurement in the marketplace right now. And if it is easy to attain, will it be sustainable as an advantage? And what about the vast non-enterprise Adobe audience that would probably much prefer measurement integrated with Google Analytics?
I’m always skeptical of acquisitions – especially one’s without an obvious cost-cutting component. It’s incredibly challenging to merge two big companies, two different cultures, and two different types of products into a coherent whole. So they’ll probably need to be both good AND lucky to make this deal work.
Adobe has more expertise than most in this game, and it’s gratifying to see measurement make such a big splash. Our little industry is growing up fast. That’s mostly to the good; but though I won’t miss those green drinks at the Omniture Summit (I guess they can make them red now), it just won’t be quite the same will it?