Wednesday, November 03, 2010

Guest Editorial: Oracle Acquires ATG

By Jamus Driscoll, Vice President of Marketing, DemandWare [we thank DemandWare for permission to publish this blog entry in its entirety]

The day that we’ve forecasted has arrived. It’s consolidation season and the online commerce world is aflutter again. This time with news that Oracle is buying ATG for $1 Billion. For most of the day yesterday I was asked to share our thoughts on the news and what it means for Demandware.

To address all the questions, I thought I would take a moment to share some of our first reactions to this news with everyone. Here it goes… 

Good for ATG! 
As one of the early pioneering companies in ecommerce, ATG helped to build an industry that is now fundamentally changing retail and how brands engage with consumers. ATG’s history is in many ways a history of ecommerce itself. From the early days with its Dynamo App Server, ATG’s product evolved into the platform it is today - improving business functionality as the evolution of eCommerce increasingly left the technology side of the house and became the domain of merchants.

As a veteran/survivor/addict to early stage technology companies, I know how much sweat, passion and conviction (often in the face of incredible market doubt) it must have taken to build a company like that and so I have tremendous respect for what they have achieved. Good for you guys. And thank you.

Good for the industry
For years, the ecommerce grapevine brought whispers of this match. It was on-again, off-again, but the constant of the pairing was always there. It makes sense. ATG is written in JAVA and Fusion-friendly and Oracle had made such a strategic bet with Retail that not having a credible eCommerce platform made the whole multi-channel story a bit, shall we say, suspect? So I wasn’t so much struck by the match as I was by the valuation - $1 Billion.

Given ATGs market cap, that’s around a 40 percent premium on yesterday’s market cap. In the world of corporate acquisitions, that may not be a gaudy exit, but it’s certainly hearty. And that’s good for everyone in eCommerce. Why? Because the transaction speaks volumes for how eCommerce is being valued by retailers and apparently also to software giants like Oracle. This bodes well for everyone in the industry - vendors and practitioners alike.

So what does this mean to Demandware?
Ultimately it comes down to this…In our view, while this is great validation for the industry, this acquisition does nothing to change Demandware’s belief that software alone is not the answer and that the future is still on demand.

With software, merchants still need to operate, maintain, upgrade, customize, secure and support it. They need to feed, care and worry about it. But the funny thing is that all the merchants really need (and the merchants ultimately run the business) is to be able to differentiate the brand and sell more product to consumers.

These are very exciting times. As one of the eCommerce leaders shaping the future of this space, we are very interested in see how this acquisition all plays out in the coming months.

How about you? What are your thoughts on this acquisition and what it means for eCommerce?

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