Adobe Buys Omniture – Quick Analysis

Yesterday, Adobe announced they were buying Omniture for $1.8B. I have to admit I don’t know Omniture very well. And I’m no bagman, so I have no idea if $1.8B is a good deal or not.

That said, if Adobe wants to be in the position to be the standard
tool-chain for web and RIA application development (spanning Creative
Suite and the Flash Platform), having the web-marketing and business
services that Omnitrue provides could make a more compelling tool
chain. The important point being that the tool-chain is not only used to create the web applications, but actually deliver them ongoing. That is, Adobe needs to add services (yes, “cloud”) to their tool-chain and offerings.

Making money with web applications

Making money on the web (or with network-reliant applications) is largely an analytics game that
requires lots of SEO, user behavior tracking, and other analysis that
the web app teams pipe into their product management decisions: what
are the features and ways of exposing those features on the web that
make us the most money?

Here, as Reductive Labs‘ Andrew Shafer helped me buzz-word out, you have all sorts of fantastic phrases (and the actual technology that back them):

In conversation people might call them feature flags, switches, valves, levers or knobs, but building them in means you can do things like dark launches, incremental launches, A/B tests, or turn off intensive features to accommodate heavy traffic.

We’ve all heard the stories of how flickr does multiple releases daily, Amazon tunes the pages to sell more, and so on. That’s the kind of thing we’re talking about here.

This business model is drawn largely from the public web, but non-consumer-facing companies are beginning to figure out how it applies to them, to “the enterprise.” You can see how the idea of “Agile Infrastructure” (which underlies this method of applications delivery) is starting to pan out in the three part podcast series I co-host over at The Agile Executive (part 1, part 2, and part 3). Chalk it up under “the consumerization of IT.”

Of course, this train of thought extends to
the mobile space as well, and, to some extent, to network connected
desktop applications (read: AIR, Silverlight Out-of-browser, Google Gears, etc.). Ultimately, if the Adobe tool chain – including
services used in production – help developers make money, it’ll be
more appealing in the face of other contenders like Microsoft, the
“open web” crew, Google, cloud-providers, and others.

Adobe’s Cloud Roadmap, Long in the Making

Adobe has been slowly on the path of building out a Platform-as-a-Service with, for example, now with a PaaS built on it’s Connect infrastructure. But, in Adobe fashion, they’ve done this gradually without a lot of fan-fair. Some Adobe groups seem to have an allergic reaction to hype, which can be endearing but also damaging at times. They’ve had a bevy of SaaS offerings for sometime now and more recently, the LiveCycle group has gotten their cloud buzz on. But when it comes to catering to web developers for production concerns, there hasn’t been enough yet.

And this is critical for Adobe’s developer build out: they can’t monetize the Flash Player, and Flash Builder revenue alone can’t be enough to sustain the Platform group (the more Adobe charges for Flash Builder, the slower Flash Platform adoption will be). Ultimately, they need to sell what we’d now call a PaaS, or at least, the tools around delivering applications over the Internet (be they web apps, RIAs, apps on non-traditional computer screens, mobile, whatever).

As I said, I don’t know Omniture too well, but it sounds like something along those lines.

(Check out Phil Kemelor’s take for someone who seems to know Omniture better than me.)

Disclosure: Adobe is a client, as are Microsoft and Reductive Labs where Andrew works.