Adobe Acquisition of Omniture Adds Flash to Web Analytics

Adobe Systems said yesterday it will acquire Omniture Inc., a leading supplier of Web analytics technology. The deal, valued at $1.8 billion, raised eyebrows as the supplier of the Flash and PDF platforms paid a premium for a company with only $296 million in revenues last year.

The acquisition promises to extend Adobe, a leading provider of content development, workflow and creation tools, into a new area of Web measurement, performance and analytics. The deal would be Adobe's largest acquisition since it grabbed Macromedia for $3.4 billion back in 2005.

Adobe said Omniture promises to expand its market and growth options by bringing the company into consumer-facing markets such as advertising and digital media distribution. In short, Adobe sees extending the use of its development and content creation technologies and workflow with optimization and measurement tools.

"Adobe will have the opportunity to embed measurement technologies within each of their applications," said Forrester analyst John Lovett in an interview. "It does offer the ability to round out their services with the measurement and the potential optimization of that content. Verses a developer simply putting out information, they now would have an engrained feedback mechanism to see how the consumers of that content use it and where it goes. That's the real opportunity there."

Despite the high price tag, IDC analyst Al Hilwa said Omniture ranked as the fastest growing of any of the suppliers of Web analytics services. "The price they are paying seems high until you recognize that this puts Adobe in a leadership contending position of a hot area now which should bolster profits and revenues as specific synergetic offerings are put together," Hilwa said in an email.

"Adobe likely sees a world where the tools for developing, testing, performance measuring and managing Web content happening as a service through versions of Adobe's tools," he added. "In a way this is a play that puts Adobe more seriously in the cloud and SaaS [software-as-a-service] space if it is able to leverage the potential synergies."

RedMonk analyst Michael Cote said that making money on the Web is increasingly moving toward Web analytics and search engine optimization [SEO]. As such, Web developers will need to focus more on user behavior.

"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," Cote said in an email.

Forrester's Lovett said Microsoft appears to sidelined its Web analytics for now, after closing the beta of its own offering codenamed project Gatineau, was discontinued. It was based on technology it acquired three years ago from DeepMetrix.

The deal, already approved by Adobe shareholders, is expected to close in the fourth quarter.

About the Author

Jeffrey Schwartz is editor of Redmond magazine and also covers cloud computing for Virtualization Review's Cloud Report. In addition, he writes the Channeling the Cloud column for Redmond Channel Partner. Follow him on Twitter @JeffreySchwartz.

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