How the Oracle acquisition of ATG effects retailers

It's an interesting play for both Oracle and ATG. The market for ecommerce software is extremely fragmented. The small, on-demand players like Big Commerce, Volusion and Shopify are making headway at the lowest ends of the market for two reasons. First, they are cheap and easy to use and second, they can continue to move upstream in both price and functionality without cannibalizing their own business model. From the top end, companies like ATG, GSI and Demandware have always had a lot of trouble moving downstream because once there is a sunk cost in the development, they have a hard time maintaining their prices for their higher end clients while pretty much giving the same functionality away to lower end clients.

Where we have specialized is in this intersection between Enterprise customers and really flexible mash-ups of lower cost technologies that can provide powerful capabilities to Enterprise customers but have to be created and positioned in a way that they become digestible by a larger Enterprise customer.

We are seeing many of our potential large customers considering Magento for their front end web application but then having to do a lot of thinking about how to integrate that successfully with their back-end SAP systems or other legacy ERP or fulfillment systems. In addition, many have made investments in development platforms like Drupal over the last few years for their flexible, CMS based web presences but aren't quite sure how that will work with their ecommerce driven sites and things like Ubercart just don't pass the smell test.

The merger between Oracle and ATG will have the immediate effect of driving that solution even farther upstream. It will become more comprehensive but less nimble. Companies already on the Enterprise Oracle infrastructure or running on ATG will definitely benefit if the have those kind of integration issues but everyone else will probably hesitate. That solution becomes more complex, not less and at least in the short term, certainly less flexible.

We still believe that for most enterprises, the mash-up is the way to go and have developed programs and methodologies that make sure the best of breed point solutions can be integrated in a way that fits into a long-term, Enterprise IT plan while at the same time, if flexible and iterative in the deployment and feedback processes.

I don't think that the competition needs to really worry about a significantly wider adoption for the mid or even high mid market of the combined Oracle/ATG solution but larger enterprises who are already customers of either one and want to either expand into ecommerce or integrate supply chain into their ecommerce solution stand the chance of benefitting greatly.