This content is adapted from a paper I wrote as part of a marketing class for my MBA at the University of North Alabama (UNA) during October and November of 2024.
Automattic is best known for the WordPress Content Management System (CMS) and related products such as WooCommerce (an eCommerce add-on for WordPress), along with other utilities such as Jetpack and Akismet, which are mostly used in conjunction with WordPress (Automattic, n.d.).
You may not be highly familiar with these brands, but you’ve visited websites built on WordPress (such as – this one) (. Approximately 43% of all known websites use it to manage content and graphics, according to W3Techs (2020).
Automattic for fun and profit
Automattic is in the web development and infrastructure industry. It originated as the for-profit division of an open-source project, which still runs as a non-profit organization, and today offers hosted WordPress sites (i.e. – offers the infrastructure and maintains the individual codebase for organizations to run WordPress sites) along with many paid and “freemium” services related to maintaining WordPress sites.
How does a company like Automattic make money, anyway?
An open-source software project generally begins with a few key figures who develop the software to solve some common problems. In the beginning, the software is offered as a free download and users pay their own expenses related to hosting it and customizing it for their own use. If enough users show interest in the software, especially business users, the next evolutionary stage is the development of for-profit businesses, usually instituted by people close to the founding stage of the project, which offer services related to the software. So, the core software usually continues to be free, but paid services begin to be offered so that other entities can make the most efficient use of it.
As mentioned above, the people who are close to the founding stage often enter for-profit businesses related to the project, and these offerings are often viewed in some sense as the “official” providers of services, as is the case with Automattic. However, other companies are free to offer their own services and even modify the open-source software as part of making their own offerings.
Who are Automattic’s most relevant competitors?
Since hosting is a significant source of revenue for Automattic, I’ll focus on the direct competitors in that space. A 2022 PC Magazine article listed 11 competitors in this arena. Based on my own experience with these companies, I’ll list four which I consider the most relevant, and why:
HostGator – prominent in search results for WordPress hosting, extremely affordable, markets to small businesses very effectively.
Bluehost – Also well known, provides stronger customer service at a somewhat more upmarket price, and offers strong site-building tools
WP Engine – perhaps the best known enterprise competitor to Automattic. They have marketed aggressively to the mid-market, and have apparently gained enough market share that the founder of Automattic, Matt Mullenweg, is engaging in questionable business practices to stop them (Roth, E., 2024)
GoDaddy – best known for providing domain registration services, but in the past decade has offered a number of services to small businesses, including WordPress site creation.
(these companies, as mentioned above, were selected from a PC Magazine list (2022).
In addition to these direct competitors, indirect competition comes in at least two forms – web site creators can choose a different open source project to build their site on, and they can also choose Software as a Service (SaaS) companies which provide an entire integrated solution where the hosting, codebase, and all related services are provided under one invoice. I’ll provide examples of both, and why they are relevant:
Drupal – another open-source project similar to WordPress, but with much greater adoption among large businesses. Drupal provides more flexibility, power, and arguably security than WordPress, but in my experience costs 3-5 times as much to maintain due to hosting requirements, cost of qualified development teams, and project management requirements.
Squarespace – a SaaS offering which solves the problem of providing a web site as described above – by controlling the entire experience. They have become highly relevant by advertising heavily in the small business and tech communities, and offering a service which requires no coding at all. A marketing team with an eye for web design can simply maintain the site themselves.
Meta – one could also consider Meta properties like Facebook an indirect competitor, in that small businesses sometimes forego having a web site in favor of putting all their content on a Facebook business page at no charge (except for optional promotional spending). As with Squarespace, no coding is required (or possible).
The textbook Strategic Market Management lists eight “competitor actions” which affect their competitive stance. I’ll focus on a few below and give examples from the competitors listed above.
Exit Barriers – this element of the competitive environment is likely one of the more abstract, so I’ll attempt to define it based on my experience. The direct competitor hosting companies like HostGator, and especially WP Engine (the WP obviously stands for WordPress and Automattic is charging them with trademark infringement for their various uses of the WordPress name) (Roth, E. 2024) have built data centers and code bases of their own, optimized to host and support WordPress. The costs to them to rebuild their businesses around a different system might be prohibitive. WP Engine faces an existential threat if they cannot resolve their legal differences with Automattic.
Few industries likely thread the needle between cooperation and competition like open source software. Because of this, Automattic should expect fierce competition from these companies to continue.
Image and Positioning – Companies like GoDaddy and Meta are household names. GoDaddy ran Super Bowl ads for many years. Meta’s Facebook and Instagram properties have user bases exceeding the population of many countries. You probably know one or both of these companies much better than you do Automattic or even WordPress. GoDaddy upsells domain customers at every step of the order process. So the “built-in” opportunities to sell against Automattic are significant.
Cost Structure – Companies like HostGator and, to a lesser extent, Bluehost depend on a low cost structure to offer hosting plans at extremely low prices. Many of their competitors (including Automattic) have also focused on providing services at a low cost, since WordPress tends to attract small business users who cannot afford to pay more. The SaaS competitors like Squarespace actually have higher costs, and sell their services at higher price points, but differentiate by claiming to provide “all in one” solutions that allow businesses to avoid hiring developers or web design firms, which are typically costly, and by including all maintenance costs in their monthly price. A tech giant like Meta, of course, is operating at such a large scale that their free offerings are monetized by potential ad revenues (whether provided by the client business or not).
How durable are Automattic’s advantages?
As mentioned, the open-source industry is different than most other service industries, including purely commercial software like Microsoft Windows or Salesforce Customer Relationship Management software (which is a SaaS). The successful competitors, both direct and indirect, have perhaps started out in front from the early days of Automattic. WordPress has very large market share because it is, at its core, free. They have had to compete like every other player for dollars as they have converted users to paid services.
Their main advantage has been name recognition (you have to go to https://wordpress.org to download the software) and the sense within the web development community that their offerings are “official” and thus trustworthy.
In my opinion this goodwill will erode very quickly if they compete against companies like WP Engine in an aggressive way, as described above, that is perceived as antithetical to open-source community values.
However, their greatest existential threat is likely from indirect competitors, especially SaaS offerings. SaaS is projected to grow at a rate of over 13% through 2030 (SaaS Market Size & Share Report, 2022-2028. n.d.). Ease of use, the assurance of compliance, and predictable costs are all points in favor of adopting SaaS solutions for website building.
Bibliography
Aaker, D. A., & Moorman, C. (2017). Strategic market management (11th ed.). John Wiley & Sons, Inc.
Automattic. (n.d.). Automattic. https://automattic.com/
Roth, E. (2024, October 18). WP Engine asks court to stop Matt Mullenweg from blocking access to WordPress resources. The Verge. https://www.theverge.com/2024/10/18/24273448/wp-engine-injunction-matt-mullenweg-wordpress-resources
SaaS Market Size & Share Report, 2022 – 2028. (n.d.). Www.grandviewresearch.com. https://www.grandviewresearch.com/industry-analysis/saas-market-report
The Best WordPress Web Hosting Services for 2022. (2022, September 16). PC Magazine. https://www.pcmag.com/picks/the-best-wordpress-web-hosting-services
Usage Statistics and Market Share of WordPress, May 2020. (n.d.). W3techs.com. https://w3techs.com/technologies/details/cm-wordpress