Microsoft buying Adobe? Call me highly skeptical

By | October 7, 2010, 2:43pm PDT

Summary: I’m seeing folks leap to the conclusion that Microsoft’s CEO Steve Ballmer met with Adobe’s CEO Shantanu Narayen to talk about Microsoft buying Adobe. Do you see this happening? I sure don’t.

The New York Times is reporting that the CEOs of Microsoft and Adobe recently met. Supposedly on their agenda: Apple.

I get that. That two of the vendors who’ve had problems getting their interactive media technologies approved for use on the iPad and the iPhone are chatting seems possible, if not probable. A Flash-on-Windows Phone 7 discussion? I could see it. Possible complaints to legal authorities launched in tandem? Sure, another plausible coffee-klatch topic….

But now I’m seeing folks leap to the conclusion that Microsoft’s CEO Steve Ballmer met with Adobe’s CEO Shantanu Narayen to talk about Microsoft buying Adobe (based on a passing mention that such an idea was on the Ballmer-Narayen “let’s team to beat Apple” agenda. There’s this paragraph in the New York Times’ report:

“Another person with knowledge of past talks between the two companies explained that Microsoft has courted Adobe several years ago with possible acquisition discussions. But the deal never moved past informal talks as Microsoft feared that United States Department of Justice would likely block the deal on antitrust grounds.”

Call me highly skeptical. Microsoft has been downright conservative on the acquisition front, as of late. The few acquisitions the company has made in the past year — only one of which Microsoft acknowledged publicly (AviCode) this week — are small companies. Microsoft officials have said repeatedly the company is not looking to buy bigger companies; any new acquisitions are likely to be small and supplemental to the company’s existing businesses.

I guess you could argue that Microsoft might want to buy Adobe to either kill or own Flash. But can anyone explain why Microsoft might want to buy Adobe otherwise? Adobe shares are surging, based on the possibility, right now. But I just don’t see it happening — especially at a time when Microsoft is trying to figure out Silverlight’s positioning in an increasingly HTML-based world.

Update: UBS analyst Brent Thilll said UBS thinks a Microsoft-Adobe deal “would make strategic sense, but is also unlikely.” He noted that the CEOs of the two companies talk regularly, as Adobe is one of Microsoft’s largest ISVs. But potential antitrust hurdles, a potentially high price, and Microsoft’s “spotty” track record in digesting large acquisitions are all factors working against such a deal happening.

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Mary Jo has covered the tech industry for more than 25 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

Disclosure

Mary-Jo Foley

Freelance journalist/blogger Mary Jo Foley has nothing to disclose. WYSIWYG (what you see is what you get). I do not own Microsoft stock or stock in any of its partners or competitors. I have no business ventures that are sponsored by/funded by Microsoft or any of its partners or competitors.

Biography

Mary-Jo Foley

Mary Jo Foley has covered the tech industry for 25 years for a variety of publications, including ZDNet, eWeek and Baseline. She has kept close tabs on Microsoft strategy, products and technologies for the past 10 years. In the late 1990s, she penned the award-winning "At The Evil Empire" column for ZDNet, and more recently the Microsoft Watch blog for Ziff Davis.

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Talkback Most Recent of 89 Talkback(s)

  • my thoughts
    About the MA,
    1) there is no base of it.
    2) it is impossible
    3) it doesn't benefit anyone
    4) apple is at the end of the their glory. it's a like a shot star, it burning out to the old past. I know you don't believe me, lets see if you understand me 6 month from now.

    About "Microsoft is trying to figure out Silverlight's positioning...":

    M.J., a lot of people have told you, you still bring up this issue. Sliverlight is a development platform, not a media player. If you are Windows Live user, you should have received MSDN news flash, there is a perfect description of what Silverlight is and is not.
    ZDNet Gravatar
    jk_10
    7th Oct 2010
  • ZDNet Blogger

    Silverlight
    Silverlight is both a player and a platform. Thanks.

    Edited: Yes, runtime is the right word, not player. Thanks to all the helpful readers who left comments. Player or runtime -- Microsoft still is struggling to figure out positioning/future of Silverlight. MJ
    ZDNet Gravatar
    Mary Jo Foley
    8th Oct 2010
  • RE: Microsoft buying Adobe? Call me highly skeptical
    @Mary Jo Foley Sorry. Silverlight is no more a 'player' than Flash is. That is like saying a cow is the same as a steak or milk.

    Just because something comes from something else doesn't make them one in the same.

    It is the little things that can diminish your work to certian groups. Just trying to help.
    ZDNet Gravatar
    mikefarinha
    7th Oct 2010
  • RE: Microsoft buying Adobe? Call me highly skeptical
    @Mary Jo Foley To say Silverlight is a media player is weird and seems to demonstrate a fundamental lack of understanding of the technology. Is VB.NET a media player? Why not? Explain the difference.
    ZDNet Gravatar
    craigvn@...
    8th Oct 2010
  • RE: Microsoft buying Adobe? Call me highly skeptical
    @Mary Jo Foley

    Well, i don't know exactly what you mean with "player". But if you replace player with runtime, i guess you are on the right way.
    ZDNet Gravatar
    Mr.Gonzo
    8th Oct 2010
  • RE: Microsoft buying Adobe? Call me highly skeptical
    @Mary Jo Foley Silverlight is a player in the same sense as a car is a cupholder.
    ZDNet Gravatar
    HalfAKilo
    11th Oct 2010
  • RE: Microsoft buying Adobe? Call me highly skeptical
    @jk_10 Apple at the end of their glory??? LOL OK...

    1) Verizon iPhone (if rumors finally come true in January, HUGE iPhone sales for Apple)
    2) iPhone 5 (Dual provider launch??....HUGE SALES)
    3) iPad 2.0 (iPad is already selling at over 4million/quarter, projected to sell over 45 MILLION in 2011)
    4) Apple TV...already sold out
    5) HTML 5...growing, the future of the Internet, taking over Flash, already does video

    Quite simply the most ridiculous post I've ever read...end of their glory...LMAO....
    ZDNet Gravatar
    cyberslammer
    8th Oct 2010
  • I'm with you, cyberslammer
    6 months, really? In the last 10 years, Apple has grown from very little to a bigger market cap than Microsoft. The Macintosh is now less than a third of their business. iPhone profit margins are huge. Apple is just getting started.
    ZDNet Gravatar
    Info-Dave
    8th Oct 2010
  • Well...
    @cyberslammer

    I changed my mind, let look back in 3 month.
    ZDNet Gravatar
    jk_10
    8th Oct 2010
  • Not true!
    @cyberslammer

    You read your own posts, don't you? Well, then, this is not the most ridiculous post you've ever read.
    ZDNet Gravatar
    trickytom3
    8th Oct 2010
  • haha.... hilarious!
    @cyberslammer Do any of you CrAppleholics understand what Market Cap is and how you arrive at a market cap value? No! It has nothing to do with the actual hard asset value of a company. It's all on a day to day paper business. Right now CrApple is one of the most highly over valued stocks on the market. Almost all soft assets. They don't even own their stores. They lease them! ....no factories of their own and their R&D is chump change compared to Electronics Brands rated above CrApple down at #40!

    Quite simply they aren't even close to any of the Electronics firms with actual hard asset value. Market Cap drop overnight as it's all based on paper assets, promise of license fees, future sales, projected growth with only cash to back it up. Why do you think CrApple maintains so much cash on hand without investing it? If we had a war with China, CrApple would be a dead valueless stock with just cash reserves to pay shareholders with! ....you can't live on a promise you fools!
    ZDNet Gravatar
    i2fun@...
    8th Oct 2010
  • RE: Microsoft buying Adobe? Call me highly skeptical
    @cyberslammer

    Quite simply the most ridiculous post I've ever read...end of their glory...LMAO....

    So you don't read your own posts, huh?


    EDIT: Nevermind, somone beat me to it.


    .
    ZDNet Gravatar
    Hallowed are the Ori
    12th Oct 2010
  • RE: Microsoft buying Adobe? Call me highly skeptical
    @jk_10 Four very GREAT points!

    I see this discussion as only about having Flash on Windows phone 7 or some compatibility with SilverLight, which would be a solid business savvy move by Microsoft.
    ZDNet Gravatar
    skyoneder
    8th Oct 2010
  • RE: Microsoft buying Adobe? Call me highly skeptical
    @jk_10 I don't think Apple is going anywhere any time soon- at the end of the day, they make cool things that a lot of people like, and just when the newness wears off of one Apple product, they release something even cooler. I wouldn't start carving Apples headstone just yet...
    As for MS, they are in the position they're in for a reason... but it seems that they haven't innovated anything in a long time- and when they come up with innovations, we either never see them or they disappoint. Maybe they're thinking they could just buy out other companies in lieu of releasing new gadgets. If you can't impress with coolness, then go for size!
    www.dfwsupergeek.com
    ZDNet Gravatar
    unclefixer@...
    8th Oct 2010
  • RE: Microsoft buying Adobe? Call me highly skeptical
    @jk_10
    Apple at the end of their Glory?
    Not for a while.
    All things will pass, including MS and Adobe.
    Go make some more prognostications.
    ZDNet Gravatar
    yobtaf
    8th Oct 2010

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