Microsoft buying Adobe? Call me highly skeptical

Microsoft buying Adobe? Call me highly skeptical

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.

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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.

Topics: Banking, Enterprise Software, Microsoft

About

Mary Jo has covered the tech industry for 30 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).

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86 comments
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  • 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.
    jk_10
    • Silverlight

      Silverlight is both a player and a platform. Thanks. <br><br>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
      Mary Jo Foley
      • 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.<br><br>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.
        mikefarinha
      • 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.
        craigvn@...
      • 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.
        Mr.Gonzo
      • 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.
        OxBAADFOOD
    • 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....
      cyberslammer
      • 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.
        Info-Dave
      • Well...

        @cyberslammer

        I changed my mind, let look back in 3 month.
        jk_10
      • Not true!

        @cyberslammer

        You read your own posts, don't you? Well, then, this is not the most ridiculous post you've ever read.
        trickytom3
      • 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!
        i2fun@...
      • RE: Microsoft buying Adobe? Call me highly skeptical

        @cyberslammer <br><br><i>Quite simply the most ridiculous post I've ever read...end of their glory...LMAO.... </i><br><br>So you don't read your own posts, huh?<br><br>
        EDIT: Nevermind, somone beat me to it.


        .
        Hallowed are the Ori
    • RE: Microsoft buying Adobe? Call me highly skeptical

      @jk_10 Four very GREAT points!<br><br>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.
      skyoneder
    • 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
      unclefixer@...
    • 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.
      yobtaf
    • RE: Microsoft buying Adobe? Call me highly skeptical

      @jk_10
      As a long time Apple supporter, I've heard all of these arguments against Apple's sustainability for almost 25 years. It's a bit funny, because the comments are always of the same tone. "Apple isn't a real company, they don't have any money, they only have 5% market share, etc."

      The best comment was one made by the second in charge at Telstra (Australia's largest telco) in 2007: "There's an old saying - stick to your knitting - and Apple is not a mobile phone manufacturer, that's not their knitting," says Winn.

      We all know how well that prediction went...

      Apple is an innovative company that executes better than anyone else in the industry. Because of that their products (Mac OS X, iPod, iTunes, iPhone, iPad) are disruptive to every market they enter. That's the key, not their market cap. Apple changes the dynamics of every market they enter and often to the detriment of their competitors. They are not perfect, the numbers say they definitely are market leaders.

      A year ago tablet PC's had negligible market penetration and were mainly concepts and vaporware. The iPad currently is enjoying a faster adoption rate than the DVD player and everyone is scarmbling to get something to market.

      Maybe Apple wasn't the focus of the meeting, but I'm pretty sure it's a safe bet they got a "mention".
      melmaninga
    • RE: Microsoft buying Adobe? Call me highly skeptical

      h t t p : / / 0 8 4 5 . c o m / I n r


      I tide fashion
      hbfjh
  • RE: Microsoft buying Adobe? Call me highly skeptical

    While it is a bit of a leap that MS is looking to acquire Adobe just because the two CEO's meet for one hour, such a deal could make sense.

    Microsoft has made a great cash-cow out of its Office suite. There are very few others desktop applications that are such desktops. Adobe's Creative Suite is such a cash cow. For Microsoft it would be pretty nice to control those type of applications that get businesses to buy proper desktop machines with Windows.

    Visual Studio development tools is another wonderful business for Microsoft. This business also supports Windows Server and SQL Server. Microsoft has for some years tried to expand this branch with more creative authoring tools such as Expression Blend. Apps need to look cool as well as be functional. Adobe is strong in this area.

    There are obviously a lot of synergies between Flash and SilverLight that are highly relevant too. Flash has a lot of creative authors, SilverLight has a lot of .Net developers. A dual interopable plugin would be great and would certainly also help Microsoft get more SilverLight installed.
    rask@...
    • RE: Microsoft buying Adobe? Call me highly skeptical

      @rask@...
      You took the words right out of my mouth. I was going to post, then I read your post. You are absolutely right! Integrating adobe and office suites would produce such that it could not be duplicated, perhaps, for another century.

      If they combine the best of flash and silverlight, I believe Microsoft would be in a league of its own.

      From where I sit it would make a perfect aquisition. As far as the regulators are concerned, we have new people now with new ideas, and most don't want to get in the way of productive businesses. The 9000 pound gorilla in the room is wheather Adobe is for sale.
      eargasm
      • RE: Microsoft buying Adobe? Call me highly skeptical

        @windozefreak If Adobe and MS talked purchases, it could well kill Apple in the PC market.

        Like it or not, most graphics designers use Photoshop. They also mostly use Macs. This is not because Photoshop is somehow better on Macs, or even that good - it's buggy and crashes, has relatively poor memory management and iMacs and Mac Books (i.e. laptop hardware) really don't have the balls to keep up with even what a cheap multi-core desktop can do. But designers (generally) aren't that technical and truly don't know any better, so they go with the status quo, blissfully ignorant that they are paying twice as much for often inferior hardware to run there ever-crucial software.

        Should Microsoft acquire Adobe, they could decide to stop the adobe CS development for Mac, delay the flash development for Mac and this could ultimately kill (or severely hurt) Apple's PC market share. This, in turn, could force apple to focus on their highly lucrative mobile device market instead, leaving Microsoft *almost* free run of the Desktop and Business PC markets.

        I don't for a second think that this is on the cards, but it would be an interesting and HUGE market shift.
        blakjak.au