Apple's next big buy: Adobe or Corel?

Apple's next big buy: Adobe or Corel?

Summary: Apple needs to increase its in-house software portfolio in order for developers to produce more compelling content for iOS and Mac.


In my last article, I talked a bit about some of the challenges that Apple and its iOS developers are going to face in the future as applications for iOS begin to take advantage of the pixel density in the Retina display on the iPad and the iPhone.

To recap, the inclusion of retina-optimized content on the new iPad, which takes the form of high-resolution bitmap images and video has brought about a condition which I'm affectionately referring to as "App Obesity."

To store images at double the previous resolution (from 1024x768 to now 2048x1536) it requires approximately four times the storage space as it did before. This results in flash memory being consumed very quickly on 16GB and 32GB devices.

This storage problem not only affects the new iPad, but it also affects the previous generation models as well as iPhones, particularly as developers move towards "Unified" application binaries for iOS devices as opposed to discrete versions which contain the graphic assets for all the target form factors.

There are two ways in which this problem can be addressed. The first is the most unlikely, in that Apple finds a way to get the costs of flash memory down so that we can quadruple the storage capabilities of iOS devices without significantly increasing the BOM (Bill of Materials) of the device.

Apple has already made a very visible purchase in Anobit, an Israeli flash memory technology company, for a cool $500 million. But the Memory Signal Processing (MSP) technology that Anobit brings to Apple is more along the lines of improving the reliability, endurance and performance of flash memory, not actually increasing the flash memory density itself.

While it's certainly possible that Anobit's MSP could be combined with data compression and de-duplication algorithms in order to make the most of existing storage while leveraging the power of the A5X and future Apple SoCs in embedded firmware, I don't forsee it being able to do it on a factor of four or more.

And while Apple has used its cash reserves in the past to make up front purchases of flash memory to control its supply chain (and thus keep the BOM under control) I don't see them buying a flash memory manufacturer and putting billions of dollars into technologies that might help reduce the overall cost of flash by more than half.

This strategy, while not outside financial means for Apple would still be very messy. It's also out of character for being a traditionally "fabless" company (for at least the last 10 years) and certainly would be a very long term investment.

Short of a density and cost-reduction miracle occurring with commodity flash memory in the next three to five years, the next way of skinning the App Obesity cat is to actually optimize the apps themselves.

In my previous piece I discussed how moving from a bitmap-oriented content asset-based programmatic model to a vector-oriented one could drastically reduce the amount of storage required for mobile applications.

While not all of the content in every application will be able to be "vectorized" a substantial amount of storage savings can definitely be achieved, and it doesn't require altering the fundamental hardware technology to do it.

The problem is that the tools that are used to create vector-based (and bitmap) assets are largely owned by other companies.

The big fish in this pond is Adobe. Yes, we all know that Apple and Adobe have been sparring for the last several years, particularly as it relates to interactive Web content standards. Flash animations and Flash videos are an anathema to mobile, and the proven success of the Flash-less iOS platform has essentially driven it to an early grave.

(Editor's note: Did I just use flash and Flash correctly in the same article?)

However, the religious battles regarding Flash and AIR aside, Adobe still owns many of the software packages that are used to create and manipulate graphics in iOS apps. Adobe's Fireworks and Illustrator are all the most widely-used applications for vector graphics creation, are the native tools that come with the Flash Builder itself.

And in terms of paint/bitmap editing and high-definition video production, Photoshop/Lightroom/After Effects and Premiere are among the most popular applications used among creative content professionals.

Arguably, there is some overlap with Apple's own Aperture, iMovie and Final Cut Pro in this space, but they really address two different markets.

I also think that it goes without saying that having Adobe's full range of content creation tools in Apple's stable would also further greatly cement the value of developing for the iOS (and Mac) ecosystem relative to competing platforms, as the price of these tools would likely go down dramatically once integrated into the Mac App Store.

But buying Adobe would not be a small feat for Apple. Adobe (ADBE) is currently capitalized at around $17 billion, and would probably fetch a bit upwards of that. Yes, Apple can definitely afford it, but it's questionable as to whether Apple actually needs all of Adobe, and there may be a bunch of regulatory headaches involved if they were really serious about the purchase.

Not to mention the fact that a substantial amount of bad blood exists between the two companies.

There is another company, however, which has many of the kinds of content creation assets Adobe has but would cost a lot less money and would have no such regulatory or emotional headaches: Corel.

If you closely examine Corel's product line, it's actually quite impressive. Corel is also a private company, and with annual revenues of around $100-$250 Million, even purchased at four to ten times earnings Apple is really only looking at about a billion dollars, worst case.

That's chump change when you've got $100 billion in cash sitting in the bank.

There are only a few negatives involved in a Corel purchase. First, the company is Canadian and not Silicon Valley-based like Adobe, so there would clearly be some major corporate culture adjustments required to integrate the company.

Second, the majority of Corel's apps are Windows-only. But it could be argued there is probably more than enough back-end code and ICAP that even spending $10M-$50M on porting their major software assets (such as CorelDRAW) to native OS X would be well worth it.

And it is clear that the folks at Corel already possess the know-how in order to write Mac and OS X apps.

And while there is definitely some product overlap, it's not as big as Adobe's, and the few products that Apple wouldn't likely be interested in (WordPerfect suite, etc.) could be sold off to someone else or run as independent businesses.

There are certainly other smaller firms such as Xara which have toolsets similar to Corel's that could also be acquisition targets for Apple, but in terms of overall value, they don't really compare.

Does Apple need to own robust content creation and optimization tools in order to fight App Obesity and to continue to develop their software ecosystem? Talk Back and Let Me Know.

Topics: iPhone, Apple, Storage, Smartphones, Operating Systems, Mobility, Mobile OS, iPad, Hardware, Enterprise Software, Tablets


Jason Perlow, Sr. Technology Editor at ZDNet, is a technologist with over two decades of experience integrating large heterogeneous multi-vendor computing environments in Fortune 500 companies. Jason is currently a Partner Technology Strategist with Microsoft Corp. His expressed views do not necessarily represent those of his employer.

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  • Corel's ability to write Mac OS X apps...

    "And it is clear that the folks at Corel already possess the know-how in order to write Mac and OS X apps."

    They write Mac and OS X apps = true.
    They write Mac and OS X apps *well* = you gotta be kidding.

    Have you ever used a Corel application on a Mac? Unless they've REALLY put a lot of effort into their product lines in the last five years, I would say you're in for a surprise. As in proctologist-with-a-hangnail type of surprise.
    • Have you ever used a Corel application on Windows?

      Trust me; their issues are not Mac-specific. I really, really, really want to love Corel's graphics products. Their workflow is MUCH more intuitive than any of Adobe's products, and they have some seriously cool features. But they are more bug ridden than a straw mat in bangkok.
      • Not in a long time...

        ...but I hear you.
      • Been using Paint Shop Pro for years now

        Ever since Corel bought it up, I've been a user, usually buying every other version available. I've never had a problem with it, but I do hate the photo downloader program that loads at startup, so I kill the startup entry for it. Other than that, Paint Shop Pro is THE BEST Photoshop alternative available, especially considering the price difference. Adobe just recently cut the price of Lightroom just to compete with Corel's brand new RAW processing program, AfterShot Pro too.

        I'm not a fan of WordPerfect, but they have at least adopted a Ribbon UI for the toolbar, so they are progressive. I have some clients on Corel's CAD programs too, and they say they are very much feature-competitive with AutoCAD, and of course, far less money.

        And anybody who's anybody in digital art knows that Painter is the #1 simulated real-media art program available, hands down.
  • Why?

    Why would Apple want to take on the troubles of Adobe and Corel? Because people who do things with Apple's platforms, as well as other platforms, may use Photoshop when producing their apps' graphics? Me, I'd plan with OmniGraffle and illustrate with Pixelmator and Inkscape.

    I also don't see how owning Adobe, for example, affects the mathematics of image compression. If Adobe can solve the problem, let them take the risk and receive the monetary reward. If the tools are written, the developers will adopt them for all the platforms which now have or are getting denser graphics.

    As far as bloat, storage and rendering will be ultimately addressed by cheaper multi-cores and flash memory. The real issue is bandwidth impact and costs for our brave new world of digital periodicals. The magazines and newspapers need these tools more than Apple's affiliated developers.
    • Let's be honest

      Inkscape et al are not in the same league as Illustrator and Photoshop. Anyone worth their salt doing professional work is working with the latter. Others are hobbyists.

      That said, I don't see Apple having any real need to own them. There is no foreseeable future in which Adobe is not making it possible to create iPad and iPhone content. And since Adobe is already doing what Apple would want them doing, why go through the hassle of owning them?
      • Right.

        Adobe does a fine business in the consumer apps these days, too.. they're not just about the Pro stuff. And they still support the MacOS market.

        Now, think about the fact that (1) Microsoft is doing crazy and possibly suicidal things because, like most people who pay attention, they think mobile devices are going to be huge enough to eat a big chunk of the PC market, and (2) Apple sold more iOS devices in 4Q2011 than they sold MacOS devices, ever. Do you think Adobe somehow needs to be told that supporting iOS will be a good idea? Ok, they put out Photoshop Touch on Android first, but that was certainly just messing with Apple.
      • Inkscape et al ...

        they are on the same league sorry, from a designer perspective (not market share or market position of course).

        For example I do all complex objects in Inkscape then I prepare them for print in Illustrator. For some things Inkscape is much more intuitive and fast - for others is superior (alignment tools, node tool, snapping tool). I can't think to work in Illustrator without the help of Inkscape (without loosing many hours). GIMP also - they have resynthesizer from 2005, Photoshop just recently added this feature, Liquid rescale was implemented in GIMP with some time before PS, right now even in Ps6 beta I can't refine the transparency as I want because the Color Curve Adjustment can't adjust alpha channel but GIMP tool can - believe-me a smart designer use both open and proprietary products in order to achieve the best (and to save time). On the market maybe they are not on the same league and they will never be - but as capability ..they are on the same league even if the main scope and public may differ ...
  • Neither

    Hands off Adobe. The last thing we need is to take the big gorilla who is currently cross-platform and make it single platform. Corel is still around? Saw that the other day and was a little surprised. Not sure Apple wants to bother getting them back into the daylight. They can probably be as successful or more so building their own apps. Xara built some very nice products back around the turn of the millenium. Not sure how they are doing today, but if they still have as bright minds as then, they would certainly deserve some more exposure.
    • Corel who?

      Agree there, thought they went out of business in the 90's like Lotus...

      (before the flame-on people show up, I work for a fortune 100 company that uses Lotus Notes for email, so I do know it exists, but really had no clue they made it past windows '95 before I started working at this job 3 years ago. I also laughed at the guy interviewing me when he told me they use Lotus and if I had any experience with it)
  • could be adobe

    They already have itunes, if they add adobe they would own the two buggiest softwares in the world!!!
  • I don't think so Tim

    Apple buying Adobe would be like AT&T trying to buy T-Mobile. It'll get blocked right away and injunctions will get filed to the FTC the day they file the buyout.
    • Not even close

      Adobe has multiple different markets, so the comparison is completely dumb.

      Not that I think Apple should waste their money buying the company that makes the most insecure software in the world (ie: huge liability).
      • The most insecure software in the world?

        Adobe did not create iTunes.
        Tim Cook
    • Nope

      The problem would be different... Apple buying Adobe would immediately cut off most of Adobe's income. After all, Apple couldn't very well keep selling x86 versions of the software, but that's where most of Adobe's sales are these days. And really, if Apple wanted to keep their pro markets alive, they could very, very easily have kept this in-house. They HAD the Pro video market on the Mac all tied up, and they've spent the last two years giving that away to Adobe and Avid. They can't be interested in the pro markets anymore... and without a serious update to the Mac Pro, the pros are losing interest in Apple, even without the pro applications being either cancelled or "appified".
  • However, takeovers are a waste of time and money.

    Financial advisors and lawyers will gain; everyone else (Apple included) will lose. Eventually, the goose (Adobe) will suffocate.
  • Yuk

    It's reasonable conjecture that these new high-resolution screens will drive a move by developers toward vector-based graphics.

    It does not, however, follow that the guy who has the first device with such a screen needs to acquire a developer of vector graphics software.

    It especially doesn't follow that anyone should acquire Corel. Corel hasn't had any money for a good 15 years. So even though Corel Draw was once best-of-breed software for that sort of thing, I doubt that the algorithms built into it have been substantially revised since 1990-something. All the best talent in that area has long since departed Corel.

    OK, so Adobe has some Big Brains in the vector graphics world. Why does Apple want them? So they can sell less Flash RAM?

    Any purchase of Adobe by Apple would hurt Adobe, and thus also Apple once Apple owned them. That's because -- other than Silverlight -- Microsoft sort of leaves Adobe alone. That won't continue if Apple buys Adobe. Then Microsoft, the ultimate reactive company, will feel compelled to knock off Dreamweaver, Photoshop, Acrobat, and so on. Nobody needs any of that.
    Robert Hahn
    • Not Flash Ram thinking....

      New file / app bloat will drive either VG or a "breakthrough" in bandwidth usability / availability.
      So far, historically it has been on the "bandwidth" side.
  • How about this!

    Buy mapquest and solve some of the major failings with your mobile platform!
    • What major failings? Is said failings another "opinion"?

      Pagan jim
      James Quinn