Why Apple should buy Adobe
Summary: Quick - which Silicon Valley icon creates computers that creative professionals love? And what SV company creates software that creative pros crave? Right: Apple and Adobe. So why are they 2 separate companies?
Quick - which Silicon Valley icon creates the computers that creative professionals love? And what SV company creates the software that creative professionals crave?
Right: Apple and Adobe. So why are they 2 separate companies? There’s no good reason, especially now that Adobe's management can't figure out how to grow the company.
The numbers Apple, with over $30 billion in cash, could buy Adobe outright, whose market cap is about $18 billion. A cash and stock offer would also make Adobe shareholders happy.
Apple prefers small, bite size acquisitions. But Apple is a big company: their market cap is 10x Adobe’s.
Integration wouldn't be hard: the 2 company’s headquarters are a 15 minute drive down I-280. Steve could oversee both. A quicker drive than to Pixar up in E-ville.
What's the play? Adobe is a mature company in mature markets. Their Photoshop, Illustrator and InDesign products dominate their markets - not much growth there.
Some of their video editing products - After Effects - are leaders too, but the rest of that portfolio is getting squeezed between Apple's Final Cut and Avid's high-end products.
Their Flash products are headed to the scrapheap of history - negative growth there. I, for one, will be glad to see them go.
Their various Creative Suites have the same problem that Microsoft Office does: the products already do what 99.9% of customers need, so why upgrade? I know happy pros using 6 year old versions.
What’s in it for Apple? Several things.
- Several gross margin points. Adobe’s gross margins are 97% - enough to add several more GM points to Apple’s results.
- A broad portfolio of creative pro apps. These are the people who buy $2500 notebooks and $5000 towers. Scoop up the 30% who aren't on Macs with features like tighter integration between Photoshop, video and HTML5
- Reinvent Adobe. Adobe products need major updates: interfaces are fugly; bloated - 21 MB for a PDF reader? - and buggy; consumer apps are de-featured pro apps with interfaces to match. Adobe needs disciplined oversight and investment and Steve is the guy to give it to them.
- Tight hardware integration, especially in video. Touch image editing is a natural on the iPad. Video is the killer consumer creative app of 21st century. Oh, and sell a lot of stuff along with it.
- Technology. Despite their problems Adobe does have good technology under the hood. For video geeks their Nvidia-based Mercury playback engine is mind-blowing. Let's give those engineers some new problems to solve!
Adobe's management is out of ideas Adobe's management sent up a distress signal when they bought Omniture, a web analytics, measurement and optimization technologies firm. The rationale, from Adobe's press release:
For designers, developers and online marketers, an integrated workflow — with optimization capabilities embedded in the creation tools — will streamline the creation and delivery of relevant content and applications. This optimization will enable advertisers, advertising agencies, publishers and e-tailers to achieve greater ROI from their digital media investments and improve their end users’ experiences.
Translation: we think we can get ad agency and publisher suits to buy more stuff if we throw them a business-flavored bone. Just because content creation and marketing metrics have never been integrated before - and have done just fine - we're gonna make Adobe a Business Solutions Provider!
Who cares if Google offers metrics for free?
The Storage Bits take Steve Jobs is saving his pennies for something. Why not Adobe?
Steve is more enthusiastic about consumer apps, but it is the pro apps and the people who use them that get Apple all that free product placement in ads and movies. The 2 work together to build "cool" into the brand.
DreamWeaver and Omniture could be sold. Someone might want to buy the Premier video editor. Flash could be put on the fast track to a well-earned oblivion.
As iTunes and Apple's other consumer apps demonstrate, tight platform and app integration create a better user experience. Buying Adobe would enable Apple to extend Adobe's leading technologies to new platforms like the iPad while cementing Apple's market share leadership in creative applications.
And add a few more margin points to Apple's impressive 40% GM.
Comments welcome, of course.
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Talkback
NO!!
Agreed
Don't Worry
that Apple would kill off the Windows versions of Adobe. And Flash
would be dead as soon as the check cleared.
And, personally, I'm all for both.
On the contrary...
versions of Adobe's Flagship apps.
With the possible exception of Flash... it's 50/50 whether they
fix it or kill it outright.
Tell me, is there a Windows version of iTunes?
Yes, there is.
Why? Because Apple makes money selling iPods to everybody,
not just Mac users.
So why would Apple kill PhotoShop for Windows, opening
themselves to potential lawsuits, and immediately losing half
of Adobe's already challenged revenue stream?
That would be stupid.
Besides, they are more likely to cut the price on the Mac
versions of the CS4 apps and leave the PC price alone.
It would be a little present to Mac users, and a subtle
inducement to buying Macs for future customers.
You looked in the wrong place
sell iPods and iPhones to at least most of the 95% of PC users who do
not run MacOS,
But Apple has bought plenty of media software than ran on Windows,
and killed of the Windows version. Start with the unreleased video editor
they bought from Macromedia, which debuted as Final Cut. Not one but
two DVD authoring programs, both dumping their Windows user base.
And the Logic audio NLE... a program that had been on Windows for
decades.
Why would Apple
They need to spread FUD to
LOL... Google is got it
First post. Simple Apple hate.
woon't buy from company X.
They are amazingly short sighted and unable to recognize good design if
it bit them.
The short-sighted one is you Bruizer...
Just because you have blind love for a company, it doesn't follow that someone else is short-sighted for not liking it.
Take your fanaticism somewhere else, it's not wanted around here.
So, if MS Bought Adobe...
YOUR fanaticism is not welcome here either...
And really I see no sort of Apple fanaticism in what he posted here - he's pointing out the blindness of favoring company X and saying everything from company Y sucks...
Scrat talking about "fanaticism" Well I guess he should know:P
How pathetic and childish
but even I recognise when there is a good piece of software. Microsoft
Office 2008, for all its faults, wipes the floor with iWork when it comes to
features such as compatibility with Office formats and bibliographical
functionality I need for university.
I do want to see Adobe be bought out by Apple, and eventually see Flash
to become an open ISO standard that anyone can implement royalty free.
That alone with fix many of the problems that exist when it comes to the
Flash world.
Microsoft? Let Microsoft buy them?
YES!!
They buy Adobe, shake things up, replace a few people,
streamline the interface;
and when CS5 comes out, the box says "Apple Photoshop CS5" !
PC bigots can choose whether to upgrade or not, as they see fit.
But if they DO.... oh, the beauty of it.
PC bigots forced to buy something with the Apple Logo on it...
and admit it "just works".
Lapdog thinking
Like say, MS did with their cutesy ribbon concept presumably? That shook things up ooohweee!
And what's a handful of gainfully employed but ultimately expendable Adobe employees in the bigger mix of things? Hardly a blip when weighed against boardroom shenanigans and "me first" pocket-linings!
Why not just pink slip the majority and rebadge the survivors with Apple medals! That way more "rooted" credits can be cited for the coup de gr?ce maneuver - whether rotten to the core should hardly matter, right? And we all know the bigger the deception, the more it tends to be believed. ;)
Is it any wonder there has never been a greater erosion of public trust in government and corporate institutions than at present, with attaboy! lapdog attitudes like yours. Any hazy degree of "company loyalty" that still exists in anyone's thinking clings precipitously by a thread - at best. We're all mercenaries now.
[i]PC bigots forced to buy something with the Apple Logo on it... and admit it "just works". [/i]
Only Apple would have had nothing to do with it working. *THINK*
If by chance you were being facetious
are you kidding?
ha, ha, ha...Good luck with that!....
all your other points are in the same ballpark!
stick with what you know!
Like Adobe's 97% gross margins?
cover - they can certainly do even more on an iPad.
This might surprise you, but touch interfaces are widely used by creative
people.
Do you know any?
Robin