Jokes aside, it makes perfect sense for both of them. Adobe's CS and Microsoft Office are naturally self-complementing desktop giants. Both companies make a ton of money selling desktop software to the enterprise, yet outside of Flash/Sliverlight battle they don't cross each other paths.
I, for one, welcome this development. It brings some hopes for better performing Flash, which I hate with a passion but its a fact of life. Flash is in need of some engineering muscle. There are many things Microsoft can possibly do to it and most of them are good, see: kill it -> good, open source it -> good, merge with silverlight -> good.
Same thing with other Adobe products: they used to be best in class some time ago, but I'm convinced that company cannot code anymore, but Microsoft still can.
No way this is bad news. The worse that can happen is nothing changes.
Edit: also, lets stop this nonsense with applying "still somewhat profitable" and "dying" to these companies. Both are doing great financially. Adobe's profits from CS keep breaking records - look at http://www.adobe.com/aboutadobe/pressroom/pressreleases/2010...
Uh, yeah... I agree it makes perfect sense for both of them. For anyone who isn't Microsoft or Adobe, the prospect seems less appealing. Two companies with considerable monopolistic sway in their respective markets come together to improve their profit margins?
Merging two huge globs that each can extract rent on their various properties into a single similar vast glob. What could possibly go wrong...
Not disagreeing, but Innovators Dilemma theory says that companies that are about to be disrupted are enjoying the greatest profits and margins ever. The problem is that the reason the profits are so high is that they've shed their less profitable divisions and products that might grow into the next big innovation. Let's say something disrupts MSFTs Office and shrinks its revenue - what do they have that could replace that?
what do they have that could replace that? Sharepoint, SQLServer, Windows 7, Windows Server, Windows Virtual Server, CRM, Exchange Server, XBox, Xbox live, Bing, Zune, Microsoft Automotive platform, Win 7 phone.
Microsoft has one of the most diverse revenue streams of any software company. They're going to be around for a while.
Google should actually be more afraid of disruptive technologies. Their revenue is primarily from advertising. They are truly a single revenue source company.
"Sharepoint, SQLServer, Windows 7, Windows Server, Windows Virtual Server, CRM, Exchange Server, XBox, Xbox live, Bing, Zune, Microsoft Automotive platform, Win 7 phone."
Has it actually been determined that Microsoft makes any profit at all from any of those products? Entertainment division (where XBox and Live and Zune lives) is about 12% of their revenue and is still not profitable, while search and online (which is Bing and MSN) loses $700 Million every quarter or thereabouts (at least it did last fiscal quarter).
Their bread and butter has always been Windows and Office. That other stuff are loss leaders, in a way.
Also the entire Dynamics series. Web people don't understand the ERP world and the profits that come from annual maintenance plans. What is Dynamics? It's what runs the internal systems for most small/mid-sized businesses that can't afford Oracle/SAP. It's a HUGE market.
I agree. Microsoft shouldn't be concerned about the fact that no one likes their products because they make so many different products that no one likes.
I disagree. Microsoft derives a bulk of its revenues and profits from packaged software (Windows and Office). These products are on the verge of being disrupted. Computing is shifting away from the desktop to "thin devices" (tablets, smartphones, etc), cloud computing, and online media. Microsoft is performing relatively poorly in all three of these new computing areas.
I agree with all those points, and I think MSFT will be healthy for a long time to come. I was just saying that record-breaking profits can either be awesome or a warning sign. I would guess that MSFT is in a better position than Adobe, but I don't know much about Adobe's financials to make a point based on them.
It's quite possible for it to take a long time, though. Microsoft has been more or less in the position you describe for ~15 years: by the mid-1990s they were making huge profits, almost entirely from Windows+Office. Now, 15 years later, they've still got large profit margins on that same duo.
I would really need to see some examples of that. Adobe doesn't deal well with Linux (or anything non-Windows) and Microsoft would make more money with Linux around.
Perhaps you think that but I don't think they are or their shareholders see it that way. Microsoft tends to only deal with Linux or the open source world in an effort to avoid criticism. In fact, that's just too ironic of a statement and I think needs a little justification.
Why wouldn't they? What would be the benefit of offering Flash for Linux, or Mac OS for that matter? Actually, why would they make a Flash plug-in for any browser other than IE? It seems to me that a reasonable thing for Microsoft to do, after acquiring Adobe, would be to discontinue Flash support for any OS other than their own, and to stop making plug-ins for other browsers, which would help IE regain some (if not all) of the market share it's recently been losing.
I may be paranoid, but it seems quite plausible to me that Silverlight is merely another example of Microsoft's famous "Embrace, extend and extinguish" strategy. Since Silverlight failed to gain wide acceptance on the web (well, certainly not as wide as Flash), acquiring Adobe to get hold of Flash would enable them to skip the part where their software first needs to be accepted by a significant majority of users and allow them to skip right to phase two, which is concentrating more and more on how Flash works on Windows and IE, leaving other platforms and browsers behind. Truth be told, Adobe has also been known to concentrate more on how their plug-in works on Windows than on other platforms, which meant that Flash would usually perform far better on Windows than on Mac OS or Linux.
Because Firefox is reaching 50% of the browser market (I recently read that somewhere on HN) and if they make it IE-only, content producers are going to stop using flash.
I suppose this is feasible if Microsoft is looking to acquire Adobe's enterprise customer base - the PDF, document management, etc part of the company. Having Air/Flex/Flash might also be nice, but doesn't seem like a good fit for Microsoft's traditional Windows-centric strategy (one they should abandon, in my view - the days of owning the market via the desktop are rapidly coming to a close).
What I'd love to see is Microsoft buy the Flash/PDF side of the company, and then the creative arm (CS, the type foundry, lightroom, etc) be spun off into an independent company that was once again run by people passionate about design and great software.
Softimage was bought for a purpose and spun off later. It was bought by Microsoft to port Softimage|3D (and develop XSI) for NT platform - to show NT is as powerful for those applications as IRIX was. It was done, and it was sold later to AVID, now Softimage is part of Autodesk.
On a side note, I always thought Autodesk was Adobe's natural predator, I was expecting a buy offer from them.
When I wrote a an XSI plugin for a feature film production, in 2005, for XSI running on Linux, half of the API was still using COM, it the app required a special gcc version that shipped with the sdk to compile plugins with and the Python was ActiveState Python (which clashed with the Linux system's Python).
In short, it was a disaster from a developers, and still a lot of trouble from a user's pov.
Now Adobe doesn't support Linux much but if what MS did to XSI is anything to go by, I wouldn't want to be a developer on one of those apps, after the acquisition.
I agree, Softimage was just mishandled. It was brought into Microsoft with a single task, and Sumatra(XSI) was architected at a really bad point in time for them. It was done on the verge of NT era, so they went berserk. Softimage (they have renamed XSI) is now a really solid piece of software, AGAIN mishandled by Autodesk. sigh.
MS managed the fruits of the SoftImage acquisition pretty poorly. It had a lot of potential, particularly since MS could have parlayed it into a part of the premiere games development platform, but they bobbled it pretty badly and ended up with trueSpace instead, which has really never come even close to living up to its potential.
Autodesk and Adobe compete really only in digital audio & video editing, and compositing. The rest of Adobe doesn't really have much impact on any of Autodesk's businesses.
I suspect that Autodesk bought Alias for Alias:Studio rather than for Maya, because Alias:Studio is the Big Dog revenue stream there, and among Autocad's biggest competitors.
> MS managed the fruits of the SoftImage acquisition pretty poorly.
It worked very well. You don't see any SGI workstations running visualization software anymore and most such software now runs under Windows. I say they won that war.
They never wanted to have an animation platform. They wanted to ruin SGI.
The reason that I suggest that MS ran SoftImage poorly is that under MS, Soft generated negative revenue, even though it was profitable before MS bought it. I have a feeling that it didn't become profitable again after Avid bought it though, because otherwise Avid probably wouldn't have sold it to AutoDesk.
Edit:
The funny thing is that MS later acquired Caligari, and now has ANOTHER animation system, which the last I heard was a freebie under Microsoft.
The Rare team was spun out of Microsoft. They were the video game company that Microsoft bought from Nintendo. They were responsible for Golden Eye, Conquer, and Perfect Dark.
I'm not sure if this would be considered a successful spin off though as Microsoft bought them when they were, IMHO, at their peak.
I would not count Rare as a good acquisition: Microsoft bought them for $375M, and they haven't produced a single hit since. To put that in perspective, Bungie (a much smaller studio than Rare at the time) was acquired for less than $40M, and their games and IP generated over $1B (and counting) in revenue for Microsoft.
I believe CitySearch was also spun off. That one isn't going so well.
I know there are a few core products that were results of acquisitions, namely PowerPoint and Visio. They've pretty much integrated deeply into Microsoft, so that's always a possibility here.
This has one major implication that makes me want to root for the deal to close:
Photoshop & Flash would be covered by an MSDN subscription.
So, instead of dishing out $1000 for CS6, we need only enroll in BizSpark (or whatever Microsoft's next version of its ISV thing is called), and pay $400 for all our OS's, all our dev tools, and all our graphics stuff in one package. Now all they need to do is buy Codesmith, Red Gate and Jetbrains so that I never need to pay full price for software again.
I wonder if Microsoft is thinking the same thing. Either as a defensive move to make sure Photoshop will always work on Windows or as an offensive move and making Photoshop and friends windows only in an attempt to strangle the OS X platform.
Apple has been able to create pro level software for both audio and video editing industries. If Adobe/Microsoft scraped its mac line of products, I bet Apple would have a competing product out in 12 months that graphic designers would flock to.
Note, however, that those were all originally acquisitions. FCP was born at Macromedia and Apple purchased the product and hired the team. Shake came from the Nothing Real acquisition. Logic is from the Emagic acquisition.
You're correct in a general sense, but for the specific case of designers working in fields where the standard computer is a Windows machine I've almost always seen an exception made for the design department to use Macs.
I assume that Microsoft is making some money on Office for Mac. They aren't developing that product for charity. I don't see any reason for them to kill off development for the Mac, especially if they acquire Adobe.
Microsoft could use some help in the mobile market, though, so I can believe the idea of those two companies joining forces to make some headway there.
Vendor lock-in isn't as crucial to Adobe's CS as it is to Office. Microsoft doesn't want anybody to even think that there's such a thing as an "Office alternative", whereas recent years have proven that upstart competitors to components of CS can get traction.
So, while killing CS for Mac might work (users switching platforms might outnumber users switching programs), killing Office for Mac would just force universities to switch to ODF and in the long term, it would hurt the rest of Office's markets.
IMHO that would be a catastrophe for Apple: the existence of MS Office being the only reason Mac OS X (and not Linux) is an accepted alternative for employees inside many companies (including at Adobe btw).
Sorry, but CS is niche software used by certain professionals. MS Office / Exchange are used by everybody else ;)
And I wouldn't bet against Microsoft for providing an alternative to CS: judging from the experience of using Microsoft Blend, they are rookies, but they can manage it.
I don't know how Apple would feel about having to deal with all those enterprise customers who run Adobe software on PCs only. Also, a number of Adobe products don't have Mac versions, like ColdFusion and JRun. Yes, there are still places that rely on this software.
Helpful to whom? of all the devs I've ever met that have used CF, the most positive thing I've ever heard said about it is that "they're used to its failings and it's comfortable". I can't help but think Microsoft's tools are a much more appealing value proposition than Adobe's in this particular space.
Microsoft's tools may be more appealing than Cold Fusion or JRun, but they are still less appealing than pretty much everything else this side of Java.
At least with CF and (IIRC) JRun you are not locked into Windows...
Yeah, it's a little strange that it actually sits in the same basic ecosystem as everything else on the other side of the microsoft stack and yet manages to be worse even than the MS offerings.
Frankly even considering the vendor lock-in implicit in being wed to the MS stack, I'd take that option over CF any day of the week. That said I see no reason to choose between different degrees of poison when there's plenty of good clean water around.
What's "CS"? Unless it's Outlook's calendaring, I doubt it will have any effect on "the enterprise". Remember, most people only use their computers to send email, setup meetings, and browse Facebook.
Correct, but a large chunk of corporations have in house creative departments and many(if not most) use macs. Killing the Mac version of CS would force them to switch back to PC.
It might be harder than you think to replace highly refined creative tools such as Illustrator or Photoshop.
Although they have become rather bloated and the last few versions have failed to innovate in significant ways, there is a lot of graphics professionals who would be very reluctant to waste all that hard-won muscle-memory.
Plus there's a lot of work-flow knowledge in them there apps.
I agree that replacing Illustrator and Photoshop are nontrivial. I doubt that a typical startup could do it.
On the other hand, it would be a natural fit for someone like Autodesk given their resources and markets. Retail box graphics applications could make sense in Microsoft's product line. Even Corel would be in a position to capitalize on Adobe leaving the Windows market.
It's a bit like old school advertising (billboards, TV) versus Google pay-per-click ads. As soon as you can measure something accurately, it's value decreases.
Regarding: "Adobe's shares rise as much as 17 percent"
Just a small detail, but the above bullet exaggerates the indicative reaction of the market. It was up 17 percent for an instant because someone fat fingered and bought it for $30.00 exactly at 3:08pm (Added: 12 minutes after the announcement at 2:56pm), maybe a little excited to buy in. Really it is up 10-11%, which is a strong and positive reaction, but there is more uncertainty factored into the price than what the bullet would seem to imply.
Gotta love stock markets. A rumor arises of two CEO's secretly meeting, and stocks skyrocket instantly. I'd assume that nobody actually knows what they were discussing, if they even met. Wouldn't be much of a secret meeting otherwise.
It's really interesting, when you think about it as a system that changes in response to observation.
Can you imagine if physical systems worked like that? That observed physical phenomena would change in response to what the experimenter/observer thinks will happen?
I should have been more precise when I said observation. In QM, clearly scientific "observation" acts on the system, causing the system to "collapse" into a definite state, but what I meant by observation in my previous comment was that speculative observation, commentary and opinion can affect the state of the system.
Not really. QM measurements follow probability distributions, but are not dependent on what the experimenter thinks about the system.
Consider a 2-state single particle system, the outcome probabilities of one state vs. the other are fixed by the Hamiltonian and the time evolution of the system, and not by the experimenter's opinion of the system.
Can everyone commenting on this please remember that Adobe produces software aside from Flash and Reader?
Those two may interfere with your browsing habits but just because you don't come into contact with anything else Adobe produces doesn't mean it doesn't have some importance in the software industry.
Don't know about the rest of Adobe, but the flash team is heavily intertwined with mozilla and google developers. Go sample irc.mozilla.org sometime.
Fun fact, the first JavaScript was written by a Netscaper in Lisp. The first ActionScript was in Standard ML, and now both guys work on ECMAScript :-) ActionScript's engine powers Mozilla's JS engine (yes, flash and firefox engines off the same code base!) and the Lisper guy works on V8. Get into the javascript scene and you will find the intellectual incest that is hacking.
I'm not sure I understand: how would a merger between these two companies get past the regulators? I doubt they'd let Apple jump into bed with Adobe, let alone Microsoft...
Randal C. Picker, a professor of law of the University of Chicago law school, said in a telephone interview that the technology space is drastically different than it was when Microsoft was originally charged with antitrust violations and an acquisition or partnership of this nature would likely not be halted.
Mr. Picker said that the Department of Justice and Federal Trade Commission are focused on other large technology companies and consumer related issues.
Thanks, very interesting. I'm genuinely surprised though, as we're talking about some huge spaces being gobbled up: Photoshop, ColdFusion, Director, Flash, FrameMaker, Illustrator etc. And those are just some of their bigger names! :)
I would have thought that the antitrust concerns would go the other way this time - the combined company using the dominance of Photoshop to prop up Windows (by cancelling the Mac version), or the dominance of Flash to prop up Windows Mobile (by killing Flash for Android).
As a thought: If it does happen, I can totally see an MS Office GRAND DELUXE edition that puts together Office and CS. And I would guess that the price would be less than the sum of the individual packages.
There is something to that - Microsoft has been spending a lot of money and resources trying to encourage Silverlight adoption. One way to do that might be to buy the rights to Flash.
Microsoft already has a problem with runtime fragmentation - their software and dev platforms are split between native and COM-based stuff (Windows, Office, most of their consumer apps), .NET/CLR based stuff (.NET, Silverlight, XNA, most of their enterprise apps) and increasingly JavaScript/web based stuff (IE, most of their web properties). The last thing they need is to add a fourth runtime to those.
I just don't see the synergies of a full takeover beyond owning the rights to the PDF format. A full takeover would result in Microsoft paying a high premium for a set of desktop design applications (CS suite) that are not part of its DNA. Microsoft excels at building excellent tools for developers, but never seems to do a good job with design tools. Adobe is the opposite.
What's more possible is some sort of partnership that enables stronger PDF support in Office, improved Flash support in Windows Phone and better integration between Office and CS applications.
Microsoft's primary business is selling Windows and Office desktop licenses. Since many Adobe CS users also own Windows and Office licenses, better integration between the two suites would be beneficial for both companies. Introducing a new mobile phone OS based on Flash/Flex/Silverlight or some other combination would not be worth the acquisition cost.
This would be quite interesting. If Microsoft bought Adobe, what would happen to PDF on Mac? What would happen to Silverlight? Would the next Office use PDF as a standard format?
Then there's the creative suite. What would happen to photoshop? Dreamweaver (or MS Frontpage 2012 as it'd be renamed)? InDesign (or Microsoft Publisher 2012 as it'd be called)?
Also think about the other side of it. The Acrobat team would be forced to actually secure their reader instead of relying on researchers to do it for them.
I think this can only be a good thing(tm). As Dan Kaminsky once said, "What could possibly go wrong?"
Apple doesn't license PDF from Adobe even though it is part of OS X's native graphics renderer.
“The Quartz renderer and the PDF interpreter that Apple ships with Mac OS X are built with Apple code, with no external licenses, by Apple employees. Adobe just publishes a specification for how it’s supposed to function. This gives Apple considerably more flexibility with regard to what Quartz and the PDF interpreter can be used for.”
PDF has an open spec and third party developers could make as many PDF readers as they want. Like on Linux, where there are plenty of PDF readers, mostly based on Poppler.
I guess there must be non-Adobe PDF readers for mac.
The only way that would happen is if Adobe went crying to the FTC... which they would, which is why Apple offers first-class PDF support in the OS and Microsoft doesn't.
An Adobe acquisition would render this a moot point. Full .PDF support would show up in Windows very quickly, which wouldn't be a bad thing IMO.
From the original NYT report [1], the discussions seem to be less about acquisition, and more about “Apple and its control of the mobile phone market and how the two companies could partner in the battle against Apple.”
Indeed, acquisition is a real and fascinating possibility, but surely there are many other ways they could work together to fight Apple, if that is what they want to do.
Microsoft should start thinking about acquiring a web company instead. One day, they will look back and realize that, in retrospective, they shouldn't have held on to the desktop. An analogy could be made with newspapers who held on to the paper. Time might prove me wrong, but I doubt it.
For my part, I'm glad there are still companies like Microsoft, Apple, and Adobe "holding onto the desktop", selling me software that I can run on my own hardware, allowing me to keep my data to myself.
I dont understand this, you seem to think that Microsoft has ignored the web when they are in fact one of the largest web companies on the planet. There is almost no company they could buy who would not overlap in concerns. You might argue that some companies are better at certain things or have larger customer bases but this idea that they should buy a web company and quit holding on to the desktop is just goofy.
All that said, one important web asset MSFT doesnt have a strong play in is web analytics.
They have thought about - MS tried to buy Yahoo. Didn't work - not too many other alternatives - maybe they'll try again. Don't forget also that MS owns a chunk of Facebook. MS is starting to go big on the cloud too, so they are getting into position slowly but surely for the future...
This would be the final end of the desktop application. Adobe is the last remaining large independent maker of mass-market desktop applications. Everyone else has been crushed between the web, Microsoft and open source.
Except for everyone else who still makes programs for people who create things which aren't just code or the written word... Audio, video, 3D, print and web visual design are all still done on the desktop, and only a slice of that is controlled by Adobe.
One big upside to this that I can see is that it might result in standardization of the Adobe CS GUI. It's been getting weirder and weirder with every new version, to the point where nothing I know about how Windows programs are supposed to behave applies.
That said, considering that MSFT just f*ed up the Office GUI (ribbon, etc) I probably shouldn't hold my breath.
This is probably one of those high priced mergers that wont really help MSN compete with Apple. Doesn't Apple hate flash? And isn’t HTML5 the future? I think MSN would be better off spending money on a smaller company that can really help its mobile strategy.
It's funny but I avoid Adobe products more than anyone else these days - an 'honor' held by Microsoft for a very long time. I don't know what is worse Acrobat or Flash at this point (esp. on mac).
Apple really needs to buy Adobe. Apple's response will determine how much life they see in their "truck" (OS X) line. This, coupled with Intel's comments on Apple, really make me wonder.
What would this mean for Flash and Silverlight?
Would MS also can the Expression Studio as well? Why would the same company put out Illustrator and Expression Design?
umjames - ColdFusion is built upon Java, of course it runs on the Mac as well as 'nix. If you go to a gathering of CF developers eighty percent of them are running Mac laptops.
Adobe has long lost any luster it might have had, and has descended into outsourced maintenance-ware. An acquisition like this would be about as smart as Intel acquiring Mc(rap)fee...
I just don't get that. It's not like MS have the superior computer scientists and the rest of us are little children. Adobe has the money to pay people to solve those problems. The Flash situation on Mac and Linux is just ridiculous.
Not sure why you were downvoted. You made a valid point.
Slightly offtopic but since people are dicussing updates. Updates are an important part of the sotfware lifecycle. It's no big deal that sometimes the updater might need to be updated.
I personally get a bit angry when of all people, software engineers get annoyed about updates. You should know better that the update to software would push better algorithms, reducing CPU and memory usage while it might also have security fixes making software more secure.
Nobody (not even Apple) makes perfect software. There is no such thing as bug free code. Updates fix bugs.
I understand it is a bit psychological too, since people complain more about free updates than paid ones.
Engineers should promote updates amongst friends and family and not deride updates in public.
There's updates and there's updates. If an update automagically installs itself and restarts your machine because you went to the kitchen to make yourself a tea and a sandwich and you lose work, that's one thing. Same if an update forces you to wait for it to download and install when you really need to get some work done. Bonus negative points if you are on a connection where you pay by the kilobyte with international roaming. If an update asks for consent, installs cleanly without breaking things or making your machine unusable for the time, and does not destroy your work if you aren't paying attention, that's another thing. There's a good reason people dislike updates. The correct thing to do is fix them, not advocate them.
Don't think only about lawsuits but also patent extortion. If their IP lawyers send a threatening letter and the receiver just complies and pays, we usually never get to hear about it.
A lawsuit is like having to beat up somebody to make an example out of him. It only happens when people refuse to pay for protection.
I feel like there's a joke in there somewhere... Something about how an adobe (proper noun) is naturally small and soft. Seems somehow fitting for the two companies to become one, no?
I, for one, welcome this development. It brings some hopes for better performing Flash, which I hate with a passion but its a fact of life. Flash is in need of some engineering muscle. There are many things Microsoft can possibly do to it and most of them are good, see: kill it -> good, open source it -> good, merge with silverlight -> good.
Same thing with other Adobe products: they used to be best in class some time ago, but I'm convinced that company cannot code anymore, but Microsoft still can.
No way this is bad news. The worse that can happen is nothing changes.
Edit: also, lets stop this nonsense with applying "still somewhat profitable" and "dying" to these companies. Both are doing great financially. Adobe's profits from CS keep breaking records - look at http://www.adobe.com/aboutadobe/pressroom/pressreleases/2010...