Daniel Eran Dilger
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Will Microsoft Buy Adobe to rival Apple?

Daniel Eran Dilger

Hello readers, sorry for the long hiatus. I hit pause to enjoy life a bit. But now I’m digesting a story that is causing me to gag: that Microsoft and Adobe are going to battle Apple together in 2010 by resurrecting the 1990s.
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The idea is that Microsoft was discovered to be holding talks with Adobe, and therefore the worlds biggest software company was imminently prepared (obviously!) to swallow the wildly overvalued conjoined twins of Adobe and Macromedia.

Why? To battle Apple of course, because how else do you take on a successful smartphone platform other than combining the worst mobile operating system available with the least efficient mobile app platform in the world, one that only exists for Android and then only works halfway on a few models of Android-based devices.

The only good thing about a Microsoft acquisition of Adobe is that it would almost certainly trigger the dismissal of CEO Steve Ballmer. Why? I’m so glad you asked, because the premise of this piece is to explain why.

Mergers are not wonderful

For starters, I’d like to point out that while oxymoronic “conventional wisdom” holds that the solution to any corporate problem is to merge with another company, the opposite is often the case. Very rarely do you have a merger of two large companies that does anything but fail or marginally survive.

The best example of a good tech merger was Apple’s acquisition of NeXT, but that was more of a reverse takeover of a well positioned but ineptly run large company by a struggling but talented management pool of a relatively small company.

Microsoft may well play the role of a well positioned but ineptly run large company, but Adobe doesn’t offer any sort of talented management, nor even the futuristic technology along the lines that NeXT provided to Apple back in 1997. A merger of the two would be more like American Airlines buying Amtrak.

Why OS X is on the iPhone, but not the PC

Flash is dying as quickly as Microsoft’s PCs

What Adobe offers is Flash, a development environment based on JavaScript but not well suited in its present form to run on the devices of the future: smartphones and tablets. Flash was designed to run on full sized PCs running a conventional mouse-based windowing environment, the same thing Microsoft’s Windows has always been aimed at. Neither are capable of running well on ARM-based mobile devices with limited resources and touch-based interfaces.

Billions could be invested in making Flash better, but the industry at large has already determined that it’s a better bet to throw capital at HTML5, a portfolio of open specifications that aren’t owned and managed by a single entity with specific goals that don’t align with most other entities in the tech world. Apple has accumulated the most flack for not being foolish in this regard, but most other companies are doing the same thing without the ignorant criticism (because they lack the ability to sell news as anti-Apple reports do).

A lot of people who are invested in Flash don’t like this reality, but failing to believe in obvious realities has never resulted in anything good. Flash is dead, and even those who seem to be advocating it (including Google and others who appear to be backing Flash as a frenemy in optimistic attempts to hold back Apple’s juggernaut iOS platform) have clear reasons not to be interested in pushing Flash long term, particularly once HTML5 begins to gain traction everywhere.

What about Microsoft? Is it the exception to this rule, given the dramatic failure of Windows Mobile, the embarrassing face-plant of KIN, and its struggling efforts to establish Windows Phone 7 in a world already oversaturated with better mobile products? Will Microsoft pick up Flash and fund it as an alternative to Apple’s Cocoa Touch?

Why Apple is betting on HTML 5: a web history

Dinosaurs eating each other

Adobe’s Flash-motivated acquisition of Macromedia in 2006 for $3.4 billion was curious at best, but at the time Adobe was struggling to earn a web presence and tie its print apps (Photoshop, Illustrator and InDesign) into a stronger suite that could better target the web.

Being able to absorb the only other significant vendor of creative apps was not only a reasonably good addition for Adobe; it was also a major subtraction of competition. This was enabled by the right wing currents blowing in America at the time, which were openly fostering the consolidation of oligarchies at the expense of the competitive, entrepreneurial marketplace of small players that once made the country great.

We now have the product of a decade of pro-consolidation, anti-regulation public policy: banks and massive corporations control the government and entertain the middle class with the notion that they should give up any demand for “socialist” benefits in exchange for providing multinational monopolies with the freedom to pay low wages, syphon their profits into tax shelters, and pay no regard to any sort of environmental issues or invest anything into the proper education and critical infrastructure of the nation.

Rather than bringing significant visible change, President Obama has since focused on making lots of invisible progress that hasn’t suitably entertained the middle class, prompting them to threaten to bring back to power the party of John Boener, who shamelessly handed out campaign checks from the tobacco industry on the House floor.

With the abject failure of the American government all but certain, one can only hope that something other than the failed “government of the people” can survive the collapse of the massive dinosaurs created under President Bush, something both Microsoft and Adobe represent: companies that are too large, poorly focused, complacent, and simply unable to compete outside of areas where they hold a monopoly lock on competition.

That something is entrepreneurial, smaller companies that make decisions with capital that benefit their customers and suppliers as well as themselves. Apple is a big company in terms of net worth, but it’s somewhere around a third the size of Microsoft in terms of employees, and many of Apple’s workers are retail staff. Apple acts and thinks like a thin, lean, small company despite its billions in the bank and its massive growth. Adobe and Microsoft act like elderly, obese queens resting on the laurels of their past glories.

No, Microsoft is not going to buy Flash

Today, one could be forgiven for thinking that Microsoft might swallow up Adobe, given all the effusively megamerger-positive drivel that the nation has wallowed in for so long. Merging major companies is like peanut butter and chocolate, right? Well not exactly.

For starters, Microsoft already has a Flash of its own: Mobile .Net / Silverlight, which is based on the same stuff Microsoft has been pushing to modernize Windows on the PC beyond Win32. Buying Flash would be more ridiculous than buying Danger and then converting its Java-based OS to WinCE. Or buying HotMail and WebTV and replacing their Solaris underpinnings with WinNT. And those things were all very ridiculous.

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Mobile .Net is already the foundation of Microsoft’s any-day-now WP7. Microsoft not only has no need for Flash, but it actively dislikes Flash and has positioned Silverlight to replace it both on the desktop PC and in its mobile devices (at some point, and very optimistically).

People who think Apple really “hates” Flash should clue into the reality that Apple doesn’t have an alternative Flash clone that it’s pushing, like Microsoft. Instead, Apple is just betting on HTML5, something Google and Microsoft and everyone else is also doing. Microsoft really hates Flash, it just isn’t upfront about it.

The only reason for Microsoft to buy Flash would be to waste vast billions of dollars for nothing. The rest of Adobe’s apps would compete against the ineffectual creative suite that Microsoft put together, then gave up on.

If Microsoft really wanted to be in the creative apps businesses, buying Adobe would be a very cost-ineffective way to not make money. However, there is no sensical reason for Microsoft to spend its money buying Adobe, as opposed to say, buying back more shares in admission that the best thing the company can do with its money is give it back to its shareholders.

Why Steve Jobs Loves Adobe Flash — RoughlyDrafted Magazine
Windows Phone 7: Microsoft’s third failed attempt to be Apple

What does Microsoft really want?

Instead, Microsoft is desperate for frenemies in its effort to rival Apple. It would like to have Adobe prepare Flash for WP7 at Adobe’s own expense just to give Microsoft’s new phone platform both a bullet point and a competitive distinction with Apple’s iOS, even though having a shoddy beta-quality Flash runtime isn’t exactly making the Google Nexus One stand out as a must have, discontinued Android phone.

Microsoft would also love to have Adobe drop Flash and push Silverlight, although the best it could ask for would perhaps be for Adobe to add Silverlight export to its Flash tools, similar to the iPhone Cocoa Touch export Adobe delivered, only to be rebuffed by Apple initially. This would enable Flash developers to poop out WP7 “apps” from Adobe’s tools, giving WP7 at least the illusion that it has some software available.

In exchange, Microsoft could offer to promote Flash in the lying sort of way that it once suggested that Windows would run OS/2 apps, or that Office on the Mac would ever be decently good again. That is, a visible show of support for Adobe’s Flash platform, even if it’s really just a hollow pretense that covers up Microsoft’s real intention to push Silverlight instead. That sort of thing is Microsoft’s core competency.

As for Adobe, investors are signaling that the best hope for the company is to have any another company of any kind take the time to talk with it, recalling the Rodney Dangerfield line about a kid being so ugly they had to hang a bone around his neck just to get the dog to play with him. Imagine how Adobe’s stock would jump if Apple ever bothered to discuss the future with it.

  • brew57

    >>Payback Time:

    Well, Adobe’s management has fudiciary responsibility to its own (not Apples’s) shareholders and had to make Windows a priority at that time. At the time it sure did look like Apple was about to fail. Remember, even Steve himself hedged his bets – he dumped all of his Apple stock from the Next sale and didn’t officially come on board as a “full time” CEO until it was clear Apple was out of the woods.

    So give Adobe a break. Hindsight is great. Adobe makes best of class creative software that customers love (and their share of crap also.)

  • http://www.markalanthomas.com marsviolet

    Adobe hedging its bets was only the beginning. Adobe has been compromising its OS X software by tying it to the same code base as its Windows software, and blames Apple for the problems this Lowest Common Denominator Syndrome has caused, from crashing bugs which never get fixed to speed issues to terrible, non-standard installers, to faked Mac interfaces which look and feel wrong. Adobe even fakes OS X window title bars and close/minimize/zoom buttons!

    Adobe isn’t even doing cocoa right. While moving kicking and screaming to a cocoa foundation, they still stubbornly refuse to use Apple’s Interface Builder to create their interfaces. Basically Adobe is lying when they claim that Photoshop is now cocoa. It’s more like half cocoa.

  • Dude

    How about those Windows Phone 7 handsets announced today?

    My first reaction–why are there so many different models?

  • Ludor

    Wings (#3): Exactly my guess. Hehe.

    Adobes incompetence worries me. They have such a bolted down monopoly over the graphic market. I’d be fine with it if the Creative Suite wasn’t such an unoptimized cake of layer upon layer of old code. And Brew57, well, glad you’re happy, but CS5 is best of class only in its lack of competition, I think. Soon as they glued on the Flash-based interface, it became twice as difficult to work with effectively.

    An incidental, possibly symptomatic clue was the Patch Match technique Adobe Labs showed off but never included. Oh it’ll come in CS6. What is this, 3D Realms?

    Would Adobe bend over for Microsoft? Likely. Would Microsoft screw Mac users over? First chance they get.

    So awesomely great to read your work again, Dan. Thanks. Any pictures from your travels across the sea coming up?

  • brew57

    @ Ludor.

    Yes, let’s bash Adobe some more…it is clearly a failed dying business just like Microsoft is.

    >>CS5 is best of class only in its lack of competition

    Well, duh. Let those who can offer better products that Photoshop and Fireworks for the purpose, and, make money at it.

  • rufustfirefly

    All

    I take Dan’s rants seriously. Anyone who objects will have SEIU thugs at their door beating the snot out of them.

    Now – has anyone found any Congressman who has yet read the Health Care bill. I believe as of yesterday nobody has yet completed that effort.

  • http://madhatter.ca The Mad Hatter

    There’s one major issue which no one here has addressed, and that is that the United States is in effect a One Party State. Remember, that the original Founding Fathers weren’t interested freedom, except for their freedom to make more money. The United States was founded as an Oligarchy, and it still is one today.

  • rufustfirefly

    Yes, Mad Hatter is right. The Founders created a tryrannical regime run by oil companies.

  • rufustfirefly

    The Statue of Liberty is actually a woman operating a gas pump. People from all over the world come here because they like the idea of a country run by greedy capitalist pigs, a tyranny, where minorities are oppressed and muredered in the streets by the greedy capitalist, country club right wing Cheney Halliburton Glenn Beck conservatives. That is the magnet that attracts the Mexicans here, slong with the chance to do the challenging occupations.

  • Ludor

    rufus [cont.] “… There’s also a negative side.”

    Brew57: What I tried but didn’t manage to express, is that CS could be great. It’s full of tools to wreak graphical havoc, as well as to put everything in complete and total order. I love the results you can achieve with it. I just think getting there is a constant struggle against an interface that has gotten old, convoluted and unreliable.

  • http://madhatter.ca The Mad Hatter

    That’s a new one about the Statue of Liberty – you shouldn’t dis that great gift from the French people that way.

    As to the rest. be sarcastic. But then take a look at how the politicians in both supposed parties vote, and who their policies benefit.

    The Tea Party will just be more of the same.

  • http://www.markalanthomas.com marsviolet

    Well, duh. Let those who can offer better products that Photoshop and Fireworks for the purpose, and, make money at it.

    Well, duh. Cost of entry prevents better products from being developed. This is partly why Adobe lacks competition. The other reason is because Adobe bought and killed much of what competition there once was.

  • brew57

    @ Ludor.

    I get your point that Adobe s/w could be better. I use Fireworks myself, and as useful as it is, I agree, it can be greatly improved…

    But not to worry, soon will come the November voter referendum, and we will have the correct party in charge which in turn will, of course, cause the great improvement in all tech products including Adobe’s :-)

  • http://www.markalanthomas.com marsviolet

    The Tea Party will just be more of the same.

    Worse, actually. My brother is in this so-called Tea Party. He went from watching Rush Limbaugh for entertainment and occasionally ridiculing the Clintons to taking Glenn Beck’s crazy logical fallacies as gospel and screaming at me for supporting a “socialist” who is hell-bent on stealing his freedoms and creating a ONE WORLD GOVERNMENT. The Tea Party is composed of radicalized Republicans, white supremacists and conspiracy theorists.

  • rufustfirefly

    of course the Democrat Party is composed of Marxists, Chicago street thugs posing as politicians, Senators who marry wealthy widows (former Presidential candidate), full cabinets composed of tax cheats, guys who live with other guys who run male prostitution rings (B. Frank), buffoonish plagiarists (Joe Biden), and the biggest affirmative action poster boy (Our Fearless Leader).

  • rufustfirefly

    I forgot John Edwards. How could I forget. Campaigned on his wife having cancer.

  • http://www.markalanthomas.com marsviolet

    You could have stopped at “Marxists” because that alone invalidates your entire worldview. It’s a conclusion dependent upon a logical fallacy. Glenn Beck Logic 101.

  • rufustfirefly

    marsviolet – Actually there are plenty of Marxists in the party. Obama himself was mentored by two – his maternal grandfather and Frank Davis, a Chicago pedophile and friend of the family. This is all public knowledge, and some is even in his book. Beyond that, the Democrat partys favorite world leader is Fidel Castro. This too is common knowledge. Ask Michael Moore. Or Sean Penn. Democrats have a long history of admiration of totalitarian regimes. Like the one we have here in the US now.

  • http://www.markalanthomas.com marsviolet

    I could listen to you for hours.

  • http://www.lowededwookie.com lowededwookie

    I have to say that as someone who is the least politically minded person you’re ever likely to meet (I’m not even politically correct) even though I’m currently working in the New Zealand Parliament rubbing shoulders with the Prime Minister (well his staff I’ve never actually met the guy but I have met the Deputy PM) I have to say I kind of like Dan’s political commentary except for when he rails on Socialism and confuses it with Communism like most ignorant Americans do.

    As for M$ buying mud and straw… I mean Adobe I hope it happens… then they implode and the world can move on and be free of evil.

  • ronhip

    I will also add a “Welcome back” to the multitudes above (and those who follow below).

    Only one issue. We don’t WANT Ballmer fired! What would we do for entertainment? What if they hired someone actually competent who could get that Redmond beast going? That would be bad for Apple…

  • brew57

    Balmer for president!

  • OlsonBW

    For those of you who think Microsoft is going to get big market share with WP7 think of this. What product have they been successful with when they didn’t have a monopoly or a big company (IBM) which did have a monopoly?

    As far as I know, one. xBox. I can’t think of another one.

  • http://www.markalanthomas.com marsviolet

    Does the XBox actually make money now? Because for years it was a big fat billion dollar loser, successful only in that geeks were buying it for Halo.

  • gctwnl

    Nice piece, Dan. Laughed out loud at the reference to Michael Dell’s “giving money back to its shareholders”.

    Politically, the US is fascinating: the right wing extremists of the Democrats of the 60′s have become the Tea Party extremists of the Republicans of today. Their fanaticism and sometimes incredible beliefs from the outside resemble Al-Quaida style stupidity more than they do resemble the respectable Republicans of the time of Eisenhower. How the times have changed, Bob.

  • PhilipWing

    Despite Dan’s wishes, mergers of large companies sometimes *do* work (see American Airlines, which he noted, although it does lumber along now). They often *don’t* work either, e.g., my wife’s former employer, Thelan Reid, which was a large San Francisco-based law firm.

  • PhilipWing

    Dan, do I understand you correctly that you think small? Little companies running around, that once they decide they have complimentary strengths and want to join up, they should be handcuffed and put out of business?

  • http://www.markalanthomas.com marsviolet

    Philip, in the future you might want to refrain from interpreting what he says, and just stick to what he actually said.

  • b0wz3r

    I’m a little late to this one, and I’m sorry if I’m parroting something that’s already been said here, but I just have to say…

    I know it doesn’t really make any business sense for Apple to buy Adobe, but there’s a part of me that wishes they would so SJ can personally fire their FUD spewing CEO, and the watch Microsoft shrivel up and die when he then kills all Adobe apps for Windows and makes their stuff Mac only!!! LOL!!!

  • http://www.markalanthomas.com marsviolet

    Amen to that.