Cringely: Apple Will Buy Adobe
Cringely: Apple Will Buy Adobe
by , 4:05 PM EST, January 11th, 2008
In his weekly column, Robert X. Cringely laid out the case for Apple to acquire Adobe in 2008. Disney was crossed off the list.
"About 18 months ago an Apple employee at an internal meeting asked Steve Jobs about Apple's positioning in the enterprise market," Mr Cringely wrote. "Jobs told the employee that it wasn't really Apple's business and that he should go work at a company like IBM or HP if he wanted to pursue that line of work. Jobs said Apple was in the 'content creation' business with the consumer iLife applications as well as professional apps like Final Cut Pro."
With that starting point, Mr. Cringely analyzed Apple's business model and what they're really after. "Last year, for example, Apple bought an application called FinalTouch from Silicon Color that was essentially video color correction on steroids," Mr. Cringely noted. "They [Apple] changed the product name to Color, added a couple features, then rolled it into Final Cut Studio, Apple's top-end video application suite. Though FinalTouch sold for up to $25,000, Color is included in Final Cut Studio FOR FREE, which is a kick in the head to Apple competitors like Avid that don't have hardware sales to count on for profitability."
Recently, however, Apple has shifted its focus from mere content creation to content distribution with iTunes. Mr. Cringely's analysis led to this: "This shift from creation to distribution is vital to understanding Apple's current strategy and involves a counterintuitive feedback loop to those professional applications. Where Final Cut Pro was useful to Apple as a driver of hardware sales, it is now becoming more useful as a driver of content to be distributed through iTunes."
Based on that future for Apple, the acquisition of Adobe makes sense. Mr. Cringely pointed to Adobe's CEO, Bruce Chizen, suddenly stepping down without warning. That may be a early indicator. In addition, the acquisition of Adobe would allow the merger of Flash and QuickTime "would make any other video standards (like Windows Media) simply immaterial," Mr. Cringely concluded.
Timing is also important. The acquisition would go better in 2008 while Avid and Microsoft still present credible competition and the FTC would be unlikely to oppose the merger.
Many others have offered the same suggestion. However, Mr. Cringely [a pen name for Mark Stephens] filled in all the bits and pieces that explain why it's likely to happen.
Observer Comments
Fri Jan 11, 2008 6:09 pm Subject: Would be good
I'm not expecting it, but I'd be happy too. Adoobie has run out of creative steam, and has slowly turned Apple into a 2nd-class citizen. I could go on forever, but refusing to port FrameMaker to OSX, then dropping the Mac version entirely "because nobody's buying it" (DUUUUUHHHHH) really stands out for me.
Adoobie needs an enema. Apple could supply a sufficiently large nozzle.
Fri Jan 11, 2008 6:33 pm Subject: At the very least
This is somewhat unlikely, though if Apple could insert a little UI sanity into the mess that is Adobe CS3 I'd be all for that. I have a friend who wants Adobe to get into the OS market, because he loves their UI so much, I just don't get it. Photoshop is an essential Tool, but outside of a few new filters and some other minor stuff there isn't much CS1-3 do that Photoshop 6.0 doesn't do as well, and without as much UI garbage. Even at 1900x1200 on the 24inch iMac I feel crowded by CS3, a problem that Expose and Spaces can only handle up to a point.
Also, Cringely/Stephens remains dense in his lack of understanding Apple, take the summary of his points above and replace Apple with MS, and then you see where he is getting his logic. The point about FCP and they're acquisition of FinalTouch is interesting, but I think he takes that and runs away with it on a fairly unsupportable tangent. If he hadn't been so wrong about so many predictions in the past, maybe this one would seem more credible. Apple going to Intel is the only one I can think of off the top of my head that ever came true, and it took several years from the first time he said it was coming within the next several months.
adobe has spread itself too thin. perhaps if they killed off half of their product line, and dropped their prices by 50%, they would gain some success.
let me put it this way-- out of all of my adobe-using friends, i'm the only one that owns a legitimate license for CS3.. everyone else torrents it. it's priced so high that it's either impossible for them to purchase it, or the product simply isn't good enough for them to justify the cost.
When I finally decided that upgrading to CS3 was worthwhile... my new MacBook Pro helped... I figured that since I owned separate licenses for Photoshop, Acrobat Pro and Freehand, I'd get a break on the awful upgrade price.
NOPE.
It stands to reason that if one owns 3 full version licenses to products that are bundled together, there would be some kind of pricing structure that takes that into account.
I was so pissed I called Adobe and harassed as many people "up the ladder" as I could. It didn't help at all and I felt even more pissed. Oh well… The old adage that "the customer is always right" seems to be going the way of the dodo.
I agree that the CS3 UI is dreadful. Even with a second monitor it's a pain to manage and keep track of scores of little palettes. The miniscule text on them got smaller and harder to read, too. Apple could certainly clean it up considerably.
And what about Freehand? Adobe should really take a long hard look at merging some of the best features into Illustrator.
Yes, it now has a "caretaker" CEO who doesn't even have a civil relationship with Steve. Yes, it only has 2 products that make money: CS and Acrobat. Yes, the culture that Warnock/Geschke founded is long gone, replaced with low morale, tension with former MACR employees, lack of confidence in the leadership - I could go on and on. If you beleive they will be acquired keep your stock, if not, sell soon.
Sat Jan 12, 2008 4:55 pm Subject: Well that is an interesting point.
QuoteAnonymous wrote:
Yes, it now has a "caretaker" CEO who doesn't even have a civil relationship with Steve. Yes, it only has 2 products that make money: CS and Acrobat. Yes, the culture that Warnock/Geschke founded is long gone, replaced with low morale, tension with former MACR employees, lack of confidence in the leadership - I could go on and on. If you beleive they will be acquired keep your stock, if not, sell soon.
Maybe Cringly is on to something. Anyone have an idea what Adobe is currently worth, Apple has some cash reserves.
Sat Jan 12, 2008 7:59 pm Subject: Re: Well that is an interesting point.
The guy is just fishing for hits. First, Adobe's market value is way too high for Apple to buy it especially when considering Apple likes to have a cash hoard so it can weather out rainy days. Second, considering that Apple buys software companies to enhance the value of its own hardware, Apple would way over pay for Adobe since half of Adobe's current value comes from the sale of its products to Windows users. Presumably Apple would kill Windows development as that would do nothing to increase the value of its own hardware. Third, last I checked Microsoft has more money then Apple and certainly wouldn't let Apple buy Adobe without a fight. Moreover, the federal government wouldn't likely approve such a sale.
With all that said, Apple buying Adobe would be a horrible idea for other reasons as well. For instance, Adobe is one of the few companies who make the same product for both the Mac and Windows. I rely on that to communicate with Windows users. Apple's purchase of Adobe would destroy that. In addition, Apple needs Adobe to keep it honest.
I suspect Apple will do as it always does: spend very little of its savings. When it does shop, it will look for a bargain.
Sun Jan 13, 2008 5:38 pm Subject: Apple won't buy Adobe
Adobe has become Quark + Malware. Buying and installing their products has become a nuisance. Then there's the fact that Adobe products install pieces of helper applications that you simply can't get rid of, like the PDF palettes in Office. Then there's the annoying "software update" alerts. Go away. I didn't choose to update last time, and I'm not choosing this time, or the next time. Let me opt out of some of the bullshit. But, since I can't opt-out of the malware/spyware bullshit, I've opted out of CS2 and CS3. And I will continue to opt-out of Adobe products in the future. There are simply too many other pieces of software that aren't as bloated, expensive, or such a pain in my ass.
As for Dreamweaver/Fireworks, my plan is just keep using them until they're no longer compatible with OS updates and then find indie tools to replace them. Adobe saw my last dollar in the fall of 2006.
So, what would Apple acquire buying Adobe? A lot of software with Windows titles to maintain or kill; a lot of software that is too expensive and too bloated while lacking the "must have" technological edge that made it "must have" early in the decade; malware-infested software designed for sales and marketing instead of the consumer; software with horrible do-everything GUIs. I don't see it happening myself. There's just too many downsides and the brand itself isn't worth what it used to be. With all the core technologies that Apple has steadily added to its OS, Apple could write its own Photoshop for a lot less money and get a better product. Adobe just has nothing to offer.
Sun Jan 13, 2008 5:50 pm Subject: It is more than PhotoShop
"Apple could write its own Photoshop for a lot less money and get a better product. Adobe just has nothing to offer."
I also use Illustrator and InDesign, probably more than PhotoShop, though of course other people have different software needs. Anyway I would want a replacement for pretty much the entire Creative Suite. Pages is good, but not yet a replacement for InDesign.
Anyway, I am still using CS2 and not it in a hurry to upgrade to CS3. The only current incentive would be Leopard compatibility otherwise there is not much new in the suite to entice me.
Apple has amassed a cash reserve, I think, of something like eight billion dollars, which is a huge sum. Sooner or later, AAPL shareholders are going to get very restive if Apple doesn't a.) invest it in some kind of acquisition or b.) return a good chunk of it to the shareholders in the form of higher dividends. So Apple's Directors must be under some pretty heavy pressure to do something with a large chunk of that money. Sure, they need a few billion on hand to buy back stock if it becomes necessary to fend off an unfriendly takeover bid, but this leaves plenty for acquisitions. And when all is said and done, Adobe might be a very attractive target.
Don't get me wrong, Apple buying Adobe would be the biggest thing since sliced bread. "Applobe" would truly outshine Microsoft.
However, there's also a million ways that it could go wrong. Arguably, Adobe is already too large for its own good; it has so many products that it can't even list them all on its web page. Apple, while seemingly snapping up software companies left and right these years, is still trying to stay lean and fierce, with a simple product offering. Apple has never, and will never, acquire a company simply to add a cash cow; generally, Apple buys companies to add to its engineering strength, and it looks for small buys, not huge mergers.
Apple would not be able to operate Adobe without making brutal cuts to its (Adobe's) product line, which would be disastrous to many professionals who base their professional lives on those products. (I am one of those; I'm still hoping that Adobe will invigorate Director).
Now is not the best time to buy Adobe, either. Adobe is experiencing a strong resurgence after the release of CS3, so it would be very expensive. It is also unkown how the stock market would react to a merger; it may not be convinced that there is so much upside to it.
So, I consider it to be very unlikely. That being said, I think we can all see how it could, possibly, be outrageously fantastic...
An Apple Adobe merger would cause hardware lock in and software lockin. I'd hate to give up my faster SLI hardware for a slow Mac. Adobe didn't abandon Apple, they just got with the times and expanded their hardware compatibility by switching to Windows and thus, dozens of perhipheral manufactorers.
The ones left complaining? Apple fan boys. Apple is no better then Microsoft and it would be a sad day to see all the new features that Apple users don't see already (Adobe OnLocation, BluRay, etc) removed from the Windows PC market. One big step backwards.
Adobe didn't make bloatware, Apple users just got suckered with last year's graphics cards. All the new features of CS3 I use because my hardware can handle it and at a fraction of the cost of a Mac. Mac is where creative students begin... PCs are where success in business really happens (just don't count on any 'artist' telling you that). Why? Because PCs aren't fashionable, even when they are raytracing a Pixar animation of an Apple computer in the background for a fraction of the cost.
Remember when Aldus was Mac only and there was no PC equivilent? Well, those days of higher prices and no competetion maybe back... ![]()
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