Cringely: Apple Will Buy Adobe

January 10th, 2008 at 2:00 PM - News by John Martellaro

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 Appleis positioning in the enterprise market," Mr Cringely wrote. "Jobs told the employee that it wasnit really Appleis 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 icontent creationi business with the consumer iLife applications as well as professional apps like Final Cut Pro."

With that starting point, Mr. Cringely analyzed Appleis business model and what theyire 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, Appleis 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 donit 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. Cringelyis analysis led to this: "This shift from creation to distribution is vital to understanding Appleis 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 Adobeis 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 itis likely to happen.