Adobe/Macromedia to offer alternative to MS

Adobe’s £1.8bn acquisition of Macromedia is major news for the software industry, although not altogether surprising. Macromedia...

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Adobe’s £1.8bn acquisition of Macromedia is major news for the software industry, although not altogether surprising. Macromedia has long been touted as a prime candidate for acquisition.

 

 

The takeover makes sense from both companies’ perspective, and this is clearly signalled in the fact that it comes with the blessing of both boards.

Adobe has traditionally been strong in the offline graphical design business, particularly with respect to desktop publishing in the newspaper and magazine world. The company has also made its PDF reader ubiquitous on the desktop and it is widely used in business.

Macromedia, on the other hand, has a much stronger presence in graphical user interfaces with its Dreamweaver and Flash products.

Both companies have made moves to offer wireless products with the promise of rich media applications and cross-platform access. Macromedia, however, has made stronger inroads into this market with recent deals with key operators and device manufacturers that will see Flash expanding its reach from the desktop environment to wireless platforms.

The acquisition is not without issues from a competition standpoint – the resulting business will almost certainly hold a sizeable chunk of the GUI market that would make it difficult for some smaller suppliers.

The companies have overlapping products and a portfolio that goes in many different directions. That is both a positive and a negative and will need to be addressed.

But what of competitors? Both large and small will be concerned, and there may be anti-competition claims. There can be no doubt that the resulting company, if allowed to go ahead, will make it difficult for competitors.

Adobe’s revenues are about £1bn and Macromedia’s are about £200m – the revenue potential of their combined offering is substantial. Cross-platform products that serve Microsoft’s own environment will make it a formidable competitor for the Redmond giant.

Ultimately both Adobe and Macromedia have superb cross-platform technologies and if they can exploit the ubiquity of the PDF reader and Flash, and emphasise the “any client anywhere” theme, they will be in a formidable position to dictate the direction of the industry.

Bola Rotibi is a senior analyst with Ovum

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