Why it would make sense for Apple to buy Adobe

[David Knaggs]

This is really a continuation from another thread in the JVC ProHD forum:

http://www.dvinfo.net/conf/showthrea...=118627&page=3

where I suggested that the reason there were still problems with Final Cut Pro (FCP) ingesting ProHD footage was because Apple lacked the resources in their FCP area. My resultant suggestion clearly belongs in the Area 51 forum. So here is the last part of that post:
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What I meant was Apple buys Adobe, reducing the field to two major players (Apple and Avid).

FCS (Final Cut Studio) and FCP will not be going anywhere. They'll be enhanced by the acquisition. (Look at how Motion and FCP have already been enhanced by the acquisition of Shake.) So don't worry.


Here are some facts:
1/ Adobe has implemented an extremely successful strategy in the past few years to become a top-three major player, if not (in their own minds) THE major player. They've packaged their applications into various comprehensive "Creative Suites". They recognized that the NLE (Premiere) needed work to compete with Avid and Apple, so they a) re-entered the Mac platform and b) dedicated a huge amount of resources to Premiere Pro so that it could play "catch-up" with FCP and Avid. (Much in the same way that FCP had to play catch-up with Avid when it was kicked off in the late 90s.)
And Adobe has been doing a wonderful job with improving the features of Premiere Pro. It fully supports our ProHD camera (with no mid-clip breaks!). And Encore (Blu-ray DVDs anyone?). That's because, as a company, Adobe is FOCUSED on software. All it does is software.

2/ Apple has lost its FOCUS as a purely computer and software company (iPods, iPhones, iTunes, etc.). They even recently dropped the word "computer" from their title. I think it used to be something like "Apple Computer Company" and now it's something like "Apple, Inc". Yet their profits for the last quarter (a big rise when Dell and HP were struggling) were not founded on the much-vaunted iPhone. It was largely based on computer sales. About 2.3 million of them in the last quarter. And the reason a lot of people buy macs is for their really cool software (OS X plus applications).

3/ Apple have developed software to compete with Microsoft Office with iWork (Pages for Word, Keynote for Powerpoint and Numbers for Excel). And Apple have developed perfect conversions for iWork files to Office files - back and forth.

4/ But, outside of their FCS applications, Apple don't compete with Adobe. Nothing to compete with Dreamweaver (for website creation), Photoshop, Flash, etc., etc. I've waited for years for something to eventuate from Apple to start competing with these pro apps, but nothing.

5/ A week or so ago, there was an official announcement from an Apple spokesperson that they would not be selling their Pro Apps division.

6/ Apple have invested FCS resources into support for the RED camera, yet have released nothing in the way of Blu-ray support. This tends to support my assertion that Apple has spread its troops too thin (iPhone applications development, OS development, etc., etc.). Adobe, solely focused on software for creative professionals, has had Blu-ray support for a while.

7/ The Adobe guys have not only been playing catch-up, but will probably soon move "ahead of the curve".
http://tv.adobe.com/#v=http%3A//adob...%26xmlvers%3D2

So, if you were Steve Jobs, how would you restore focus to your software division? (And remember that those record last quarter Mac sales are much more driven by sales to creative professionals than office applications.)

Buy a company that IS focused on software applications to creative professionals (just like he earlier bought the companies that originally made FCP, Shake and Color). That's his successful action. Buy the company that makes the cool creative software.

Then he can port Adobe's improvements (such as the handling of .m2t files natively in the timeline, Blu-ray, etc) into FCS. The influx of Adobe staff will bring FCS back up to speed on the cutting edge (and ahead of it).

I wouldn't even dismantle Premiere Pro or those similar apps (to FCS). Just keep developing them (but also port their improvements to FCS as they occur). That way Premiere users and FCP users both win. And keep delivering the Windows versions, of course (after all, profits are profits and even Steve Jobs still has to answer to the stockholders).

Anyway, this is all pure Area 51 speculation. And purely my opinions, of course.

But FCS is clearly unable to keep abreast of proper support for the proliferation of new cameras (such as bug-free support for ProHD footage - after nearly three years!) or platforms (Blu-ray).

Whereas Adobe clearly can.

Adobe won't be buying Apple (nor would it want to).

But Apple can buy Adobe.

And, really, it should (despite the hefty price tag!).

[Paolo Ciccone]

Originally Posted by David Knaggs

But Apple can buy Adobe.

I'm not sure about this. Adobe is quite huge. A merger could be possible but a buy-out is too big a gulp to digest fro Apple. I agree that it would make sense for them but then they would be bound to develop and maintain a bunch of applications for Windows. Not sure that that is what Apple wants.

[Ethan Cooper]

I've been intrigued by the idea of Apple buying Adobe for a little while now, but I do agree that Adobe is just too big to buy outright unless you're Microsoft, Google, or someone like that.
That being said, how cool would it be if Apple were to magically print it's own money (iCash) and buy Adobe? They would then be in control of the entire graphic design industry. Is there anything else in the market that actually competes with Adobe? Quark is a shadow of it's former self, and I've never heard of a professional shop that doesn't use Illustrator and Photoshop. Adobe has almost an entire market virtually cornered. That's impressive and would be a great addition to someone's bottom line. I wonder what their profit margin was last year?

[Paul Cascio]

Software companies are always a risky buy because theire productivity depends so much on the corporate culture of the company. This is a delicate structure that can be damaged easily.

I worked for a company that made a word processor (Multi-Mate) many years ago. It was bought by Ashton-Tate (dBase) and the company fell apart.

Serious Magic is another example that comes to mind. What was one of the most creative companies in the industry has been almost destroyed IMO. This is partially due to Adobe and partially due to the fact that the Serious Magicians all become seriously wealthy.

[Colin McDonald]

Originally Posted by David Knaggs

4/ But, outside of their FCS applications, Apple don't compete with Adobe. Nothing to compete with Dreamweaver (for website creation), Photoshop, Flash, etc., etc. I've waited for years for something to eventuate from Apple to start competing with these pro apps, but nothing.

OK - apart from Aperture which competes directly against Adobe's Lightroom which is a kinda spinoff from Photoshop. (Or is Lightroom competing with Aperture, which came out first?)

[Harrison Murchison]

Originally Posted by Paulo

I'm not sure about this. Adobe is quite huge. A merger could be possible but a buy-out is too big a gulp to digest fro Apple. I agree that it would make sense for them but then they would be bound to develop and maintain a bunch of applications for Windows. Not sure that that is what Apple wants.

Given today's stock price and volume of each company Apple could nearly buy Adobe with cash on hand. They have roughly 18+ billion in cash and Adobe is 21 Billion compared to Apple's 161 Billion. It's not an EASY acquisition but Apple certainly has the money if not the desire.

Originally Posted by Colin

OK - apart from Aperture which competes directly against Adobe's Lightroom which is a kinda spinoff from Photoshop. (Or is Lightroom competing with Aperture, which came out first?)

Aperture came Nov 2005 ...Lightroom came Spring 2006. Rumor has it that Apple approached Adobe about creating a Photography workflow app and Adobe reneged so Apple created their own. Once Adobe got wind that Aperture was going to be released they greenlit Lightroom. This actually happens frequently between the two companies. iLife nee iTools was developed after Adobe decided against creating a small suite of applications.

Originally Posted by David

where I suggested that the reason there were still problems with Final Cut Pro (FCP) ingesting ProHD footage was because Apple lacked the resources in their FCP area. My resultant suggestion clearly belongs in the Area 51 forum. So here is the last part of that post:

My thoughts are

1. Adobe is somewhat of a lazy company. They don't do well as far as innovation goes when they don't have a competitor pushing then. Photoshop developement slowed down when XRES (Macromedias photo editor) and LivePicture both died. When Adobe is challenged they do wonderful stuff.

2. I think it depends on how you define "computer" Apple really hasn't lost focus on computers. The iPod is a computer (iPod Touch) but the iPhone is nothing more than a portable pocket computer. The Apple TV is nothing more than a computer for media playback. They've changed their name but not really their focus. It's still about pushing OS X into other areas
by not focusing on "computer" Apple sidesteps the computer= Wintel X86 paradigm.

3. About time. Apple was always about Clarisworks/Appleworks back in the days. Why they took so long for a replacement is beyond me.

4. Photoshop= creation app. I don't think Apple's going to go here but if you just need Photoshop for image editing Aperture is becoming quite adept especially with its new plug in format. My prediction is that we see a Dreamweaver competitor (iWeb Pro??) from Apple. Think about it...out of iLife the only product that doesn't have a bigger brother is iWeb. Also

Apple's at the forefront of HTML5 development I have no doubt that they'll be flexing muscle with a web design app soon. Apple "gets" the web.

5. Pro Apps= Mac Pro sales. This should have be obvious to most.

6. The DRM features needed by Blu-ray already have suppor in Windows. Apple needs to graft this into OS X before they can deliver a fully encrypted pathway from video to output. Adobe's Encore is PC only so they just leverage the support already there.

7. Adobe does indeed have some nice things coming. In fact alot of the Metadata stuff they're discussing is exactly what I expect to see from Apple in subsequent revisions to FCS.

[David Knaggs]

Terrific post, Harrison.

Originally Posted by Harrison Murchison

Given today's stock price and volume of each company Apple could nearly buy Adobe with cash on hand. They have roughly 18+ billion in cash and Adobe is 21 Billion compared to Apple's 161 Billion. It's not an EASY acquisition but Apple certainly has the money if not the desire.

Yes, definitely a hefty price-tag (but, as you point out, definitely achievable). The only critical issue seems to be whether or not the acquisition makes strategic sense to Apple.

Originally Posted by Harrison Murchison

Aperture came Nov 2005 ...Lightroom came Spring 2006. Rumor has it that Apple approached Adobe about creating a Photography workflow app and Adobe reneged so Apple created their own. Once Adobe got wind that Aperture was going to be released they greenlit Lightroom. This actually happens frequently between the two companies. iLife nee iTools was developed after Adobe decided against creating a small suite of applications.

Interesting!

Originally Posted by Harrison Murchison

My thoughts are

1. Adobe is somewhat of a lazy company. They don't do well as far as innovation goes when they don't have a competitor pushing then. ... When Adobe is challenged they do wonderful stuff.

I think you might have just uncovered the key strategic point. If, in fact, Adobe have mostly been driven to make their advances due to competition with Apple, then Adobe might not have a "game" to play, if acquired by Apple. Then it wouldn't be such a good idea, strategically, for the Adobe acquisition.

Unless, of course, Adobe is simply absorbed as a full entity and run as a separate division within Apple. And in competition with other internal Apple divisions (such as Pro Apps). I vaguely recall reading that, back in the early 1980s, Apple was internally organized into competing computer divisions. Apparently they played the "game" fiercely against each other. Much harder than against any external competitors. I think Steve Jobs was in charge of the Mac division and someone else in charge of the other division. (Wasn't it the Lisa or the Newton or something?)

Originally Posted by Harrison Murchison

2. I think it depends on how you define "computer".

Yes, I'll admit that I'm defining it (for the sake of this current line of thought) as the more "traditional" desktop and laptop computer. The type of computer which you would use as a NLE and for other professional creative applications. But you make a valid point.

Of course, it's also worth pointing out that some of today's modern cameras are essentially a "computer with a lens stuck on front of it". Such as the RED Digital Cinema camera (and it's a great camera!). So, if Apple bought the RED company (which wouldn't happen - I'm purely using this as a made-up example), I guess Steve Jobs could make the argument that he's still only dealing with computers. The amazing thing is the different "forms" that these computers can now take!!!

Originally Posted by Harrison Murchison

3. About time. Apple was always about Clarisworks/Appleworks back in the days. Why they took so long for a replacement is beyond me.

Yes. In fact I noticed that my new iMac no longer has AppleWorks (i.e. no longer installed along with the OS). Well, I guess it was inhibiting the sales of iWork!

Originally Posted by Harrison Murchison

My prediction is that we see a Dreamweaver competitor (iWeb Pro??) from Apple. ... I have no doubt that they'll be flexing muscle with a web design app soon.

It can't be soon enough as far as I'm concerned!

Originally Posted by Harrison Murchison

6. The DRM features needed by Blu-ray already have suppor in Windows. Apple needs to graft this into OS X before they can deliver a fully encrypted pathway from video to output. Adobe's Encore is PC only so they just leverage the support already there.

I did not know that (it was PC only). I've been considering getting the entire Adobe Master collection for my Mac but, if it really doesn't have Blu-ray support for the Mac, that puts a different complexion on things.

That last piece of info makes me very glad that I started this thread (Blu-ray is very important to my current plans).

But, otherwise, I've now said everything I wanted to on this topic and I thank Paolo, Ethan, Paul, Colin and Harrison for their thoughts and contributions.

[Harrison Murchison]

Thanks for the compliment David.

In a way I'd love to see Adobe/Apple get together but they are sooo damn good at competing in the areas they have like product. I watched half of that video you linked and wow...Adobe's been putting their "thinking hat" on. First let me correct myself. Encore "is" available for Mac now. I don't know how this escaped me but I'm glad to know that it's here and has Blu-ray support so perhaps I'm a bit off about the DRM requirements for the OS.

I think Blu-ray is going to be hot this Christmas. This is coming from a person who has a HD DVD player and 50 discs but in a way I just want the victor (Blu-ray) to get out there with affordable players which will yield more affordable recorders and media.

Kudos to Adobe for ante upping big on their video suite. I'm waiting for Apple's response. I'd have no problems building an Adobe workflow since I'm new to the game really.

David ..speaking of web development. The rumors of iWeb Pro have floated around a bit

http://www.macrumors.com/2007/04/27/...g-on-iweb-pro/

It really sounds plausible to me. Last year Apple had a few World Wide Developers Conference sessions around making websites that are appealing. Plus when you look at how they are leveraging Safari to bring new HTML5 features in I think it's only a matter of time before they drop a "Big Boy" app with CSS 3.0 support and more. Apple's website continutes to get more and more slick but in a tasteful manner IMO.

[Lawrence Bansbach]

Originally Posted by Harrison Murchison

My prediction is that we see a Dreamweaver competitor (iWeb Pro??) from Apple. Think about it...out of iLife the only product that doesn't have a bigger brother is iWeb. Also

Apple's at the forefront of HTML5 development I have no doubt that they'll be flexing muscle with a web design app soon. Apple "gets" the web.

I don't know about that. Every other activity -- image, video/film, and sound editing -- pretty much needs a specialized app. Much of Web development can be done with a text editor; where a specialized environment is desirable, code-based, not WYSIWYG, interactive design environments (IDEs) are generally preferred. And there's no shortage of them already. And for typical mid-sized Web sites, template-based content management systems are commonly used.

[Harrison Murchison]

Originally Posted by Lawrence Bansbach

I don't know about that. Every other activity -- image, video/film, and sound editing -- pretty much needs a specialized app. Much of Web development can be done with a text editor; where a specialized environment is desirable, code-based, not WYSIWYG, interactive design environments (IDEs) are generally preferred. And there's no shortage of them already. And for typical mid-sized Web sites, template-based content management systems are commonly used.

I wouldn't mind seeing Coda on steroids.

http://www.panic.com/coda/

I think the magic is in offering Web mavens the access to a great text environment but also allowing for the rapid development features of a WYSIWYG tool . I should be able to quickly prototype the framework and layout of a sight and then tweak the CSS code and everything else via a capable text editor.

I'd be curious to know what Apple uses on their website.

[Christopher Ruffell]

How big is Avid? How much are they worth..

It's more likely that Avid would be a purchase choice for Apple than Adobe, especially with Avid's scaling back of development, and unclear future as Avid's users base shrinks.

Imagine: Apple buys Avid, under Apple's umbrella, Apple restructures Aid’s priorities, offers Avid's current user base clear cut initiatives to move to FCP systems, and over the next 5 years, scales down production on Avid's editing systems, while proving and displaying 100% commitment to Final Cut + Pro Apps.

Apple wants to sell Macs - if 100% of the Avid users went to Mac OS X based systems, that'd be one heck of a lot of sales and a huge user base of power users.

[Ethan Cooper]

Originally Posted by Christopher Ruffell

It's more likely that Avid would be a purchase choice for Apple than Adobe

Hurray for real media management that actually works. If that's the only thing Apple gets for it's $10,000,000,000,000,000 acquisition of Avid, they'd be better off for it.

I don't think Apple will be buying Avid anytime soon it just doesn't make sense for them to do so. I'd think that half the Avid users would freak out and jump ship, if only to spite Apple.

But IF they did, which would get dropped, ProRes or DNxHD?

[Christopher Ruffell]

So you're saying Avid is really big then? ;)

Agreed, Apple editing solution isn't thought of fondly by the Avid world. Oh us Apple users and our toys ;)

I see Avid - a company that has peaked and hasn't shown any big innovation recently - Adobe and Apple have more apps that interact and offer more value. I don't see Apple buying Adobe.

In terms of dropped Codecs - who cares, they're the same (I'm a ProRes user, and I'd trust DNxHD with the same confidence.)

[Ethan Cooper]

Originally Posted by Christopher Ruffell

In terms of dropped Codecs - who cares, they're the same (I'm a ProRes user, and I'd trust DNxHD with the same confidence.)

I don't really care either, it was just a thought that popped into my brain. I see them both as being essentially equal as well, but one of them would have to go in our unrealistic Apple buying Avid scenario.

[Christopher Ruffell]

Yes, they're both great. I figure that both companies will come up with answers to Cineform's codecs which are apparently superior. Some good things could come from an Avid-Apple merger, but I don't trust Apple to be able to completely look after Avid's wide user base or support.