Adobe To Acquire Macromedia. Good Or Bad?

Adobe and Macromedia have agreed to a $3.4-billion merger. Adobe is the buyer and Macromedia is the seller. What does that mean for you, the faithful Mac user? What’s the official and unofficial “spin” of the buyout?

We’ve been in a TiVo mood recently and have recorded dozens of episodes of The West Wing. The requirements for a political spin on everything that hits the White House is enlightening. So it is with the recent announcement that Macromedia is being swallowed by Adobe.

There’s plenty of spin in them thar hills of PR verbiage.

For Mac users specifically, and PC users in general, there will be substantial changes, though you won’t see many for about a year. Even a giant can’t digest another giant overnight.

Adobe is the maker of Photoshop, Photoshop Elements, InDesign, Illustrator, ImageReady, GoLive, Premiere, Acrobat, and the originators of the Portable Document Format (PDFs). Mac applications make up about 25-percent of Adobe revenue.

Macromedia is the maker of Flash, Dreamweaver, Fireworks, Freehand, Director, and ColdFusion, among others.

While there are some product overlaps between the two brands, both companies have complementary lines.

Of course, a few questions come to mind. First, why? Why is this merger taking place between two successful and profitable companies? Which products stay and which get dumped? What does this mean for Mac users (and Windows users)?

Second, who’s got answers to the questions? Who’s got a crystal ball that works these days?

Finally, have you seen the PR spin that Adobe is putting on this buyout of Macromedia? Whoa. I’ll use my trusty Mac Decoder Ring (often used to decipher news releases during a Steve Jobs’ keynote with Reality Distortion Field™) to bring the PR-Speak into focus.

Why is the merger taking place? A variety of reasons come to mind why Adobe would want Macromedia. One important reason is to keep Microsoft from buying Macromedia first. Microsoft has about $30-billion in the bank so they could afford to get deeply into the graphics marketplace by dropping a mere $5-billion into the pot.

Adobe beat Microsoft to the punch.

Besides, Adobe gets Macromedia’s complementary product line without spending money. It’s a stock swap. Macromedia’s shareholders get Adobe stock at a bargain. If the market rebounds, so will Adobe and so will the stock.

Which products stay and which get dumped? My crystal ball says you can expect Adobe’s GoLive to bite the dust, and Macromedia’s FreeHand to be buried along with it. Among all the products, those are the weakest in the market.

Unknown is what happens to Fireworks. Adobe already has ImageReady though the combination of Dreamweaver and Fireworks has done well among web developers. I’d expect Fireworks to stay as a bundle with Dreamweaver, though gain more Adobe tools.

Adobe’s products have not done as well in the web world but rule in print media. Flash is a great addition.

What does all this mean for Mac users (and Windows users) of Adobe and Macromedia products?

Less competition usually breeds lower quality, higher prices, less innovation. So, expect to get less and pay more over the next few years. Competition among high quality, comprehensive media tools is drying up fast.

Will Apple enter the graphics market with an enhanced iWorks product that offers some graphics capability? You can bet on it.

Apple realizes that it’s important to provide a little competition for the increasing market girth of Adobe but not so much that they’ll stop developing for the Mac platform altogether. That being said, Apple needs to be ready to provide quality graphics and media products to the Mac’s installed base.

Windows users have fewer worries. They’ll continue to pay a premium for buggy products in a non-competitive environment (but they’re used to that).

What’s the PR spin coming from Adobe? Public relations folks must be getting paid by the dollar. Per word.

For example, Adobe’s Frequently Asked Questions:

Why is Adobe acquiring Macromedia?
Adobe’s mission has always been to help people and businesses communicate better… Together, we share a vision for the future with the combination of the two companies-- our products, technologies and people…

Translation: We didn’t want Microsoft to buy Macromedia first.

What is the mission of the combined company?
Adobe’s mission remains the same - to help people and businesses communicate better. With the acquisition of Macromedia, Adobe strengthens its mission…

Translation: Increased shareholder value at no cost, increased revenue, lower expenses (layoffs), trimmed product line.

Do you anticipate a reduction in force as a result of this transaction?
When two successful growing companies join together, the result is a combined organization that creates new and exciting opportunities. The combination will lead to powerful new areas of innovation… blah, blah, blah.

Translation: Yes.

What opportunity is Adobe addressing with the acquisition of Macromedia?
Together, Adobe and Macromedia will meet a wider set of customer needs by integrating products and Technologies. We have a significant opportunity to grow into new markets… blah, blah, blah.

Translation: Increased shareholder value at no cost, increased revenue, lower expenses (layoffs), trimmed product line.

Are there areas of duplication in product lines? If so, how will that be addressed?
Adobe and Macromedia are committed to serving the needs of our combined customers. The companies are largely complementary… blah, blah, blah.

Translation: We’ll flush the products with the least sales (GoLive, Freehand, etc.).

What happens to the Macromedia brand?
Adobe recognizes the strong equity of the Macromedia brand. That said, it makes great business sense for a company the size of the combined company to align behind a single corporate brand.

Translation: It’s history.

Why is this good for customers?
This transaction will benefit customers across all segments the two companies serve-- creative professionals working with web, print, and video; application developers; business users, and enterprises… blah, blah, blah.

Translation: It’s not.

Will Macromedia continue to use blogging as a way to communicate with partners and customers?
Until the close of the transaction, the companies will continue their current communication practices.

Translation: Of course not.

This acquisition benefits Macromedia’s shareholders. They’re cashing out for a premium in a down market. Adobe gets to increase revenue, cut per-product costs, and prevent Microsoft from entering their turf. For now, the OS Borg remains at bay.

In summary, this acquisition is good for Adobe, good for Macromedia’s shareholders, not good for Microsoft, and not necessarily good for Apple or Mac users. The Mac needs applications to remain viable. Too many applications in the hands of too few publishers is NOT a good thing.

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