The times, they are a changin’. In retail business it’s location, location, location. For Apple, it’s timing. Timing is everything.
Microsoft is wallowing in troubles and now is the time for another torpedo aimed at the Redmond Ship of Fools. I agree with Cringely. Apple should buy Adobe.
This is not a new or unique idea. Apple buying out Adobe has been floated before, and considered somewhat absurd back in the day when Apple’s stock could be bought for the price of a couple of Starbucks’ visits.
Today is a different time and a different place. The time is ripe because Microsoft needs more competition and they’re faltering at every turn; revenue, profits, stock price, management turmoil, legal issues, product problems and delayed product releases.
Writing for PBS, Robert X Cingely says Apple should buy Adobe. What a marriage that would make. The one area where Microsoft has made no inroads is the graphics community, arguably, like Mac users, fiercely loyal and willing to spend money.
Adobe swallowed up competitor Macromedia, arguably, to prevent Microsoft from doing the same. That action raised the stakes and raised the bar of entry for a competing suite of Microsoft applications.
Apple has a growing and successful applications business; iLife, iWork, Final Cut, Logic, and others. For the most part, the Adobe line would mesh well with Apple’s products.
Arguably, Apple and Adobe could afford to enter into a buyout arrangement that’s part cash, of which Apple has plenty, and mostly stock. Why? Both stocks are at a bit of a plateau after recent record territory and both could climb higher.
Both companies have a similar Price to Earnings Ratio, though Apple’s price and market cap make it the tentative buyer vs. Adobe as the buyee.
Apple’s ability to hedge bets, create contingency plans that work is now crystal clear. Note the move from PPC chips to Intel chips. Almost flawless. Note the change in strategy with Windows running on Mac hardware. See?
Apple is prepared for the day when Microsoft becomes a desperate, clumsy, lumbering, foaming-at-the-mouth giant willing to put the hurt on other segments of the market. For example, Microsoft could bring patent lawsuits against defenseless Linux, messing up the Open Source side of the market.
Microsoft could stop development of Office for the Mac, harming Apple’s small but growing business momentum. Wild animals, when cornered, would do worse.
What’s Apple’s plan? We’ve seen glimpses of it with iWork’s Keynote and Pages, which Apple is so obviously and clearly using to leverage Microsoft into moving Office native onto Intel Macs. What’s missing? Numbers and Data. Data could easily come in the form of small version of the popular FileMaker Pro application.
Numbers just needs to be a well integrated spreadsheet to capture the attention of the crowd of users who ante up for the Excel tax every few years.
Apple’s leveraged well against Microsoft, so how about Adobe? Cringely put it very well, because he’s recognized that the desktop wars are not over, and though Microsoft won many of the early battles, battles rage on.
“Steve wants Windows applications to run like crazy on his hybrid platform but to look like crap. In his heart of hearts, he’d still like to beat Microsoft on the merits, not just by leveraging some clever loophole. So he needs the top ISVs who are currently writing for OS X to continue writing for OS X, and that especially means Adobe.”
Windows Vista is really not much more than Windows XP Pro Service Pack 3 (or, 4 or 5; whatever it’s up to these days; I stopped counting).
Running any version of Windows alongside OS X Leopard is a comparison that Apple wants Windows PC users to see.
They also want and need Adobe to create great applications for Mac users, and one sure fire way to make that continue to happen is to buy Adobe.
One, so Microsoft doesn’t. Two, because it’s a great fit of similar cultures. Three, because it means better everything for Mac users.
Timing is everything, and the timing is right for Adobe and Apple to make history. Heck, Adobe could even stay Adobe, and just be part of Apple. For awhile.
If Apple and Adobe do the Stock Swap Dance™, would that encourage Microsoft to enter the graphics application business to compete head on with Photoshop, Illustrator, and iLife?
Possibly. With Microsoft’s current management team, it’ll be somewhere near the year of THX 1138 before anything of substance ships. Apple and Adobe could raise the barrier to entry a few bars highers.
Adobe and Apple together would throw some bricks into Microsoft’s Windows.