Microsoft Should Buy Adobe Instead Of Yahoo!

Amit Chowdhry | Wednesday July 23, 2008 | 788 Views |
Categorized under Adobe Systems Inc, Microsoft Corporation

 
I once read an article in Business 2.0.  The article asked the reader which software company do you think touches our everyday lives the most.  The answer was Adobe Systems (NASDAQ:ADBE).  Adobe software is used for the magazines we read, the videos we watch, and the advertisements we see on the subways. 

Carl Icahn was able to get several board positions on Yahoo!’s Board.  Yahoo! also has what they wanted, avoidance of a proxy fight against Carl Icahn on August 1st.  But Microsoft is left without a Yahoo! acquisition and now has an unsigned $44 billion acquisition check.  Who should Microsoft buy instead?  Adobe Systems makes the most sense. 

Microsoft can afford to buyout Adobe Systems because their market cap is roughly the same as Yahoo!’s.  Yahoo! is riding at about a $30 billion market cap and Adobe is about $22.23 billion.  Adobe is constantly ranked as an outstanding place to work by Fortune magazine too.  If you go to any user-generated video sharing website in the world today including YouTube, Adobe Flash software is most likely used.  Yahoo! makes about double of Adobe’s revenues, but Yahoo! is constantly losing marketshare to search engine leader Google.

Integrating Adobe and Microsoft software would be pretty seamless too.  Microsoft Word and Adobe Acrobat/Reader are interdependent.  MS Paint definetely could use help from Photoshop.  Adobe Dreamweaver is clearly better than Microsoft Frontpage.  Microsoft Silverlight and Adobe Flash are competing against each other but clearly Silverlight hasn’t made a dent on Flash’s marketshare.  Windows Movie Maker could use the features that After Effects and Premiere has.  The list goes on.

The only problem I see with a combined Adobe and Microsoft is that there would be a definete corporate culture clash.  Microsoft is seen as a process-driven software bully and Adobe is seen as a freeflow creative environment.  If I was Steve Ballmer and I had a big budget for a major acquisition, then I would definetely set my sights on the company that makes the best photo and video editing software.

In your opinion, who would you buy if you were Microsoft and had $44 billion to spend?  Leave it in the comments.



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Comments

  1. jelly
    July 23rd, 2008 at 2:20 pm

    I’m not sure the government would allow it. Even if it happens, Adobe can’t really help MSFT build up their online presence. Flash doesn’t fit in their .Net solution stack b/c of its script legacy. SilverLight may not look as shiny (yet) but is much better as an application platform to build SAAS solutions. So MSFT doesn’t really need Adobe.

  2. Oli Burgess
    July 23rd, 2008 at 3:08 pm

    I’m sorry but I think thats a crappy idea. The whole point microsoft was pursuing yahoo was to improve its position on the web, which it has failed to do for 13 years. Online advertising will provide revenue growth potential far greater than that of the creative software industry. Microsoft has only recently started to compete head-on with adobe with its new ‘Expression’ suite of products and silverlight, and it is microsoft’s preference to grow organically as opposed to through acquisitions; so I expect we’ll see microsoft continue working on the progress its made so far.

  3. Amit Chowdhry
    July 23rd, 2008 at 3:57 pm

    Microsoft and Adobe have been competing for years. It’s not a crappy idea. Companies do it all the time. In the business world, it’s called horizontal integration.

  4. Anonymous
    July 23rd, 2008 at 11:11 pm

    its a totally immature idea which has no base…

  5. Amit Chowdhry
    July 23rd, 2008 at 11:54 pm

    The base is that Microsoft’s software would improve and Adobe shareholders would be able to cash out.

  6. wangjel
    July 24th, 2008 at 5:32 am

    ssssssht………please don’t give ideas,
    yahoo is sufered already enough youdon’t wish the same hyena for adobe…..pleeease let them be

  7. Ammar
    July 25th, 2008 at 7:53 pm

    “MS Paint definetely could use help from Photoshop.”
    …omg! this is like comparing notepad to MS Word!

    You have absolutely no idea what you are talking about. This will be the worst acquisition in human history, just too many tech overlap and culture gap. Yahoo is also not a prefect match for MS to buy, but it’s the best right now.

    But Adobe will be a suitable for Google.

    To answer your question, i will buy a large number of startups that have technology or community to increase my web presence and web-ad market share (rather than search engine share)

  8. Mohammad Taghi Karimi
    October 3rd, 2008 at 2:46 pm

    you know , i know m$ change so many thing in computer world but i hate evryone who works in m$ coz they don’t think about people just money and money F###em all
    but adobe , google i love them coz they are doing the best things in the computer world
    if i had money i’m going to buy google and adobe make them one to change the world not for money

  9. Ibraheem Nour
    October 12th, 2008 at 1:00 pm

    Microsoft for Sure …. to sale it and invest in another useful company :)

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