Adobe’s planned $3.4 billion takeover of Macromedia cames as a shock. Rumours abounded for years that Microsoft was about to snap up Macromedia, but it never crossed my mind that Adobe would prove the predator. The shake-up it promises for the publishing, graphics and creative community as a whole could hardly be bigger. So just what is going on? The nearest equivalent situation happened in 1998, when it was an ailing Adobe that was the target and a cash-rich Quark was the marauder. There was an undeniable logic to that proposed deal, bringing together the developer of PostScript on which the commercial publishing industry is built and the developers of QuarkXPress, the dominant PostScript authoring package. In truth, the real motive was Quark’s desperation to head off InDesign, Adobe’s about-to-be-launched Quark killer. Thankfully, the overwhelmingly negative reaction from Adobe and the creative community at large stopped that merger in its tracks.
Although some parallels are clear, this latest bid is different for a number of reasons. For a start, you couldn’t imagine a more unlikely pairing. Back in 1994, when Adobe acquired Aldus to get its hands on PageMaker, as part of the deal it had to choose between its own Illustrator drawing package and the more powerful Aldus FreeHand – it sold FreeHand to Macromedia, then a multimedia company built on the CD-ROM authoring package Director. In doing so, it created its own biggest rival. In fact, Adobe and Macromedia were more than rivals – so much bad blood flowed over the years, including various legal actions, that at the post-announcement conference call Adobe and Macromedia directors were happy to describe themselves as former ‘enemies’.
When times get hard, even former enemies are forced together, but that is not the case here. Under Bruce Chizen’s leadership, Adobe has gone from strength to strength, thanks to the success of Acrobat and the consolidation of its bitmap, vector and DTP flagships into the Creative Suite. Meanwhile, Macromedia, under its equally effective and forward-looking CEO Rob Burgess, has expanded from Director and FreeHand to an impressive software portfolio, including the web-authoring MX collection of Dreamweaver, Fireworks and Flash (the latter acquired after Adobe had turned it down!). In short, both companies are booming with plenty of scope for further growth, and there is nothing obvious that would force such bitter rivals together.
The most important difference from Quark’s hostile bid is that this time, with both companies signed up, there is little chance it will not go through, so what will this mean for end users? The bottom line is that from 2006 onward we are going to be dealing with a single dominant vendor of creative software products from video and multimedia authoring tools, through print and electronic publishing, to website design and development. And as Quark showed us only too clearly, monopolies are inherently bad news for the end user, removing the main motives to innovate and keep pricing attractive.
In fact, the situation now is much worse than it was with Quark. Attempts during the conference call to inflate competitive threats from CorelDRAW (which apparently outsells both Illustrator and FreeHand in Germany) and the open-source KIllustrator (which I would never heard of and is now discontinued) were frankly laughable. Once this deal goes through, any possibility of real competition across the entire creative spectrum vanishes, as all these applications are employed together as part of larger workflows. To compete with them would be like trying to topple Microsoft from the Office marketplace.
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