Microsoft Said To Consider Adobe Acquisition - InformationWeek
Cloud // Cloud Storage
06:23 PM
Connect Directly

Microsoft Said To Consider Adobe Acquisition

Adobe's stock rose more than 11% on Thursday amid speculation about a possible deal.

Microsoft CEO Steve Ballmer and Adobe CEO Shantanu Narayen reportedly met recently to discuss ways to counter the growing power of Apple, one of which was the possible acquisition of Adobe.

The "secret meeting" was first reported by The New York Times, which said its sources for the story were employees and contractors of the two companies who had asked for anonymity because they were not authorized to speak publicly.

Microsoft declined to comment. Adobe acknowledged that the two companies meet on occasion but nothing more.

"Adobe and Microsoft share millions of customers around the world and the CEOs of the two companies do meet from time to time," said Adobe senior director of corporate communications Holly Campbell in an e-mailed statement. "However, we do not publicly comment on the timing or topics of their private meetings."

Adobe and Apple have a long history of antipathy arising from competition over video software, Adobe's slowness in supporting Apple's transition from IBM to Intel chips, font licensing conflicts, and Apple's concerns about how Adobe's Flash technology could affect its control over its iOS platform.

In April, Apple CEO Steve Jobs took the unusual step of publicly disparaging Adobe's Flash technology following the issuance of draft iOS developer rules that effectively forbid the use of Flash on iOS devices. Adobe and others complained to regulators and last month Apple undid its ban by relaxing its rules. But relations between the two companies remain cool.

Despite the lack of any official confirmation of an offer from Microsoft, the New York Times report was enough to send Adobe's stock up more than 11% on Thursday.

At its current market capitalization, Adobe would cost Microsoft $15 billion, a sizable portion of its $40+ billion cash reserve. It would be a huge investment in a legacy software business rather than a forward-looking investment in the cloud or mobile -- areas where Microsoft would benefit from further investment.

Such a deal would invite regulatory intervention and would be an awkward fit in some areas: It's hard to see how Microsoft Silverlight and Adobe Flash could cohabitate.

It's also hard to see how Adobe's alliance with Google could continue following a Microsoft acquisition.

The most probable outcome of the Microsoft-Adobe meeting is likely to be deeper integration of Flash in the Windows 7 Phone platform.

Comment  | 
Print  | 
More Insights
Newest First  |  Oldest First  |  Threaded View
How Enterprises Are Attacking the IT Security Enterprise
How Enterprises Are Attacking the IT Security Enterprise
To learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Register for InformationWeek Newsletters
White Papers
Current Issue
Digital Transformation Myths & Truths
Transformation is on every IT organization's to-do list, but effectively transforming IT means a major shift in technology as well as business models and culture. In this IT Trend Report, we examine some of the misconceptions of digital transformation and look at steps you can take to succeed technically and culturally.
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Flash Poll