The Rise of the Adobe Empire

Originally Published: May 2005

Most of you are aware that Adobe agreed to acquire Macromedia on April 18, 2005. The stunning announcement sent shockwaves through the tech industry – two long-time rivals now joining forces to form a very dominate software team. Many in the industry have speculated on the outcome of the acquisition, but everyone agrees that the new Adobe empire will offer the most powerful, integrated creative suite available and will dominate desktop publishing.

Abobe stated that by acquiring Macromedia, they now have an “industry-defining technology platform that delivers compelling, rich content and applications across a wide range of devices and operating systems.” The company also stated, “The combination of Adobe and Macromedia will provide customers a more powerful set of solutions for creating, managing and delivering compelling content and experiences across multiple operating systems, devices and media. Together, the two companies will meet a wider set of customer needs and have a significantly greater opportunity to grow into new markets, particularly in the mobile and enterprise segments.” Basically, Adobe argues that one combined company will be stronger than the two on their own, and that they will be able to harness the strengths of each company and dominate the marketplace.

Adobe currently produces the following popular products: Photoshop, Illustrator, InDesign, GoLive, Acrobat and PageMaker, while popular Macromedia products include Flash, Dreamweaver, Fireworks, FreeHand, Director/Shockwave and ColdFusion. These are some of the biggest names in software and now they play for the same team. Because Adobe and Macromedia were in direct competition before the merger, they have a good deal of product line overlap. For example, Macromedia's Freehand directly competes with Adobe's Illustrator while Macromedia's Fireworks competes with Adobe's Photoshop. This means that some applications will be jettisoned in an effort to streamline the new company. The good news for Adobe is that the transition will be easier because the two companies have definite strengths and weaknesses when their products are compared to each other. For example, Macromedia’s strengths lie in its web development applications and graphical user interfaces such as Flash and Dreamweaver, while Adobe’s strengths lie in its graphic design capabilities, such as Photoshop and Illustrator, as well as the company’s popular Acrobat. As such, Adobe will likely combine the product lines of each of the two companies that complement each other, while discontinuing weaker titles.

The most interesting aspect of this acquisition is speculating on the shape of Adobe’s new product line. Because of the complementary and competing aspects of the products lines, some products will merge, some will remain the same and some will disappear altogether. But, the most attractive aspect of Macromedia’s acquisition is Adobe’s access to Flash, and the promise that a future Acrobat version will include some if not all aspects of Flash. There is even the possibility of Acrobat and Flash Player merging into one universal plug-in. Adobe’s Creative Suite may get a major facelift, and a future premium Adobe Creative Suite may look something like this:

- Photoshop with Fireworks
- InDesign
- Illustrator
- Dreamweaver
- Flash
- Acrobat with Flash
- Director

While this is purely speculation, there are many people salivating at the thought of such a complete suite of products. The only downside might be the price tag for such a suite. In addition to the products in my proposed suite, Macromedia's web development titles like Contribute, Authorware and ColdFusion (which has a strong following) will likely be retained by Adobe, as there are no challengers to these products in Adobe’s current software lineup.
While the acquisition will make Adobe a powerhouse and could potentially make purchasers of a hyper-suite of products very happy, there is one major downside to the acquisition. Adobe has basically erased its competition. Adobe acquired its closest and fiercest rival – good for the company, potentially bad for consumers. As Microsoft has received harsh criticism for its Office Suite and Internet Explorer domination, Adobe could face the same criticism if it acts like a company with no competition and/or routinely crushes competitors. People fear that Adobe will raise its prices exponentially and possibly become stagnant in its research and development – sitting fat and happy on its new throne. Adobe could potentially set any price it wants for its new suite of products, and with the lack of competition, people would have to buy. The chances of these fears becoming reality are somewhat slim, but the potential is definitely there.

While everyone agrees that Adobe’s purchase of Macromedia is very big news, the impact on the consumer is still very much up in the air. The combined product line could potentially be very convenient, but it could also come with a very big price tag. And of course, many are worried that the new Adobe will take advantage of its new dominate position. If this happens, will it take the “Firefox” of creative suites to keep Adobe from acting like the king of the castle?