Microsoft and Adobe met to discuss a possible merger and the best way to compete with Apple, according to The New York Times. But some analysts see a merger as unlikely.
Microsoft has no comment on rumors that it's interested in acquiring Adobe
Software, but that hasn't stopped some analysts from mulling over the
implications of such a move.
"Microsoft and Adobe have been around for a very long time, and their
software products can be found on just about every PC, but of late these
vendors have been relegated to the chorus line with Google and Apple now
occupying center stage," Richard Edwards, principal analyst for Ovum,
wrote in an Oct. 8 research note. "The mobile 'apps' business is now the
place to be for software development companies, and Microsoft and Adobe have
yet to make any real or significant impact in this market."
Were Microsoft and Adobe to merge, Edwards wrote, "then it would have
to be the mobile apps market driving the deal, as this is where both companies
need to score big-time."
Edwards added: "It would certainly strengthen Microsoft's position in
the 'prosumer' market if the company were to acquire Adobe, and the enterprise
market would benefit too if Adobe LiveCycle (the company's back-end business
integration platform) became fully integrated with Microsoft SharePoint."
Nonetheless, speculation about a possible merger seems to be cooling. "We'd
like the premium that Microsoft would likely pay to acquire Adobe," reads an Oct. 8 quote from Janney Capital
Markets analysts in The Wall Street Journal
"However, we do not believe a deal is likely."
That speculation followed an Oct. 7 report in The New York Times
suggesting that Microsoft CEO Steve Ballmer
and Adobe CEO Shantanu Narayen had met at
Adobe's headquarters to discuss the possibility of a Microsoft acquisition. The
two companies had also reportedly discussed best strategies for competing with
"Adobe and Microsoft share millions of customers around the world, and
the CEOs of the two companies do meet from time to time," an Adobe
spokesperson reportedly told The Times.
That spokesperson did not deny a meeting had taken place, but declined to
comment on any possible discussion points between the two executives.
Adobe found itself pushing back against Apple earlier this year, after Steve
Jobs aired his reasons for banning Adobe Flash from devices such as the iPhone.
In the wake of Jobs' attack, various competitors wasted no time touting Flash
on their own devices as a competitive differentiator. For example, Samsung
executives have boasted of their Galaxy S smartphones' and upcoming Galaxy Tab
tablet PCs' ability to browse "the complete Web" thanks to Flash,
which is used to render rich content on many of the Internet's most popular
Microsoft's upcoming Windows Phone 7 smartphones will compete against Apple
for market-share, giving Ballmer more than enough reason to meet-and possibly
negotiate-with any of Cupertino's enemies.
When contacted by eWEEK
Oct. 8, a
Microsoft spokesperson declined to comment on whether an Adobe-Microsoft
meeting had taken place, or whether the two companies had ever talked about how
to best optimize Adobe products for Windows Phone 7.