Will Adobe-Macromedia Deal Kill Competition?

The merger of the two "complementary" companies could lead to a dominating combined portfolio, or it could stifle development, according to some customers.

When Adobe Systems and Macromedia last week ended their longtime rivalry and announced plans to merge, the future of the combined company became a question of great interest to users of both companies products.

Adobe Systems Inc. acquired Macromedia Inc. in a $3.4-billion deal last week. The combined company will operate under the Adobe brand and will further expand into the enterprise and mobile markets, company officials said.

"I would characterize my feelings as a combination of excitement and uneasiness," said Stacy Young, a senior developer with Optimal Payments Inc. of Montreal, discussing the issues created by the deal.

"Adobes resources and market penetration with Reader are definitely positive angles…My only concern is whether the acquisition will disturb the close relationship Macromedia has with the development community and long-time customers. As for the future of Flex…I can only guess, but Im thinking Adobe wants to jump-start their server-side offering to extend their workflow product offering, so thats also possibly another positive point," Young said.

Darius Fattahipour, senior IT engineer for San Diego Countys Department of Child Support Services, and a Macromedia user, said, "I was surprised that these two competitors had decided to merge. While ultimately I believe Adobes acquisition will be a success, if youre a developer, its going to mean some confusing times ahead as Adobe integrates Macromedias product line.

"These companies have many competing products, such as Dreamweaver versus GoLive, FlashPaper versus PDF, Illustrator versus Freehand, ImageReady and Photoshop versus Fireworks. There is no direct competition for ColdFusion.

"Personally, Im not usually a big fan of acquisitions when companies are direct competitors. It usually results in less choice and innovation in the long term. Macromedias forte was innovation. I view Adobe as much more conservative," Fattahipour said.

/zimages/2/28571.gifRead more here about analysts take on the possible impact of the Adobe-Macromedia merger on customers.

Roland Collins, chief technology officer at InvestEdge Inc., Pittsburgh, said, "Actually, as a customer of both companies, Im looking forward to having an integrated tool set to work with! Both companies have great products—even the competing product offerings from both camps are fantastic, which is rare. I think this is an opportunity to truly dominate their markets by creating a new product that utilizes the best technology from each existing suite."

Moreover, Collins said, "I dont share the paranoia that a lot of Macromedia diehards have been expressing. I cant really see Adobe doing away with many of Macromedias offerings, since Macromedia has worked hard over the years to put together a solid, profitable set of products."

Gary Hein, an analyst with Burton Group Inc. of Midvale, Utah, said, "I think that Adobe plus Macromedia forms a new wild card in some desktop- and graphics-related formats and standards. Both have great installed bases among desktops, and together theyll have much more influence in what happens with interoperable, cross-platform document, graphics and animation formations. Its interesting, to say the least."

Hein added, "Adobe has some interesting technologies but is not as prevalent in the enterprise. Macromedia brings more credibility and a great technology portfolio to Adobe."

In a news conference announcing the deal last week, Bruce Chizen, chief executive of Adobe, noted the "complementary functionality" of Adobes PDF and Macromedias Flash technology, both de facto standards in their spaces.

/zimages/2/28571.gifClick here to read more about customer reaction to the Adobe-Macromedia merger.

The newly combined company will see Chizen continue as chief executive officer and Shantanu Narayen remaining president and chief operating officer. Meanwhile, Stephen Elop, president and chief executive officer of Macromedia, will join Adobe as president of worldwide field operations. Murray Demo will remain executive vice president and chief financial officer. John Warnock and Charles Geschke will remain as co-chairmen of the Board of Directors of the combined company and Rob Burgess, chairman of the Macromedia Board of Directors, will join the Adobe Board.

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