Why Apple buying Adobe wouldn’t make sense

October 20, 2006, 12:27 AM UTC
Fortune


Adobeapple_1

A couple of readers on Thursday commented that one way for Apple to solve the problem of having to wait for Adobe’s next version of the Creative Suite would be for Apple to buy Adobe. I suspect these folks weren’t serious, but it still might be fun to have a look at reasons why that union just doesn’t seem to make much sense.

1. Adobe Systems wouldn’t want to be bought by Apple

The two companies get along fine, but Adobe doesn’t seem to be

interested in getting bought out by anyone these days. It’s a

commanding presence in the digital document and creative software

markets, it just bought Macromedia, and executives seem confident that

there’s plenty of growth ahead. Why sell?

2. Apple’s not big enough to easily pull a hostile takeover of Adobe

Apple’s market capitalizaion – the total value Wall Street puts on its stock – is just under $70 billion. Adobe’s is about a third of that. I might sound like a big difference, but it’s not. Apple would have a hard time making an offer good enough to get Adobe shareholders to bite.

3. It’s a lose-lose

Apple doesn’t understand Adobe’s business. The vast majority of Adobe’s customers now run Windows, and the lion’s share of revenue and profit growth is coming from Windows customers. While Apple has a little experience dealing with Windows thanks to the iPod and iTunes, it’s in no position to handle a mammoth task like Adobe’s business.

Meanwhile, Apple would also lose a very important third-party developer. As much as Apple hates to wait for Adobe, it’s valuable that one of the world’s largest software companies is investing so much time and energy into the platform. If Apple were to buy Adobe, who would be the example for other developers?

4. Apple doesn’t need Adobe that badly anymore

Once upon a time, creative professionals – Adobe customers – drove a big proportion of Apple’s sales. No more. The sales and growth these days seem to be coming from consumers, the folks who buy iPods and MacBooks. Apple still sells plenty of iPods and MacBooks no matter how long Adobe takes to develop the Creative Suite. (To be fair, Adobe doesn’t need Apple as much these days, either. Its top-selling Acrobat software is mostly a Windows phenom.)

Bottom line? You’re gonna have to just wait for the Creative Suite. I don’t think Apple’s buying Adobe.