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Lucid Nonsense

Apple buying Adobe

Well, everyone else has had a go so I’m going to give it a bash. Although to be honest this is more of a muse along the lines of “I wonder why they haven’t” rather than seriously thinking that they will. Certainly Apple could afford to, they have somewhere in the region of $30 billion in cash and short term investments at the moment and Adobe’s market capitalisation is around $14 billion. As far as big purchases go Apple could technically go in with a very good offer to Adobe’s shareholders, over the $14 billion market valuation and still leave themselves $10 billion or so in the bank even if they went in with a full cash offer.

The benefits are fairly obvious. Apple could push Mac OS X as the platform for creative professionals. They would have to keep developing Windows versions of the Adobe applications possibly to avoid any potential legal issues, but also to avoid instantly de-valuing their rather large investment. Instead Apple could start pushing their own technologies to give the Mac versions of the Adobe suite an advantage. As it stands Adobe are unlikely to ever use a lot of Apple’s system specific technologies. Libraries and frameworks such as CoreImage, OpenCL and GrandCentral have no direct Windows counterpart and as I’ve mentioned before Adobe like to keep parity between the Mac and Windows versions of their applications. This makes it easier to keep the code up to date, but does mean that a lot of tricks that could speed up the Adobe apps on the Mac platform aren’t used. In essence a level of performance is sacrificed, undoubtedly on both platforms, in order to make code management easier. Exactly the same thing happens with the user interface; it’s not quite Mac and it’s not quite Windows. If Apple owned Photoshop it would be a lot more likely that the next version would suddenly be leveraging OpenCL, GrandCentral, CoreImage and, importantly, using all the standard system controls and widgets. They would have to keep a Windows branch running, but it could mark the comeback of Apple’s once perennial “Photoshop bake-off”, this time highlighting how the OS makes it run faster, not the hardware. Apple could, by leveraging their own frameworks in this way, provide a push to users to move to the Mac platform, giving them a way to organically increase the Mac’s professional design market share further without resorting to the blunt instrument of simply stopping Windows development.

The second big benefit to Apple would be becoming the owner of Flash. Flash at the moment doesn’t run brilliantly on OS X, using a fairly high amount of CPU power, which for portable devices has a fairly hefty impact on battery life. That has been one factor in Apple’s so far unrelenting decision to withhold Flash from the iPhone and iPod Touch. Another factor is likely the desire to avoid entrenching another company’s development platform in their flagship portable device. Apple would rather developers used Cocoa to develop for the iPhone as that also increases the number of developers able to code for Mac OS X. Flash support would allow developers to create web-based applications that are more feature-comparable with native apps, thereby bypassing both Cocoa and the App Store at the same time. It’s not unimaginable that were Apple to be owners of Flash then the first problem could be worked around reasonably quickly, and the second issue would become a lot less unpalatable, especially if Apple were then able to make OS X the premier flash authoring environment.

There are benefits other than the acquisition of Adobe’s product range, least of which is that Adobe makes money so any purchase would have an immediate and respectable revenue stream attached to it, not something that comes with many acquisitions between technology companies. YouTube is believed to cost Google a phenomenal amount of money for example. So why does an Apple buyout of Adobe still seem very unlikely?

The immediate answer to that is that $14 billion is still a lot of money and Apple have grown accustomed to having a large war chest available, to the extent that a few years ago they created a subsidiary, Braeburn Capital, to manage their cash pile. Still, with traditional investments in a rather volatile state at the moment and not necessarily providing good yields, now would seem like a reasonable time for Apple to go shopping if they wanted to. The implication is that Apple’s board just don’t want to. Adobe are a very big developer and there would be a lot of work involved in such a purchase. If Apple wanted to make substantive changes at Adobe and integrate development of key-apps into Apple’s own development structure, that would take a huge amount of oversight. It would detract focus from Apple’s core areas and Apple already seem stretched on the development front with Snow Leopard and iPhone OS 3.0 racing towards completion. Personally I think it could provide some benefits, but it’s not the sort of purchase that could be “fire and forget” with little involvement after the contract was signed. There would need to be a lot of work on Apple’s side to make it a success and frankly I think that Apple are probably in a position where they can get more marketshare by concentrating on other areas.

Buying Adobe isn’t the only way that Apple can claim a larger margin of the creative market either. The preferred option from Apple’s point of view would almost certainly be for someone else to come into the market with a Mac-only competitor to some of the Adobe apps, utilising all the latest Apple technologies. Apple could then still hold up a further Mac OS X advantage without the trouble of integrating a large Mac and Windows developer into the company. Perhaps Apple’s long game is to watch apps like Pixelmator and see where they go in a few years time. Nothing competes with Photoshop at the moment but the same could be said of Quark Xpress a few years ago so it’s amazing how quickly things can change. With Apple developing technologies like CoreImage and OpenCL it actively makes that possibility more likely as well.

With $30 billion in the bank, two big software releases this year and a successful product range, the one thing that is certain for Apple’s acquisition plans, if they have any: there’s no rush.