How odd that Oracle didn't drop 20% in one day when it was announce they were buying Sun...
Apple buying Adobe isn't a disaster in the making. It's just not all that great. The market would treat it as a wash since Apple IS swimming in cash and Adobe has significant branding and IP value.
EA is a great buy
and 4 more server farms
to feed the needed data for the up coming nano phone
How odd that Oracle didn't drop 20% in one day when it was announce they were buying Sun...
Apple buying Adobe isn't a disaster in the making. It's just not all that great. The market would treat it as a wash since Apple IS swimming in cash and Adobe has significant branding and IP value.
Look again. As an ORCL stockholder I know that it hit a six month low within a few weeks of the deal being announced, yes about 20% down from where it had been before. It was also down nearly 10% immediately. This for a deal that was 1/4 of the size of an Adobe acquisition and which had more obvious benefits for Oracle. I also know that ORCL has been flatlining since about 2001.
A merger that's no better than a wash is a disaster. It has to produce new growth opportunities, or it's a waste of money and effort. I'm still waiting for someone to tell me what it could do for Apple.
A merger that's no better than a wash is a disaster. It has to produce new growth opportunities, or it's a waste of money and effort. I'm still waiting for someone to tell me what it could do for Apple.
I wholeheartedly agree that there must be something in it for Apple and any merger/buyout MUST have a short-term path to profitability and market growth in Apple's current and future market(s).
The main reason and the path to those objectives from my POV, is that Apple and Adobe have similar past and present backgrounds in producing "creativity apps". Apple does it with the iLife suite and it's pro apps, Aperture, Logic, and FinalCut. Adobe with CS4 suite & LightRoom, Premier (I forget their music apps name). Merging the technology behind these apps, for both a Mac AND Windows version, once again puts Apple on the desktops of millions, very much like iTunes.
Just to keep this short... I wonder how many people have switched to Apple hardware (Macs) based solely that the user has come to the conclusion that running Apple software (iTunes), on Apple hardware, just might be a better experience. The so-called Halo effect.
Would the Halo-effect in cohesive Pro creative apps cause people to buy more powerful and profitable iMacs and MacPros? I certainly don't know, but that would be the main goal, and path to Apple profitability from the merger.
Re. Management
I would assume that Apple would toss the lot out. I believe that there are a lot of Adobe users that would love to see it happen... myself included. It is Adobe that has become unfocused in their goals and have adopted a MS approach to marketing their products i.e multiple versions and suite configurations, etc. etc. An Apple management-led team would cut that crap, I would expect, pronto... for the good of Adobe AND Apple.
Re. Developers
I can't imagine that they would bail... where would they go (and why?)... so they would be integrated into the Apple dev. teams, and probably enjoy it considering that their main goal would be to make the apps run "perfectly" on a small subset of computer configs (Apple's offerings) first... and the Wide-wide-world of PC combos, second. For some reason I think this is an easier job. Could be wrong
Does the above help to answer the synergy skepticism?
I will admit as a 20+ year user of Adobe products, my heart is in my wishes. However I have given it consideration from my more practical business-side, as well as a personal Apple shareholder. I know and realize that there would be a bump-down after a merger, however, I am a huge fan of Apple's management style, and actually SJ's to be precise. IF this were to be on the table at all, I would hope that Apple would consider it while SJ is active and still with us. If SJ isn't there to oversee such a merger, I'll definitely agree with your skepticism that it would probably be a disaster.
Truthfully, I expect a major "bag of hurt" as a shareholder when SJ leaves, regardless of circumstances, mergers, whatever. Call me Fanboy whatever... the guy has the Golden Touch. My practical side says not to trust investing in individuals, but rather the company. However, without SJ coming back... Apple would more than likely no longer exist. I'm also a fan of Warren Buffet... not necessarily his tech-buddy... and I think the same "B-o-H" will happen with BerkHath as well. Just sayin'.
Does the above help to answer the synergy skepticism?
Yes, somewhat. Thanks for fleshing out your ideas.
The biggest problem I see on the products front is that Apple would have to decide which of Adobe's products to discontinue and which to "merge" with their own; the latter being potentially a major bit of technological heavy lifting. Even more troubling IMO is the fate of Adobe's Windows products. Apple develops one Windows application, iTunes, but the purpose is to drive Apple's hardware market, not to sell software (setting aside FileMaker, which is a separate division of Apple).
If Apple buys Adobe, they immediately become a Windows developer in a big way. The question will be asked what Apple intends to do with their Windows software. Are they going to discontinue any of it? Give it a lower priority than Mac development? If so, won't that give Adobe's competitors an opportunity? These are tough questions for Apple to answer, I think.
It might have been interesting ten years ago, when Apple decided to use PDF for OSX's display technology instead of Postscript, which had been used by NeXTSTEP. The reason this did not happen IIRC is because the relationship between Apple and Adobe hasn't been great for a long time. I don't think Jobs and Warnock are on the best of terms.
The biggest problem I see on the products front is that Apple would have to decide which of Adobe's products to discontinue and which to "merge" with their own; the latter being potentially a major bit of technological heavy lifting. Even more troubling IMO is the fate of Adobe's Windows products. Apple develops one Windows application, iTunes, but the purpose is to drive Apple's hardware market, not to sell software (setting aside FileMaker, which is a separate division of Apple).
If Apple buys Adobe, they immediately become a Windows developer in a big way. The question will be asked what Apple intends to do with their Windows software. Are they going to discontinue any of it? Give it a lower priority than Mac development? If so, won't that give Adobe's competitors an opportunity? These are tough questions for Apple to answer, I think.
Let see...iTunes, Quicktime, Safari are Apple's windows products. Along with Bootcamp drivers, control panels, software update, etc.
Not just iTunes. More importantly these products offer some of the components desired to port from OSX to Windows.
Apple would want Adobe simply to lock in the creative marketspace into their ecosystem to continue to sell hardware.
They would continue to support windows but with OSX first...rather than the current way which has OSX behind Windows in terms of focus. How long it takes to merge Final Cut, Apeture, etc features into Creative Suite is immaterial. In fact they may hold some of those features back for OSX to make mac hardware more attractive.
It seems unlikely they would bother buying Adobe but it would be better than pissing away $30B in a one time payout. At least they'd get something out of it.
I wholeheartedly agree that there must be something in it for Apple and any merger/buyout MUST have a short-term path to profitability and market growth in Apple's current and future market(s).
No. It doesn't need a short-term path to profitability. Any large expenditure of money like that should be for core strategic reasons that have long reaching and game changing effects.
Not a short term bump of the stock price or profitability.
Look again. As an ORCL stockholder I know that it hit a six month low within a few weeks of the deal being announced, yes about 20% down from where it had been before.
March 9, 2009 - $13.85
April 17, 2009 - $19.06
April 20, 2009 - $18.82 - Merger Announced
April 21, 2009 - $19.53
April 22, 2009 - $19.35
April 23, 2009 - $19.68
April 27, 2009 - $19.77
July 15, 2009 - $21.51
July 16, 2009 - $21.64 - Sun shareholders approve merger
July 16, 2009 - $21.74
At no point after the April 20 announcement did Oracle stock dip to March 9 prices (the real 6 month low).
Why on earth do people say stuff that can be easily verified as true or false without simply checking? And to top it off they often say something like "look again" without looking themselves in the first place.
Simply looking at Oracle stock prices in comparison to NASDAQ shows no real divergence until September 14th 2009 where oracle prices dropped while NASDAQ continued upwards due to dissapointing sales
It's also easy to see that the six month low occurs in March and not April. The dip in May was slightly more severe than for the general market but still tracked with the market.
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It was also down nearly 10% immediately.
Immediately for you is longer than a week? Immediately it was up. A week later it was up. Not until May 7th was it below the April 20 price.
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This for a deal that was 1/4 of the size of an Adobe acquisition and which had more obvious benefits for Oracle. I also know that ORCL has been flatlining since about 2001.
The benefits are so-so. They're getting a hardware company that's on the ropes with some useful IP that Oracle will control (Java).
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A merger that's no better than a wash is a disaster. It has to produce new growth opportunities, or it's a waste of money and effort. I'm still waiting for someone to tell me what it could do for Apple.
What did dumping $32.6B as a one time dividend do for Microsoft? Nada. Oracle's stock didn't really do anything on the Sun announcement because the market feels it's kinda a wash for $7B.
That the EU is likely to kill the deal doesn't seem to be doing anything either.
This merger is a wash for Oracle. It doesn't change the landscape much but they will likely get their money's worth as a hedge against the future if they need to become more like IBM.
Yes, somewhat. Thanks for fleshing out your ideas.
You're welcome
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Originally Posted by vinea
No. It doesn't need a short-term path to profitability. Any large expenditure of money like that should be for core strategic reasons that have long reaching and game changing effects.
Not a short term bump of the stock price or profitability.
Absolutely agree that the merger would have to be a part of a grand strategy for the future. However, that strategy would have to show signs of success rather fast in my opinion... stock bump not necessary. Just that the merger will be a success at a certain finite time in the future and bring long-term value to Apple. It's the unfocused and lack of concise strategic planning that dooms most mergers. It seems many times to be just an "emotional" or "spontaneous purchase". If Apple was going to purchase Adobe (or any company) just to give SJ or themselves an ego-boost, or to "get even"... I would be the first to object(!)
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Originally Posted by vinea
EA would be a MUCH better buy than Adobe. It would be signalling something pretty significant.
An interesting acquisition to be sure. However since I'm the resident "Graphics Whore", I don't have much time for games. Although I do realize it's appeal and potential profitability for Apple to be a major player in that sphere. Witness the marketing of the iPod Touch as a gaming device.
Back to my area of interest, I wouldn't expect culling the assorted programs to be that difficult, and could be accomplished over time anyway. It would be leveraging the strength of Apple's engineering for Pro software, and tapping into Adobe's dev pool for porting certain apps to Windows.
It is my belief in SL and OS X's superior tech that would make Adobe on the Mac better than any box running Windows. Period. Actually, Adobe could do that NOW... but their priorities are with Windows. Apple would fix that in short order I would think.
And don't forget the reason to go Mac for the consumer, iLife and iWork. Using the Adobe developers versed in Windows to port just iLife (iPhoto really)... could be another scintillating opportunity to get people interested in buying a Mac (Halo-effect again). Considering that the iPod/iTunes franchise is inevitably slowing down. It's a whole lot better than licensing OS X to the PC market... as you (Melgross) have posted many times. It would come down to this : is OS X great enough to stand on it's own, or does it absolutely HAVE to have iLife all to itself to generate that extra kick to go Mac. Since iTunes is a different experience on a PC than on a Mac, I would expect the same would be true with iPhoto (the biggest and first port).
Again, I'm gonna bet on OS X being the "Lion" in the jungle... just waiting to be released onto the Savannah and realizing it's true potential. (The previous sentence is over the top(!); I'm leaving it just for laughs ) What better way than with the best known, and most stolen software that has it's own verb ... "Photoshop(ped)"? Regardless of what it's become (some would say bloatware), it still is synonomous with photography, retouch and design and "Pro"... and has no true competition, and I trust with Apple's influence would be a whole lot better. Actually, it "used to be fact" that PS on a Mac was the only "Pro" way to go. Why not again? Adobe is the wall here.
Anyway... just a short (too long?) way I think Apple "the hardware maker", would be able to capitalize on software, and the purchase of Adobe.
Absolutely agree that the merger would have to be a part of a grand strategy for the future. However, that strategy would have to show signs of success rather fast in my opinion... stock bump not necessary.
Then by that criteria the aquisition of PA Semi is a failure? Over a year and no sign of any visible success.
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An interesting acquisition to be sure. However since I'm the resident "Graphics Whore", I don't have much time for games. Although I do realize it's appeal and potential profitability for Apple to be a major player in that sphere. Witness the marketing of the iPod Touch as a gaming device.
The aquisition of EA would signal (to me anyway) a real push for the living room and that aTV was leaving the hobby status. This would only happen if Apple really thought they could sell expensive set top boxes by pairing it with compelling software software.
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Back to my area of interest, I wouldn't expect culling the assorted programs to be that difficult, and could be accomplished over time anyway. It would be leveraging the strength of Apple's engineering for Pro software, and tapping into Adobe's dev pool for porting certain apps to Windows.
Yes, it's not an insurmountable task to do correctly. It does take a lot of time to do correctly though. Several product revs. BEA's products are not fully integrated with other Oracle products yet. Heck, Plumtree's products weren't well integrated with BEA products before Oracle purchased BEA.
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And don't forget the reason to go Mac for the consumer, iLife and iWork. Using the Adobe developers versed in Windows to port just iLife (iPhoto really)... could be another scintillating opportunity to get people interested in buying a Mac (Halo-effect again).
I guess iLife could replace Adobe Photoshop and Premier Elements in the product line. You'd want the whole suite really.
Frankly I'd be happy if Apple released a Keynote player on Windows.
Then by that criteria the aquisition of PA Semi is a failure? Over a year and no sign of any visible success.
What visible signs if any did PA Semi have before Apple bought them. I doubt anyone outside of tech circles had even heard of them. Certainly not of the scope or headlines an acquisition of Adobe would be. Eventually, I'll bet that PA Semi will devise a certain chip to kill any and all clones or hacking of the OS in any way to allow unauthorized installations. Just my guess...
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The aquisition of EA would signal (to me anyway) a real push for the living room and that aTV was leaving the hobby status. This would only happen if Apple really thought they could sell expensive set top boxes by pairing it with compelling software software.
Agreed, and this should still be an additional goal for Apple... with Adobe, EA, or non of the above.
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Yes, it's not an insurmountable task to do correctly. It does take a lot of time to do correctly though. Several product revs. BEA's products are not fully integrated with other Oracle products yet. Heck, Plumtree's products weren't well integrated with BEA products before Oracle purchased BEA.
We're talking consumer and Pro-sumer software versus enterprise database SF. I think the enterprise stuff definitely would take more time... and well it should. It's also why I like Apple not getting too involved in that direction. Is Apple ready for "big iron" IT? Don't think so personally.... also, it's not very fun.
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I guess iLife could replace Adobe Photoshop and Premier Elements in the product line. You'd want the whole suite really.
Well you're thinkin' in my direction at least However I like each one of them occupying a space similar to the film apps from Apple: iMovie, FC-Express for Pro-sumer, and FCP for the big guys. Kill Adobe Premier, and see what's good about AfterEffects and add it to the film mix somewhere.
So for instance: iPhoto(incorporating Bridge?), Elements (Pro-sumer) , and Photoshop.
Then the big question: Lightroom or Aperture
Also: Indesign or Pages or merged?
Illustrator is alone... so it would stay as is.
Those under a Programming Tools division:
Dreamweaver
Coldfusion
AIR
Flex
Now... what to do about Flash???
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Frankly I'd be happy if Apple released a Keynote player on Windows.
Actually something like this would be great using Flash tech. Actually what Flash was first intended for, rather than as a movie player.
All in all, there would be some tough decision making. But I think SJ's up to it... should be since he's recently been crowned "The Best CEO of the Decade". Piece-a-Cake!
The PA Semiconductor buyout cost Apple $278 million. Apple made that much money during the time it took me to type this. This kind of acquisition doesn't have to show results right away, or even results that can be readily measured. An Adobe takeover would cost Apple somewhere in the neighborhood of $20-25 billion, before you even get into the restructuring costs it would inevitably produce. The plan would have to be apparent right from the start, and results seen in fairly short order, or the fear would be raised that it's another Time-Warner-AOL sort of deal, a merger that looked great only on paper.
I also don't understand the attractiveness of EA. Again, they are a big WIndows developer, so the question deserves to be asked: Why would Apple want to become a big Windows developer? Also, Apple has never been a major proponent of games development for the Mac, so I don't see any likelihood of this changing, and not especially in such a huge way.
It seems obvious to me that Apple's selected approach to the "living room" is delivering streaming media. Becoming a major games developer is a completely different approach with no obvious connection to the existing strategy. If such a thing ever happened, investors would be puzzled -- and justifiably so.
This discussion points out one of the biggest problems with Apple having such a fat wallet. At some point, they may feel an obligation to open it, and what they buy could easily bring them more pain than gain.
I also don't understand the attractiveness of EA. Again, they are a big WIndows developer, so the question deserves to be asked: Why would Apple want to become a big Windows developer?
No, they are a big games developer/publisher. They can target all or just a few platforms.
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Also, Apple has never been a major proponent of games development for the Mac, so I don't see any likelihood of this changing, and not especially in such a huge way.
Did I mention Mac? No, I mentioned living room and aTV.
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It seems obvious to me that Apple's selected approach to the "living room" is delivering streaming media. Becoming a major games developer is a completely different approach with no obvious connection to the existing strategy. If such a thing ever happened, investors would be puzzled -- and justifiably so.
An existing strategy that isn't working out all that great because of lack of content and diversity. Apple can gain significant traction in the living room with the aTV as a Wii like console that plays iPhone like games from an app store.
The key is a compelling user experience and content if you're going to pay PS3 pricing for Wii level hardware.
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This discussion points out one of the biggest problems with Apple having such a fat wallet. At some point, they may feel an obligation to open it, and what they buy could easily bring them more pain than gain.
I don't see why they would feel an obligation to open it any time soon. Nor should they until they determine something that is of strategic value.
Sure, EA is a big game developer. Overwhelmingly for Windows and consoles -- as I'm sure you well know. Same problem as Adobe, in that respect.
So you think it makes sense for Apple to buy a big games developer, then try to figure out how to make use of their products? Is an Apple gaming console even a whisper of a rumor? No, not even. Seems like a backwards strategy to me.
We all know that content is king for a media streaming strategy. Nobody has licked that one yet. Games don't bring content. If that were the case, then Sony, Microsoft and Nintendo would already be there. Apple seems to be working on it in their own way. Apple TV is their big toe in the water, not a product we should decide now is a success or a failure.
Sure, EA is a big game developer. Overwhelmingly for Windows and consoles -- as I'm sure you well know. Same problem as Adobe, in that respect.
You act as if developing for Windows is a significant problem. it isn't.
Apple is the 2nd most capable company in the world at it. The first being MS. No one else develops their own operating system, APIs, ecosystem, languages on the same scale as MS and Apple (and Sun but they're getting bought out by Oracle).
Nor is it difficult for most coders to switch development platforms.
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So you think it makes sense for Apple to buy a big games developer,
No, I said it would indicate that Apple is going to make a big push into an area. It would be a strategic decision like moving into phones.
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then try to figure out how to make use of their products? Is an Apple gaming console even a whisper of a rumor? No, not even. Seems like a backwards strategy to me.
It's not hard. An Apple purchase of EA does these things:
1) Apple products are 1st tier gaming platforms from the perspective is that major AAA titles appear on Apple platforms same date as all other gaming platforms.
2) EA has significant IP that can be used as exclusive content for Apple devices. They own Bioware. This gives them AAA exclusives to develop their own gaming platforms: iPhone, iPod Touch, aTV using only a portion of EA's IP. You wouldn't want to make Madden an Apple exclusive.
3) EA is a publisher as well as having their own studios. Apple could leave the EA division in charge of that aspect with losing focus on their core areas.
4) EA could dump Valve in favor of iTunes distribution. This makes iTunes even more of a nexus for online distribution.
You can substitute EA for any of the other major publishers like Activision...if you could pry it from Vivendi anyway. The biggest problem with EA as a purchase is they don't have a casual game focus despite The Sims. They dumped their casual division and let Vrabeck go.
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We all know that content is king for a media streaming strategy. Nobody has licked that one yet. Games don't bring content.
Games ARE content.
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If that were the case, then Sony, Microsoft and Nintendo would already be there.
Sony invested in Blue Ray and they own Sony pictures. Apple has iTunes. The problem with getting video content is that you have to contend with the cable and satellite industries. Getting game content is easier unless Apple wants to own studios instead.
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Apple seems to be working on it in their own way. Apple TV is their big toe in the water, not a product we should decide now is a success or a failure.
aTV as a product is a failure. But it's not central to any of Apple's current strategies so it's not a big deal. It could be successful and adding gaming could be what makes it successful by tying it to the iPod Touch/iPhone app store.
The problem with the iPhone/iPod Touch as a gaming platform is the game prices are so low that the big studios are kinda lukewarm about it. Owning something like EA address the content issue in the same way that investment into pro apps, iLife and iWork does for the mac.
You act as if developing for Windows is a significant problem. it isn't.
No, I don't act that way because that's not what I said. I said it puts Apple in the position of becoming a major developer for a competing platform. This is strange strategy to undertake unless it has a very good purpose (e.g., iTunes), which even after your explanation, I don't see in support of making a big, new move into games.
You can't say that AppleTV is not central to Apple's current strategy. I think it might very well be. At the very least, Apple quite clearly wants it to be. If Apple judged this product to be a failure, they would have discontinued it. Instead they are continuing to develop it further.
My experience is that gamers tend to overestimate the importance of games. Believe it or not, relatively few people play them more than casually.
You act as if developing for Windows is a significant problem. it isn't.
Apple is the 2nd most capable company in the world at it....
Vinea
I have enjoyed reading your argument and believe that you have put it well. I believe too that the new iMac is much more than just an incremental upgrade and would be fabulously supported by Apple gaining access to the skills base at EA, which I hadn't thought about until reading your case. (A colleague, who writes software for OS X, made the comment - referring to the iMac, that it had been a long time since there was such a strong argument to purchase a top of the line model.)
I'd like to see some games where parents could sit down with their children and share adventures. In the 'old days', savvy parents would sit down with the children around the dining table and read to them, with them, supervise home work and play table games. This is still possible but add to the mix, the fabulous worlds and concepts that could be explored on a well utilised iMac.
This discussion points out one of the biggest problems with Apple having such a fat wallet. At some point, they may feel an obligation to open it, and what they buy could easily bring them more pain than gain.
Whoa! That certainly hit a cord with me personally... been there, done that, and didn't have enough money left over after the disaster to get the t-shirt! Should have left the money in the bank!
I definitely like your Devil's Advocate position Dr. Millmoss, and it gave me a chance to pause and reconsider the purchase of Adobe.
However, it is still my position that Apple needs to add to their Creative Toolbox... specifically on the photo side, to compliment and enhance both iPhoto and Aperture. Also, easier and complimentary tools to aid in the content creation of their new LP format, and possibly the content on their yet unrealized iTablet.
What other company(ies) are out there, hopefully cheaper, that you or anyone else might suggest as a buy candidate? The only company that I can think of right now are those guys over at Pixelmator. They make good use of the resources they have, plus OpenSource tools, and develop only for the Mac. It would be interesting to see what they could accomplish with a little more help. However that's just one program.
Or do you think they should start from scratch and develop there own? Build out there current software set? Thus keeping their money in the bank.
Just wanna add that I guess I'm probably guilty (again!) of making an emotional buy rather than a sound financial one. Funny how it took your post Millmoss for me to remember the horror of my ways and make me backpedal. It's why I'm still a Graphics Whore, and will continue to be one I suppose 'til the day I "kick it".... the habit or the bucket, whatever comes first.
PS Wow! Sure is nice to have an intelligent debate with out the asinine remarks from TechSpud, NonVendorBan or XdreamSkater, huh? Hope I didn't wake the "boors"...! (Misspellings intentional!)
Comments
How odd that Oracle didn't drop 20% in one day when it was announce they were buying Sun...
Apple buying Adobe isn't a disaster in the making. It's just not all that great. The market would treat it as a wash since Apple IS swimming in cash and Adobe has significant branding and IP value.
EA is a great buy
and 4 more server farms
to feed the needed data for the up coming nano phone
with SW MVNO backing up the small phone play
making apple the gatekeeper
How odd that Oracle didn't drop 20% in one day when it was announce they were buying Sun...
Apple buying Adobe isn't a disaster in the making. It's just not all that great. The market would treat it as a wash since Apple IS swimming in cash and Adobe has significant branding and IP value.
Look again. As an ORCL stockholder I know that it hit a six month low within a few weeks of the deal being announced, yes about 20% down from where it had been before. It was also down nearly 10% immediately. This for a deal that was 1/4 of the size of an Adobe acquisition and which had more obvious benefits for Oracle. I also know that ORCL has been flatlining since about 2001.
A merger that's no better than a wash is a disaster. It has to produce new growth opportunities, or it's a waste of money and effort. I'm still waiting for someone to tell me what it could do for Apple.
A merger that's no better than a wash is a disaster. It has to produce new growth opportunities, or it's a waste of money and effort. I'm still waiting for someone to tell me what it could do for Apple.
I wholeheartedly agree that there must be something in it for Apple and any merger/buyout MUST have a short-term path to profitability and market growth in Apple's current and future market(s).
The main reason and the path to those objectives from my POV, is that Apple and Adobe have similar past and present backgrounds in producing "creativity apps". Apple does it with the iLife suite and it's pro apps, Aperture, Logic, and FinalCut. Adobe with CS4 suite & LightRoom, Premier (I forget their music apps name). Merging the technology behind these apps, for both a Mac AND Windows version, once again puts Apple on the desktops of millions, very much like iTunes.
Just to keep this short... I wonder how many people have switched to Apple hardware (Macs) based solely that the user has come to the conclusion that running Apple software (iTunes), on Apple hardware, just might be a better experience. The so-called Halo effect.
Would the Halo-effect in cohesive Pro creative apps cause people to buy more powerful and profitable iMacs and MacPros? I certainly don't know, but that would be the main goal, and path to Apple profitability from the merger.
Re. Management
I would assume that Apple would toss the lot out. I believe that there are a lot of Adobe users that would love to see it happen... myself included. It is Adobe that has become unfocused in their goals and have adopted a MS approach to marketing their products i.e multiple versions and suite configurations, etc. etc. An Apple management-led team would cut that crap, I would expect, pronto... for the good of Adobe AND Apple.
Re. Developers
I can't imagine that they would bail... where would they go (and why?)... so they would be integrated into the Apple dev. teams, and probably enjoy it considering that their main goal would be to make the apps run "perfectly" on a small subset of computer configs (Apple's offerings) first... and the Wide-wide-world of PC combos, second. For some reason I think this is an easier job. Could be wrong
Does the above help to answer the synergy skepticism?
I will admit as a 20+ year user of Adobe products, my heart is in my wishes. However I have given it consideration from my more practical business-side, as well as a personal Apple shareholder. I know and realize that there would be a bump-down after a merger, however, I am a huge fan of Apple's management style, and actually SJ's to be precise. IF this were to be on the table at all, I would hope that Apple would consider it while SJ is active and still with us. If SJ isn't there to oversee such a merger, I'll definitely agree with your skepticism that it would probably be a disaster.
Truthfully, I expect a major "bag of hurt" as a shareholder when SJ leaves, regardless of circumstances, mergers, whatever. Call me Fanboy whatever... the guy has the Golden Touch. My practical side says not to trust investing in individuals, but rather the company. However, without SJ coming back... Apple would more than likely no longer exist. I'm also a fan of Warren Buffet... not necessarily his tech-buddy... and I think the same "B-o-H" will happen with BerkHath as well. Just sayin'.
Does the above help to answer the synergy skepticism?
Yes, somewhat. Thanks for fleshing out your ideas.
The biggest problem I see on the products front is that Apple would have to decide which of Adobe's products to discontinue and which to "merge" with their own; the latter being potentially a major bit of technological heavy lifting. Even more troubling IMO is the fate of Adobe's Windows products. Apple develops one Windows application, iTunes, but the purpose is to drive Apple's hardware market, not to sell software (setting aside FileMaker, which is a separate division of Apple).
If Apple buys Adobe, they immediately become a Windows developer in a big way. The question will be asked what Apple intends to do with their Windows software. Are they going to discontinue any of it? Give it a lower priority than Mac development? If so, won't that give Adobe's competitors an opportunity? These are tough questions for Apple to answer, I think.
It might have been interesting ten years ago, when Apple decided to use PDF for OSX's display technology instead of Postscript, which had been used by NeXTSTEP. The reason this did not happen IIRC is because the relationship between Apple and Adobe hasn't been great for a long time. I don't think Jobs and Warnock are on the best of terms.
The biggest problem I see on the products front is that Apple would have to decide which of Adobe's products to discontinue and which to "merge" with their own; the latter being potentially a major bit of technological heavy lifting. Even more troubling IMO is the fate of Adobe's Windows products. Apple develops one Windows application, iTunes, but the purpose is to drive Apple's hardware market, not to sell software (setting aside FileMaker, which is a separate division of Apple).
If Apple buys Adobe, they immediately become a Windows developer in a big way. The question will be asked what Apple intends to do with their Windows software. Are they going to discontinue any of it? Give it a lower priority than Mac development? If so, won't that give Adobe's competitors an opportunity? These are tough questions for Apple to answer, I think.
Let see...iTunes, Quicktime, Safari are Apple's windows products. Along with Bootcamp drivers, control panels, software update, etc.
Not just iTunes. More importantly these products offer some of the components desired to port from OSX to Windows.
Apple would want Adobe simply to lock in the creative marketspace into their ecosystem to continue to sell hardware.
They would continue to support windows but with OSX first...rather than the current way which has OSX behind Windows in terms of focus. How long it takes to merge Final Cut, Apeture, etc features into Creative Suite is immaterial. In fact they may hold some of those features back for OSX to make mac hardware more attractive.
It seems unlikely they would bother buying Adobe but it would be better than pissing away $30B in a one time payout. At least they'd get something out of it.
I wholeheartedly agree that there must be something in it for Apple and any merger/buyout MUST have a short-term path to profitability and market growth in Apple's current and future market(s).
No. It doesn't need a short-term path to profitability. Any large expenditure of money like that should be for core strategic reasons that have long reaching and game changing effects.
Not a short term bump of the stock price or profitability.
Look again. As an ORCL stockholder I know that it hit a six month low within a few weeks of the deal being announced, yes about 20% down from where it had been before.
March 9, 2009 - $13.85
April 17, 2009 - $19.06
April 20, 2009 - $18.82 - Merger Announced
April 21, 2009 - $19.53
April 22, 2009 - $19.35
April 23, 2009 - $19.68
April 27, 2009 - $19.77
July 15, 2009 - $21.51
July 16, 2009 - $21.64 - Sun shareholders approve merger
July 16, 2009 - $21.74
At no point after the April 20 announcement did Oracle stock dip to March 9 prices (the real 6 month low).
Why on earth do people say stuff that can be easily verified as true or false without simply checking? And to top it off they often say something like "look again" without looking themselves in the first place.
Simply looking at Oracle stock prices in comparison to NASDAQ shows no real divergence until September 14th 2009 where oracle prices dropped while NASDAQ continued upwards due to dissapointing sales
It's also easy to see that the six month low occurs in March and not April. The dip in May was slightly more severe than for the general market but still tracked with the market.
It was also down nearly 10% immediately.
Immediately for you is longer than a week? Immediately it was up. A week later it was up. Not until May 7th was it below the April 20 price.
This for a deal that was 1/4 of the size of an Adobe acquisition and which had more obvious benefits for Oracle. I also know that ORCL has been flatlining since about 2001.
The benefits are so-so. They're getting a hardware company that's on the ropes with some useful IP that Oracle will control (Java).
A merger that's no better than a wash is a disaster. It has to produce new growth opportunities, or it's a waste of money and effort. I'm still waiting for someone to tell me what it could do for Apple.
What did dumping $32.6B as a one time dividend do for Microsoft? Nada. Oracle's stock didn't really do anything on the Sun announcement because the market feels it's kinda a wash for $7B.
That the EU is likely to kill the deal doesn't seem to be doing anything either.
This merger is a wash for Oracle. It doesn't change the landscape much but they will likely get their money's worth as a hedge against the future if they need to become more like IBM.
EA is a great buy
EA would be a MUCH better buy than Adobe. It would be signalling something pretty significant.
Yes, somewhat. Thanks for fleshing out your ideas.
You're welcome
No. It doesn't need a short-term path to profitability. Any large expenditure of money like that should be for core strategic reasons that have long reaching and game changing effects.
Not a short term bump of the stock price or profitability.
Absolutely agree that the merger would have to be a part of a grand strategy for the future. However, that strategy would have to show signs of success rather fast in my opinion... stock bump not necessary. Just that the merger will be a success at a certain finite time in the future and bring long-term value to Apple. It's the unfocused and lack of concise strategic planning that dooms most mergers. It seems many times to be just an "emotional" or "spontaneous purchase". If Apple was going to purchase Adobe (or any company) just to give SJ or themselves an ego-boost, or to "get even"... I would be the first to object(!)
EA would be a MUCH better buy than Adobe. It would be signalling something pretty significant.
An interesting acquisition to be sure. However since I'm the resident "Graphics Whore", I don't have much time for games. Although I do realize it's appeal and potential profitability for Apple to be a major player in that sphere. Witness the marketing of the iPod Touch as a gaming device.
Back to my area of interest, I wouldn't expect culling the assorted programs to be that difficult, and could be accomplished over time anyway. It would be leveraging the strength of Apple's engineering for Pro software, and tapping into Adobe's dev pool for porting certain apps to Windows.
It is my belief in SL and OS X's superior tech that would make Adobe on the Mac better than any box running Windows. Period. Actually, Adobe could do that NOW... but their priorities are with Windows. Apple would fix that in short order I would think.
And don't forget the reason to go Mac for the consumer, iLife and iWork. Using the Adobe developers versed in Windows to port just iLife (iPhoto really)... could be another scintillating opportunity to get people interested in buying a Mac (Halo-effect again). Considering that the iPod/iTunes franchise is inevitably slowing down. It's a whole lot better than licensing OS X to the PC market... as you (Melgross) have posted many times. It would come down to this : is OS X great enough to stand on it's own, or does it absolutely HAVE to have iLife all to itself to generate that extra kick to go Mac. Since iTunes is a different experience on a PC than on a Mac, I would expect the same would be true with iPhoto (the biggest and first port).
Again, I'm gonna bet on OS X being the "Lion" in the jungle... just waiting to be released onto the Savannah and realizing it's true potential. (The previous sentence is over the top(!); I'm leaving it just for laughs
Anyway... just a short (too long?) way I think Apple "the hardware maker", would be able to capitalize on software, and the purchase of Adobe.
Absolutely agree that the merger would have to be a part of a grand strategy for the future. However, that strategy would have to show signs of success rather fast in my opinion... stock bump not necessary.
Then by that criteria the aquisition of PA Semi is a failure? Over a year and no sign of any visible success.
An interesting acquisition to be sure. However since I'm the resident "Graphics Whore", I don't have much time for games. Although I do realize it's appeal and potential profitability for Apple to be a major player in that sphere. Witness the marketing of the iPod Touch as a gaming device.
The aquisition of EA would signal (to me anyway) a real push for the living room and that aTV was leaving the hobby status. This would only happen if Apple really thought they could sell expensive set top boxes by pairing it with compelling software software.
Back to my area of interest, I wouldn't expect culling the assorted programs to be that difficult, and could be accomplished over time anyway. It would be leveraging the strength of Apple's engineering for Pro software, and tapping into Adobe's dev pool for porting certain apps to Windows.
Yes, it's not an insurmountable task to do correctly. It does take a lot of time to do correctly though. Several product revs. BEA's products are not fully integrated with other Oracle products yet. Heck, Plumtree's products weren't well integrated with BEA products before Oracle purchased BEA.
And don't forget the reason to go Mac for the consumer, iLife and iWork. Using the Adobe developers versed in Windows to port just iLife (iPhoto really)... could be another scintillating opportunity to get people interested in buying a Mac (Halo-effect again).
I guess iLife could replace Adobe Photoshop and Premier Elements in the product line. You'd want the whole suite really.
Frankly I'd be happy if Apple released a Keynote player on Windows.
Then by that criteria the aquisition of PA Semi is a failure? Over a year and no sign of any visible success.
What visible signs if any did PA Semi have before Apple bought them. I doubt anyone outside of tech circles had even heard of them. Certainly not of the scope or headlines an acquisition of Adobe would be. Eventually, I'll bet that PA Semi will devise a certain chip to kill any and all clones or hacking of the OS in any way to allow unauthorized installations. Just my guess...
The aquisition of EA would signal (to me anyway) a real push for the living room and that aTV was leaving the hobby status. This would only happen if Apple really thought they could sell expensive set top boxes by pairing it with compelling software software.
Agreed, and this should still be an additional goal for Apple... with Adobe, EA, or non of the above.
Yes, it's not an insurmountable task to do correctly. It does take a lot of time to do correctly though. Several product revs. BEA's products are not fully integrated with other Oracle products yet. Heck, Plumtree's products weren't well integrated with BEA products before Oracle purchased BEA.
We're talking consumer and Pro-sumer software versus enterprise database SF. I think the enterprise stuff definitely would take more time... and well it should. It's also why I like Apple not getting too involved in that direction. Is Apple ready for "big iron" IT? Don't think so personally.... also, it's not very fun.
I guess iLife could replace Adobe Photoshop and Premier Elements in the product line. You'd want the whole suite really.
Well you're thinkin' in my direction at least
So for instance: iPhoto(incorporating Bridge?), Elements (Pro-sumer) , and Photoshop.
Then the big question: Lightroom or Aperture
Also: Indesign or Pages or merged?
Illustrator is alone... so it would stay as is.
Those under a Programming Tools division:
Dreamweaver
Coldfusion
AIR
Flex
Now... what to do about Flash???
Frankly I'd be happy if Apple released a Keynote player on Windows.
Actually something like this would be great using Flash tech. Actually what Flash was first intended for, rather than as a movie player.
All in all, there would be some tough decision making. But I think SJ's up to it... should be since he's recently been crowned "The Best CEO of the Decade". Piece-a-Cake!
The PA Semiconductor buyout cost Apple $278 million. Apple made that much money during the time it took me to type this. This kind of acquisition doesn't have to show results right away, or even results that can be readily measured. An Adobe takeover would cost Apple somewhere in the neighborhood of $20-25 billion, before you even get into the restructuring costs it would inevitably produce. The plan would have to be apparent right from the start, and results seen in fairly short order, or the fear would be raised that it's another Time-Warner-AOL sort of deal, a merger that looked great only on paper.
I also don't understand the attractiveness of EA. Again, they are a big WIndows developer, so the question deserves to be asked: Why would Apple want to become a big Windows developer? Also, Apple has never been a major proponent of games development for the Mac, so I don't see any likelihood of this changing, and not especially in such a huge way.
It seems obvious to me that Apple's selected approach to the "living room" is delivering streaming media. Becoming a major games developer is a completely different approach with no obvious connection to the existing strategy. If such a thing ever happened, investors would be puzzled -- and justifiably so.
This discussion points out one of the biggest problems with Apple having such a fat wallet. At some point, they may feel an obligation to open it, and what they buy could easily bring them more pain than gain.
What visible signs if any did PA Semi have before Apple bought them. I doubt anyone outside of tech circles had even heard of them.
Wasn?t this the company that was considered a replacement for the IBM PPC?
This kind of acquisition doesn't have to show results right away, or even results that can be readily measured.
The talk was that they bought them for their personnel, so we may never actually see a product that screams PA Semi.
The talk was that they bought them for their personnel, so we may never actually see a product that screams PA Semi.
A good point, which brings up another: If you buy a company and many of their key people leave, then what have you gained?
I also don't understand the attractiveness of EA. Again, they are a big WIndows developer, so the question deserves to be asked: Why would Apple want to become a big Windows developer?
No, they are a big games developer/publisher. They can target all or just a few platforms.
Also, Apple has never been a major proponent of games development for the Mac, so I don't see any likelihood of this changing, and not especially in such a huge way.
Did I mention Mac? No, I mentioned living room and aTV.
It seems obvious to me that Apple's selected approach to the "living room" is delivering streaming media. Becoming a major games developer is a completely different approach with no obvious connection to the existing strategy. If such a thing ever happened, investors would be puzzled -- and justifiably so.
An existing strategy that isn't working out all that great because of lack of content and diversity. Apple can gain significant traction in the living room with the aTV as a Wii like console that plays iPhone like games from an app store.
The key is a compelling user experience and content if you're going to pay PS3 pricing for Wii level hardware.
This discussion points out one of the biggest problems with Apple having such a fat wallet. At some point, they may feel an obligation to open it, and what they buy could easily bring them more pain than gain.
I don't see why they would feel an obligation to open it any time soon. Nor should they until they determine something that is of strategic value.
So you think it makes sense for Apple to buy a big games developer, then try to figure out how to make use of their products? Is an Apple gaming console even a whisper of a rumor? No, not even. Seems like a backwards strategy to me.
We all know that content is king for a media streaming strategy. Nobody has licked that one yet. Games don't bring content. If that were the case, then Sony, Microsoft and Nintendo would already be there. Apple seems to be working on it in their own way. Apple TV is their big toe in the water, not a product we should decide now is a success or a failure.
Sure, EA is a big game developer. Overwhelmingly for Windows and consoles -- as I'm sure you well know. Same problem as Adobe, in that respect.
You act as if developing for Windows is a significant problem. it isn't.
Apple is the 2nd most capable company in the world at it. The first being MS. No one else develops their own operating system, APIs, ecosystem, languages on the same scale as MS and Apple (and Sun but they're getting bought out by Oracle).
Nor is it difficult for most coders to switch development platforms.
So you think it makes sense for Apple to buy a big games developer,
No, I said it would indicate that Apple is going to make a big push into an area. It would be a strategic decision like moving into phones.
then try to figure out how to make use of their products? Is an Apple gaming console even a whisper of a rumor? No, not even. Seems like a backwards strategy to me.
It's not hard. An Apple purchase of EA does these things:
1) Apple products are 1st tier gaming platforms from the perspective is that major AAA titles appear on Apple platforms same date as all other gaming platforms.
2) EA has significant IP that can be used as exclusive content for Apple devices. They own Bioware. This gives them AAA exclusives to develop their own gaming platforms: iPhone, iPod Touch, aTV using only a portion of EA's IP. You wouldn't want to make Madden an Apple exclusive.
3) EA is a publisher as well as having their own studios. Apple could leave the EA division in charge of that aspect with losing focus on their core areas.
4) EA could dump Valve in favor of iTunes distribution. This makes iTunes even more of a nexus for online distribution.
You can substitute EA for any of the other major publishers like Activision...if you could pry it from Vivendi anyway. The biggest problem with EA as a purchase is they don't have a casual game focus despite The Sims. They dumped their casual division and let Vrabeck go.
We all know that content is king for a media streaming strategy. Nobody has licked that one yet. Games don't bring content.
Games ARE content.
If that were the case, then Sony, Microsoft and Nintendo would already be there.
Sony invested in Blue Ray and they own Sony pictures. Apple has iTunes. The problem with getting video content is that you have to contend with the cable and satellite industries. Getting game content is easier unless Apple wants to own studios instead.
Apple seems to be working on it in their own way. Apple TV is their big toe in the water, not a product we should decide now is a success or a failure.
aTV as a product is a failure. But it's not central to any of Apple's current strategies so it's not a big deal. It could be successful and adding gaming could be what makes it successful by tying it to the iPod Touch/iPhone app store.
The problem with the iPhone/iPod Touch as a gaming platform is the game prices are so low that the big studios are kinda lukewarm about it. Owning something like EA address the content issue in the same way that investment into pro apps, iLife and iWork does for the mac.
You act as if developing for Windows is a significant problem. it isn't.
No, I don't act that way because that's not what I said. I said it puts Apple in the position of becoming a major developer for a competing platform. This is strange strategy to undertake unless it has a very good purpose (e.g., iTunes), which even after your explanation, I don't see in support of making a big, new move into games.
You can't say that AppleTV is not central to Apple's current strategy. I think it might very well be. At the very least, Apple quite clearly wants it to be. If Apple judged this product to be a failure, they would have discontinued it. Instead they are continuing to develop it further.
My experience is that gamers tend to overestimate the importance of games. Believe it or not, relatively few people play them more than casually.
You act as if developing for Windows is a significant problem. it isn't.
Apple is the 2nd most capable company in the world at it....
Vinea
I have enjoyed reading your argument and believe that you have put it well. I believe too that the new iMac is much more than just an incremental upgrade and would be fabulously supported by Apple gaining access to the skills base at EA, which I hadn't thought about until reading your case. (A colleague, who writes software for OS X, made the comment - referring to the iMac, that it had been a long time since there was such a strong argument to purchase a top of the line model.)
I'd like to see some games where parents could sit down with their children and share adventures. In the 'old days', savvy parents would sit down with the children around the dining table and read to them, with them, supervise home work and play table games. This is still possible but add to the mix, the fabulous worlds and concepts that could be explored on a well utilised iMac.
Keep the arguments coming!
This discussion points out one of the biggest problems with Apple having such a fat wallet. At some point, they may feel an obligation to open it, and what they buy could easily bring them more pain than gain.
Whoa! That certainly hit a cord with me personally... been there, done that, and didn't have enough money left over after the disaster to get the t-shirt!
I definitely like your Devil's Advocate position Dr. Millmoss, and it gave me a chance to pause and reconsider the purchase of Adobe.
However, it is still my position that Apple needs to add to their Creative Toolbox... specifically on the photo side, to compliment and enhance both iPhoto and Aperture. Also, easier and complimentary tools to aid in the content creation of their new LP format, and possibly the content on their yet unrealized iTablet.
What other company(ies) are out there, hopefully cheaper, that you or anyone else might suggest as a buy candidate? The only company that I can think of right now are those guys over at Pixelmator. They make good use of the resources they have, plus OpenSource tools, and develop only for the Mac. It would be interesting to see what they could accomplish with a little more help. However that's just one program.
Or do you think they should start from scratch and develop there own? Build out there current software set? Thus keeping their money in the bank.
Just wanna add that I guess I'm probably guilty (again!) of making an emotional buy rather than a sound financial one. Funny how it took your post Millmoss for me to remember the horror of my ways and make me backpedal. It's why I'm still a Graphics Whore, and will continue to be one I suppose 'til the day I "kick it".... the habit or the bucket, whatever comes first.
PS Wow! Sure is nice to have an intelligent debate with out the asinine remarks from TechSpud, NonVendorBan or XdreamSkater, huh? Hope I didn't wake the "boors"...! (Misspellings intentional!)