VARs: Macromedia Buy Strengthens Adobe's Stance Against Microsoft

In an interview with CRN Monday, Adobe CEO Bruce Chizen said the combination of the two companies' products will give partners a highly attractive portfolio of products and solutions to offer their customers.

"Probably the biggest win for us and for the channel is our ability to offer a solution that is more compelling and more interesting from a channel perspective than ever before," Chizen told CRN.

While regulatory conditions prohibited Chizen from discussing specific solutions, obvious areas of synergy in the $3.4 billion stock deal, unveiled Monday, include collaboration solutions that might be enabled by combining Adobe Acrobat and Macromedia Breeze. The deal also enables workflow applications that make use of the Adobe LiveCycle series in conjunction with the Macromedia Flex tool for building media-rich Internet applications.

All told, the purchase of Macromedia gives Adobe, San Jose, Calif., an opportunity to offer a comprehensive cross-platform Web application development and design tools and technology, including San Francisco-based Macromedia's popular Flash animation tool.

It also will allow Adobe, know primarily for digital document-creation software, to expand its server-side offerings and extend into new markets such as mobile phones with Macromedia's Flash Lite technology, solution providers said. Additionally, the purchase gives Adobe additional protection against potential rivals, notably Microsoft, which in the past was considered a potential buyer for Macromedia. Microsoft long has been rumored to be developing a competitor to Adobe's PDF in the Longhorn Windows timeframe, and is pushing its own digital rights management, Office publishing and animation development technologies to Web developers.

Both analysts and solution providers agreed that deal creates a stronger software company than either Adobe and Macromedia was on its own, and the companies are a good fit from a product and cultural perspective.

Yet while Adobe and Macromedia enjoy many similarities that make them a good match, there is at least one big challenge to the deal -- namely, the unification of the two companies' substantial sales channels.

Peter Cohan, president of Cohan and Associates, a management consulting firm in Malborough, Mass., said both companies have complex distribution channels that do a little bit of everything, including direct sales as well as working with distributors, resellers, OEMs, ISVs and systems integrators.

"They will find cross-selling and cross-pollination opportunities," Cohan said. "But integrating both companies' distribution channels represents the most important integration challenge facing the companies."

Merging channels may prove a small glitch in what should spell big opportunity for solution providers and customers of the two companies, which will be able to offer a much broader and more competitive product portfolio.

"Between the Flash installed base and Adobe Reader installed base, the combined companies have some very powerful PC real estate," said Dana Gardner, an analyst with The Yankee Group. "I can see high developer and ISV interest here -- without the costs of individual ports -- to take advantage of this very large addressable market. For the software as a service market, the trio of a browser, Acrobat and Macromedia is platform. For the consumer, game and entertainment markets, Macromdedia plus Adobe also has really interesting possibilities."

Another analyst said the deal is a good culture fit and will provide a significant cross-selling and channel opportunities for Adobe, since both platforms appeal to the same types of users and partners, and there is little technical overlap between their respective offerings.

"They don't have much of an overlap of customers, but their customers share a common trait -- they are creative types and that means the integration of the two companies won't be too hard," said Peter Cohan, president of Cohan and Associates, a management consulting firm in Malborough, Mass. "If Adobe does a good job of appealing to this creative community, Microsoft will have difficulty overcoming this. It may be an overgeneralization, but creative people tend to like Macromedia, Adobe and Apple more than they like companies like Microsoft that are more corporate."

The marriage of the two leading design ISVs came as a surprise to many Web developers and systems integrators, who view Adobe's Acrobat Portable Document Format (PDF) and famed PhotoShop tools and Macromedia's Dreamweaver and Flex animation tools as best-of-breed offerings whose installed base will only expand as a result of the merger.

"I'm not sure if it makes Adobe any more of a target for Microsoft, but it makes Adobe a much stronger Web company," said Jason Wehling, vice president of technology at Netxposure, Portland, Oregon. "It'll be a big win for us since we work with both companies and having them united will benefit our company."

Adobe's acquisition of Macromedia, he said, gives the company a better server story, since it gives Adobe access to Macromedia's "Flash" animation -- far better than Adobe's aborted LiveMotion project "- and Macromedia's older server-side technology known as Generator. Adobe's previous acquisition Allaire and its application servers ColdFusion and JRun also will enrich the Adobe server platform, Wehling said.

Jim Burke, CEO of Mind's Eye, a solution provider in Boston, said though his company works closely with Macromedia, he was completely surprised by Adobe's purchase of the vendor, thinking that perhaps IBM or Microsoft would have been a more likely candidate to acquire Macromedia.

Burke said the $3.4 billion price tag also was unexpected because he "didn't think Adobe could afford that" or that Macromedia was worth that much money. "If someone is going to pay that much for your company, wouldn't you sell?" he said. "Your company is worth whatever someone will pay for it."

Though it remains to be seen if any Macromedia products are discontinued after the merger of the two companies, Burke said he hopes that among the software that survives will be Flex, Macromedia's XML-based development tool for marrying back-end applications with rich front-end content.

BARBARA DARROW and HEATHER CLANCY contributed to this article.