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Adobe takeover of MacroMedia – another brick in the wall

Thursday, 21 April 2005
By Print 21 Online Article

The deal sees the end of the only serious competition to Adobe in online graphics where its Go Live product struggled against MacroMedia’s industry benchmark Dreamweaver and Flash software. It also extends the company’s reach into the rapidly growing mobile phone graphics market as well as facilitating its ability to repurpose publishing files across an extended range of media.

Some graphic designers have expressed reservations at the continuing consolidation of the industry’s software options, expressing concern at Adobe’s virtual monopoly of the design desktops.

Naturally this is not the view from Adobe.

“Customers are calling for integrated software solutions that enable them to create, manage and deliver a wide range of content and applications – from documents and images to audio and video,” said Bruce Chizen, chief executive officer of Adobe. “By combining our powerful development, authoring and collaboration software – along with the complementary functionality of PDF and Flash – Adobe has the opportunity to bring this vision to life with an industry-defining technology platform.”

The deal makes Adobe the second largest software producer after Microsoft and has served notice that the long-awaited Acrobat rival, Longhorn – to be released by Microsoft later this year – will face even tougher competition.

It continues a trend of software companies to consolidate – Symantec bought Veritas, and Oracle acquired PeopleSoft. It is expected to give Adobe Acrobat even more credibility as the transmission format for digital files.

Under the terms of the agreement, which has been approved by both boards of directors, Macromedia stockholders will wind up owning approximately 18 percent of the combined company.

In the combined company, Chizen will continue as chief executive officer and Shantanu Narayen will remain president and chief operating officer. 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. Dr. John Warnock and Dr. 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.

“Both Macromedia and Adobe are passionate about creating and enabling great experiences across a wide range of devices and operating systems,” said Stephen Elop, president and chief executive officer of Macromedia. “Our combined teams will be a powerful force for innovation around cutting-edge platforms for delivering content and applications.”

The two companies are developing integration plans that build on the cultural similarities and the best business and product development practices from each company.

“While we anticipate the integration team will identify opportunities for cost savings by the time the acquisition closes, the primary motivation for the two companies’ joining is to continue to expand and grow our business into new markets,” said Chizen.

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