April 18, 2005 11:44 AM PDT

Macromedia, Adobe make peace for bigger fight

With its $3.4 billion acquisition of Macromedia, Adobe Systems is buying into a crucial battle to shape the next generation of Web application development.

Adobe, which built its name on the Portable Document Format, or PDF, for printable digital documents, has long struggled to make an impact in the purely digital realm where Macromedia has its roots.

Now, with Macromedia's Flash animation and application development software in its portfolio, Adobe has positioned itself as a primary competitor against Microsoft on the one hand and open standards on the other in building new platforms for Web applications.


What's new:
By merging, Adobe and Macromedia have launched a gambit to become the dominant platform for multimedia Web applications.

Bottom line:
The two companies will have to overcome a history of bad blood and a formidable competitor in Microsoft, which, with Longhorn, intends to break into graphic-rich Web applications.

More stories on Adobe Systems

"What's taking shape is the ultimate battle for the browser," said Paul Colton, CEO of Xamlon, a company that provides tools for creating applications that run in Microsoft's .Net framework. The company this month added the capability of letting its developers output Flash movies. "This (merger) play is about gaining dominance in the browser applications market," Colton said. "The reach of PDF and Flash already go a long way, and the combination of those two will be very intense."

From Adobe's perspective, the acquisition of Macromedia's tools for authoring multimedia content also bolsters its standing in the business market. The combined company can offer a fuller suite of cross-platform products for building document-oriented applications and "rich media" Web applications. It can also offer Macromedia's collaboration products.

"The enterprise market is absolutely what this is about," said Robert Markham, principal analyst at Forrester Research. "It's really broadening Adobe's capability to compete in the enterprise as opposed to having off-the-shelf packages."

The audience for Adobe and Macromedia's software consists of so-called creative professionals, such as Web designers and graphics artists. But the companies are also seeking to expand their business with corporate technology departments.

Adobe versus the world
CEO Bruce Chizen sheds light on why Adobe's products continue to command top dollar while other desktop software prices plummet.
Adobe's "life cycle" business for document management software, which can tie into back-end computing systems at corporations, last year totaled about $100 million.

"Enterprises and enterprise developers want to provide a complete set of development tools to create rich interactive experiences and personalized content that tie into transaction systems," Shantanu Narayen, president and chief operating officer of Adobe, told CNET News.com on Monday.

The coming clash
While Adobe, with its PDF and Photoshop software, has generally held its own in the battle against Microsoft, analysts say the most pitched battle between the companies will come as software providers vie to provide the platform of choice for next-generation Web-based application development.

In this area, Macromedia has a good head start with Flash. Microsoft's forthcoming Longhorn version of the Windows operating system, which has a graphics engine called Avalon, is considered a major contender despite being late. Adobe, meanwhile, hasn't had a hand in the game until its Macromedia acquisition.

"It's not that Microsoft is going to specifically target Macromedia and Adobe," said Burton Group analyst Peter O'Kelly. "But we've

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I don't like the looks of this
My greatest fear is Dreamweaver becoming more like GoLive. GoLive produces some of the worst HTML I've ever seen that is barely editable outside of the program. Dreamweaver(IMHO) is one of the best programs out there for creating static, and to some extent dynamic, pages.

Flash could also take a big fall. When adobe had LiveMotion it was a decent app because they fixed some things that were hard to do in Flash, but Macromedia fixed that and LiveMotion died. Now I fear Adobe putting their hand into any of Flash.

I hope this is more of a name buyout then a developer buy out. Macromedia is the leading company in web development and I would hate to see that change because there isn't a good second option.
Posted by metric152 (18 comments )
Reply Link Flag
Who does C|Net's research?
Freehand was not released by Macromedia in answer to
Illustrator. It was purchased my Macromedia from Adobe, when
Adobe acquired Aldus. Check your facts.
Posted by (1 comment )
Reply Link Flag
more facts
Good call. how 'bout this from the article:

"Adobe, which built its name on the Portable Document Format,
or PDF, for printable digital documents".

It's as if Adobe didn't create Postscript, or Type I fonts, or
Photoshop... all WAY before PDF.
Posted by ekfritz (8 comments )
Link Flag
Macromedia and Freehand....
Macromedia acquired Freehand through its purchase of Altsys a decade ago, with the intent of competing with Adobe Illustrator as the story implies. Thanks for the information. We'll add it to the story.
Posted by mike ricciuti (12 comments )
Link Flag
i completely agree
Cnet is really dropping the ball when it comes to quality articles. Plus, that Molly Wood is a good writer and is entertaining to read, but sometimes her thoughts don't make any sense. PDF's are very reliable, and I haven't heard of many people having them crash constantly.
Posted by jetman8000 (23 comments )
Link Flag
Fire Molly Wood
Fire Molly Wood
Posted by montgomeryburns (109 comments )
Reply Link Flag
Maybe your argue would hold a bit more weight if you actually gave a reason WHY she should be fired...
Posted by Lucky Bob (47 comments )
Link Flag
UI Confusion Explosion
There in excess of 15 open source UI languages, there are over 25 proprietary vendors of tools for creating UI's into a proprietary format.

This is too much choice for developers wanting to create UI applications. There needs to be consolidation if it cuts down choice, but also there needs to be standards to keep vendors honest and customers free from lock in.

Or an alternative approach ........Open Presentation Server

keep your eyes open on the two main contenders:
Posted by (2 comments )
Reply Link Flag
We will have to see what really happens
Adobe has an almost unbreakable stronghold on printable media (i.e. mag ads, brochure designs and anything else on paper).

I have using Macromedia products for website creation from way back when and IMHO they are the best in web development for graphics and layout.

Perhaps they will keep those seperate. Former Adobe products for printable design and Macromedia just for the web. Or what would probably happened is that they will merge the strenghs of their respective products and make a designer/developer dreams come true.

oh yeah and the cost of software might go up as well.
Posted by quaribc (11 comments )
Reply Link Flag

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