Merger Mania

Arguably, the Avid-Pinnacle merger will still have a more direct effect on higher-end digital video professionals than Adobe buying Macromedia. But at slightly less than a half-billion dollars, the Avid-Pinnacle deal can’t touch the $3.4 billion Adobe is paying for Macromedia. Nor does Avid-Pinnacle ultimately reach such a potentially broad cross section of users, including those working in digital video, digital graphics and animation, and publishing, both print and online.

Content creators who remember the multimedia glory days in the 1990s might find Adobe buying Macromedia as startling as Ford buying Chevy, and they may focus on the end to some classic product rivalries: Photoshop vs. Fireworks, Illustrator vs. FreeHand, and more recently GoLive vs. Dreamweaver. Yet, the bigger monopolistic threat should really be having one company owning three hugely popular technologies-Postscript, Acrobat, and Flash-that are installed on an extremely high percentage of desktop computers. And the exciting part of the deal is that Flash may yet become the true video-capable application it’s been trying to be for that past few years.


Adobe has some decisions to make, of course, regarding the blending of the most similar parts of the two product lines. Photoshop is, and will be, the centerpiece of Adobe’s creative product line. That means Fireworks, as we know it, almost certainly won’t last, although it might be an effective replacement for ImageReady as the Web engine for Photoshop, if it could be neatly integrated.

Illustrator is the dominant graphic design application, although you might find some argument in the creative community about Illustrator vs. FreeHand. Still, Illustrator’s tight integration with Photoshop will be impossible to abandon, and that leaves FreeHand in a tenuous position. It would be ideal if Adobe could take the best of FreeHand and combine it with Illustrator. Dreamweaver has a much larger following than Adobe’s GoLive, and that should keep it around as a future Adobe brand.

The concern is that the merger of these two strong brands will reduce competition and future product advancement, and that may happen to an extent. However, that’s hardly as much an issue today as it would have been a few years ago. Each of these products is now mature and at least in a seventh revision, and feature one-upmanship isn’t what it used to be. The bigger goal for both Adobe and Macromedia has been finding ways to enhance work flow and broaden user and customer bases. In fact, one could certainly argue that since Adobe’s lawsuit with Macromedia a few years ago-for patent infringement on user interface elements-true product advancement has suffered from the competition, particularly with Flash.

And it’s Flash that is the crowning jewel in this deal. Indeed, Flash has been a thorn in Adobe’s side for years. Adobe has tried to match it with the unsuccessful LiveMotion application that could create Flash files. It has tried to leapfrog it in a way with the oddly conceived Atmosphere 3D format. And it has tried to make Flash obsolete by throwing support behind the industry’s SVG (Scalable Vector Graphics) initiative. Now, Adobe has just bought Flash, which Macromedia has claimed is installed on 98 percent of desktop computers.

The fun part of this acquisition is imagining what could happen with all of Adobe’s and Macromedia’s technologies under one roof. That starts with PDFs opening in SWF files and vice versa. Adding SVG to that mix could make a new Flash an extremely powerful creation tool. Yet for video professionals, it’s Flash’s potential as an online video distribution format that should wet the chops. Macromedia has been trying to incorporate video into Flash for several years now. Macromedia was the original developer of what is now Apple’s Final Cut Pro, but it could not sustain a lengthy development cycle that increasingly came to be a distraction to its core products.

This year at NAB, Macromedia’s booth was all about Flash video, although the design tools to work with video in Flash are limited. But imagine Flash working with serious and familiar video tools like Premiere and After Effects. Imagine the round-trip integration that those two applications share with, for example, Adobe’s Encore DVD authoring application. Now imagine Flash being able to deliver integrated and interactive video and graphics content to 98 percent of desktop computers without installing anything. Online video production could actually reach the promise of the late 1990s.

The Adobe-Macromedia announcement was actually the third video industry takeover announced in less than two months. The first was InterVideo gaining a controlling stake in Ulead Systems, a video company dating back to the early 1990s. Then, it was Avid buying Pinnacle, and now with the Adobe-Macromedia deal, it may seem like industry consolidation or the proverbial shakeout. And it probably is.

The video industry is long past the pioneering years of product development and user experience revolution. Creation tools are, for the most part, quite robust, and while manufacturers are always looking to improve products and to sell the next dot revision upgrade to as many users as possible, the shakeout reflects that it’s getting harder to maintain the same level of improvement.

Today, content-creation vendors are looking for new opportunities to broaden their installed bases. That can mean extending product lines, like Avid is likely to do with Pinnacle’s broadcast tools. Or it could mean going in unrelated directions, like focusing on corporate customers. In a real way, the Macromedia acquisition does both for Adobe, giving it a line of well-respected business tools like Director and Authorware, and an opportunity to raise the creative potential of designers by enhancing Flash.