[old-gregg]

Jokes aside, it makes perfect sense for both of them. Adobe's CS and Microsoft Office are naturally self-complementing desktop giants. Both companies make a ton of money selling desktop software to the enterprise, yet outside of Flash/Sliverlight battle they don't cross each other paths.

I, for one, welcome this development. It brings some hopes for better performing Flash, which I hate with a passion but its a fact of life. Flash is in need of some engineering muscle. There are many things Microsoft can possibly do to it and most of them are good, see: kill it -> good, open source it -> good, merge with silverlight -> good.

Same thing with other Adobe products: they used to be best in class some time ago, but I'm convinced that company cannot code anymore, but Microsoft still can.

No way this is bad news. The worse that can happen is nothing changes.

Edit: also, lets stop this nonsense with applying "still somewhat profitable" and "dying" to these companies. Both are doing great financially. Adobe's profits from CS keep breaking records - look at http://www.adobe.com/aboutadobe/pressroom/pressreleases/2010...

[joe_the_user]

"it makes perfect sense for both of them..."

"I, for one, welcome..."

Uh, yeah... I agree it makes perfect sense for both of them. For anyone who isn't Microsoft or Adobe, the prospect seems less appealing. Two companies with considerable monopolistic sway in their respective markets come together to improve their profit margins?

Merging two huge globs that each can extract rent on their various properties into a single similar vast glob. What could possibly go wrong...

[rbanffy]

> What could possibly go wrong.

The combined corporate mass would exceed the Tolman–Oppenheimer–Volkoff limit and they would collapse into a black hole?

[joe_the_user]

In the case of Microsoft, one might argue that has already happened...

[rbanffy]

Yes, but the extra mass could shorten the process...

[pchristensen]

Not disagreeing, but Innovators Dilemma theory says that companies that are about to be disrupted are enjoying the greatest profits and margins ever. The problem is that the reason the profits are so high is that they've shed their less profitable divisions and products that might grow into the next big innovation. Let's say something disrupts MSFTs Office and shrinks its revenue - what do they have that could replace that?

[iamelgringo]

what do they have that could replace that? Sharepoint, SQLServer, Windows 7, Windows Server, Windows Virtual Server, CRM, Exchange Server, XBox, Xbox live, Bing, Zune, Microsoft Automotive platform, Win 7 phone.

Microsoft has one of the most diverse revenue streams of any software company. They're going to be around for a while.

Google should actually be more afraid of disruptive technologies. Their revenue is primarily from advertising. They are truly a single revenue source company.

[muhfuhkuh]

"Sharepoint, SQLServer, Windows 7, Windows Server, Windows Virtual Server, CRM, Exchange Server, XBox, Xbox live, Bing, Zune, Microsoft Automotive platform, Win 7 phone."

Has it actually been determined that Microsoft makes any profit at all from any of those products? Entertainment division (where XBox and Live and Zune lives) is about 12% of their revenue and is still not profitable, while search and online (which is Bing and MSN) loses $700 Million every quarter or thereabouts (at least it did last fiscal quarter).

Their bread and butter has always been Windows and Office. That other stuff are loss leaders, in a way.

[protomyth]

Sharepoint is a pretty good seller for them. Exchange has as much of a lock on corporations as Windows.

[chime]

Also the entire Dynamics series. Web people don't understand the ERP world and the profits that come from annual maintenance plans. What is Dynamics? It's what runs the internal systems for most small/mid-sized businesses that can't afford Oracle/SAP. It's a HUGE market.

[Shamiq]

I'll also chime in and support Dynamics. It's an amazing market with a ton of actual growth potential.

[jballanc]

Microsoft is no slouch (especially compared to Google), but these charts seem to imply that Apple still has the more diverse revenue stream:

http://www.businessinsider.com/chart-of-the-day-microsoft-op...

http://www.businessinsider.com/chart-of-the-day-in-case-you-...

[Tamerlin]

Apple's also not really a software company.

Still, even if you ONLY look at Apple's software revenues, I suspect that Apple would turn out to be more diversified than Google. :)

[jmulho]

I agree. Microsoft shouldn't be concerned about the fact that no one likes their products because they make so many different products that no one likes.

[mjfern]

I disagree. Microsoft derives a bulk of its revenues and profits from packaged software (Windows and Office). These products are on the verge of being disrupted. Computing is shifting away from the desktop to "thin devices" (tablets, smartphones, etc), cloud computing, and online media. Microsoft is performing relatively poorly in all three of these new computing areas.

[ChRoss]

The development suites: Visual Studio, plus those all CAL licensing fee.

[pchristensen]

I agree with all those points, and I think MSFT will be healthy for a long time to come. I was just saying that record-breaking profits can either be awesome or a warning sign. I would guess that MSFT is in a better position than Adobe, but I don't know much about Adobe's financials to make a point based on them.

[bluesnowmonkey]

Azure...

[_delirium]

It's quite possible for it to take a long time, though. Microsoft has been more or less in the position you describe for ~15 years: by the mid-1990s they were making huge profits, almost entirely from Windows+Office. Now, 15 years later, they've still got large profit margins on that same duo.

[protomyth]

Adobe sells a lot of enterprise document software that could really boost Microsoft's Share Point properties.

I really do think all product development for Linux or Android would be cancelled (Flash for Windows Phone 7 only).

[watty]

Microsoft isn't stupid. They won't make Flash Windows only and they won't make Flash Windows Phone 7 only.

[dinkumthinkum]

But continued Linux support is clearly a possible cancellation.

[mfukar]

I don't think so. Both Adobe and Microsoft benefit from the existence of (and their coexistence with) Linux.

[protomyth]

I would really need to see some examples of that. Adobe doesn't deal well with Linux (or anything non-Windows) and Microsoft would make more money with Linux around.

[dinkumthinkum]

Perhaps you think that but I don't think they are or their shareholders see it that way. Microsoft tends to only deal with Linux or the open source world in an effort to avoid criticism. In fact, that's just too ironic of a statement and I think needs a little justification.

[Sandman]

Why wouldn't they? What would be the benefit of offering Flash for Linux, or Mac OS for that matter? Actually, why would they make a Flash plug-in for any browser other than IE? It seems to me that a reasonable thing for Microsoft to do, after acquiring Adobe, would be to discontinue Flash support for any OS other than their own, and to stop making plug-ins for other browsers, which would help IE regain some (if not all) of the market share it's recently been losing.

[bullseye]

>> What would be the benefit of offering Flash for Linux, or Mac OS for that matter?

Presumably it would be the same benefit that caused them to make Silverlight available to multiple platforms and browsers.

[Sandman]

I may be paranoid, but it seems quite plausible to me that Silverlight is merely another example of Microsoft's famous "Embrace, extend and extinguish" strategy. Since Silverlight failed to gain wide acceptance on the web (well, certainly not as wide as Flash), acquiring Adobe to get hold of Flash would enable them to skip the part where their software first needs to be accepted by a significant majority of users and allow them to skip right to phase two, which is concentrating more and more on how Flash works on Windows and IE, leaving other platforms and browsers behind. Truth be told, Adobe has also been known to concentrate more on how their plug-in works on Windows than on other platforms, which meant that Flash would usually perform far better on Windows than on Mac OS or Linux.

[thebigshane]

Because Firefox is reaching 50% of the browser market (I recently read that somewhere on HN) and if they make it IE-only, content producers are going to stop using flash.

[Sandman]

Firefox is not reaching 50% of the browser market: http://en.wikipedia.org/wiki/Usage_share_of_web_browsers#Sum.... The big news was that, according to most sources, usage share of IE dropped below 50%.

[thebigshane]

24%... not even close! I think the point is still valid at 24% though.

[lukestevens]

But how does this counter Apple in mobile? That's what I don't get -- buy Adobe for Flash because, err, that'll hurt Apple somehow?

If they just want Flash, I bet they're bummed they didn't buy Macromedia a few years ago.

[metageek]

Maybe pouring more resources into making Flash run well on all other devices, leaving the iPhone in the cold.

[suhair]

"yet outside of Flash/Sliverlight battle they don't cross each other paths" - what about Microsoft's Expression Studio and similar Adobe products?

[Tyrannosaurs]

Technically they cross but only in the way MS Office crosses paths with Apple's iWork - that is one utterly runs the other one down.

Hardly anyone is paying for Expression Studio in the way they are for Adobe CS. The people using it are doing so because it was bundled.

[gmac]

only in the way MS Office crosses paths with Apple's iWork - that is one utterly runs the other one down

Which runs which down? For my requirements, Keynote > PowerPoint, Excel > Numbers, Pages ~= Word.

[Tyrannosaurs]

That may be so but based on sales most people who choose to part with cash pick Office as with Adobe CS over Expressions Studio.