Robert Cringley has been recently speculating that Apple will buy Adobe. Jon Gruber doesn't think its going to happen. On the other hand, Blogger Matt Maroon has written that Microsoft should buy Adobe.
My view is that *someone* should buy Adobe.
From a Microsoft perspective, even with a premium, this is a deal that is smaller or perhaps at worst case similar in size to the Yahoo deal. But it is much more strategic. Microsoft's Silverlight efforts will likely never gain the kind of traction that Adobe has with Flash. It would not be at all hard for Microsoft to take their WPF platform and port it to the flash engine. This would allow multiple development targets for the same runtime, meaning developers could write in Actionscript and Flex, or they could write in C# and use a Microsoft's WPF interface framework. I believe this is possible because several years ago, the company now called Aptana, before deciding to switch strategies and names, had a similar product on the market called Xamlon. There is another product currently in the market called GOA Winforms that does the C# part and implements the standard .NET GUI interface framework.
The point is that the Flash engine is a work of art not easily bested on any front by Silverlight without years and years of investment. In that time frame, Flash will be getting stronger and more broadly deployed through things like the Open Screen Project.
From Apple's perspective, Adobe would indeed be a big acquisiton based on their history. Apple's market cap is $162 Billion and Adobe's is $21.4 Billion. But depending on the premium required to get a deal done it would likely still be accretive to earnings. But the real opportunity is strategic. For Apple, this would be a way to inject "Appleness" across the entire Internet.
Apple is currently a niche player, albeit a highly profitable niche player, in the desktop and the phone worlds. Buying Adobe would give Apple a chance to be *the* brand on the Internet. I believe that Flash and AIR are destined to be, effectively, the new operating system of the Internet. Flash is and will continue to be the leading cross-platform API on the Internet, but its developer mindshare, big as it is, is growing.
For Apple to own the platform that could be the gateway to writing apps that run anywhere, but just run better on the Mac would be an incredbily powerful lever in taking Mac OSX (on the iPhone and the Desktop) to the mainstream in an incredibly fast manner.
But the main reason I would be trying to buy Adobe is that if Microsoft were to buy it, it could be disatstrous for Apple. Microsoft has done a horrible job in keeping its developer APIs relevant to mainstream developers with the advent of the Internet. An acquisition of this type could bring Microsoft the kind of dominant API position that they had in the 90's.
Of course, this doesn't at all fit the style of Steve Jobs. He has never done a major acquisition, and has a major case of NIH (Not Invented Here) Syndrome. Somehow I just don't think Steve's ego could handle something like this. And with Microsoft having just ditched on Yahoo, I suspect it will be a while before they make any other big bets like this.
All that said, it is still amazing that Adobe is being allowed to take such a position in the marketplace. Adobe has a broadly distributed platform at around 99% penetration, an incredibly well tested well engineered technology, great engineering management, and a huge developer base.
In any case, in my view, investors that are long Adobe should be happy. Adobe is well poised to join the really big boys whether they get an official invitation or not.