Concentration of key graphics software in one company could be a problem for Apple, Corel CEO Amish Mehta says.Figures in the software industry have given their first takes on the deal that has Adobe Systems Inc. buying up Macromedia Inc., one of its leading rivals in the design and publishing market.
The two companies announced this morning that Adobe would acquire its rival in a takeover worth around $3.4 billion.
Amish Mehta, CEO of Corel Corp., which competes with both Adobe and Macromedia with its CorelDRAW Graphics, described the deal as "no big surprise. Consolidation has been going on for years in the software industry, and this is a continuation of that."
Mehta acknowledged that the deal might lead to decreased competition, but claimed that this might not be bad for existing Macromedia customers.
"At the moment, Macromedia is a one core-technology company. This deal means it will be able to offer more to those customers," he added.
The deal also offers several opportunities to Corel.
According to Mehta, the effective disappearance of Macromedia—the company's brand will vanish after the takeover is completed—leaves Corel as the sole remaining alternative to Adobe in the graphics market.
And for Mac users, the news might lead to some concerns.
"Today if you're Apple, you can't be too excited about this, as it leaves a lot of key software concentrated in a single company. Hence, there's an opportunity for us to say, 'Hey, we're here, let's work together.'"
To read more about what the merger means in the PDF space, click here.
Mehta added that if Adobe decides to divest itself of some of its products in the wake of the deal, Corel might be interested in acquiring them.
"At the right price, all kinds of products become interesting. We'd be interested in anything that complemented the products we already have," he said.
Gavin Drake, marketing director at Quark UK, pointed to the hole that the deal would leave in the competitive landscape of the publishing and design market.
"Lack of competition is not good for customers, and this definitely looks like it could be bad for competition," Drake said. "It'll be interesting to see what Macromedia customers think of the deal."
And the deal may yet have wider ramifications for the software industry, beyond design and publishing.
Joe Wilcox, senior analyst at Jupiter Research, claimed that the acquisition could lead to the emergence of a much tougher competitor for Microsoft in the business market.
"Microsoft should be more worried about Adobe than Google," he said, adding that while the penetration of Windows and Office has reached saturation point, the server market has become much more important as an engine for growth.
"Now along comes Adobe," Wilcox added. "Its pull is that documents are PDFs, which has certain advantages. For example, government departments sometimes insist that documents are submitted in PDF form. Macromedia fills in the Adobe product line, in areas where Microsoft isn't strong."
These areas, Wilcox said, include server products such as Breeze, Central, ColdFusion and Flex, bolstering Adobe's push into the enterprise.
The deal may be better for Adobe than for customers, analysts say. Click here to read more.
This addition of Macromedia products could also lead to Adobe dominating the rich media market: "There's an opportunity around making content in business more accessible and exciting," Wilcox said.
"But what if you then bring in more collaboration—something that's been an Adobe strength. What if Adobe could bridge the gap between static and animated documents?" Wilcox added.
However, Wilcox cautioned that in order to exploit this opportunity, "Adobe needs to hit the ground running. As soon as it closes the deal, it needs to bring out products that start to exploit the merged company."
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