In the shocking news of the week, two of the 600 pound gorilla companies of the Macintosh market announced a plan to merge. That’s right, Aldus and Adobe agreed to become one and the same, dependent on the agreement of the shareholders at meetings in July. What with all the mergers failing these days, there’s room for this one to fall through as well, and the merger is subject to numerous conditions, with each company paying a break-up fee if those conditions aren’t met. Talk about a pre-nuptial agreement!
The company that emerges from the combination will be worth more than $500 million, and there was some fabulous corporate-speak about how the merger would take place. John Warnock, CEO of Adobe and future CEO of the new company, said it best with, "We are committed to achieving the cost savings necessary to make this transaction non-dilutive in the first full year of the combined operations." Hmm?
Chuck Geschke, president of Adobe, will retain his post at the new company, and Paul Brainerd, CEO of Aldus, will serve on the board of the new company. The propaganda claimed that the new company would maintain existing Adobe and Aldus facilities in Mountain View, California and in Seattle, Washington. It also claimed that all major products from both Adobe and Aldus would continue to be marketed and supported.
The press release contained the usual platitudes about how the merger makes sense technologically and financially, but some questions do arise. Perhaps the most interesting question concerns FreeHand and Illustrator, two leading PostScript design and illustration programs. Although Deneba’s Canvas sort of fits into the same category, most graphic designers I know use FreeHand or Illustrator, or both, depending on the job at hand. The new company may find it difficult to market two such closely competing programs without in some way differentiating them. The companies have also used competition to push advances in interface and features, each attempting to leapfrog the other. Will that disappear once they’re on the same side? And how will Aldus’s other two graphics programs, SuperPaint and the extremely neat IntelliDraw, fare after the merger?
The other question the merger raises relates to Aldus’s other major competitor, Quark. Although PageMaker and QuarkXPress both have adherents, QuarkXPress has apparently done extremely well in taking market share from PageMaker over the years, resulting in a program of choice for many high-end publishers. (And please, no PageMaker versus QuarkXPress arguments!) How might the merger affect competition with Quark? Might it suddenly become easier to work with Illustrator and Photoshop files in PageMaker? Will Quark react to the merger in any way?
On a more general note, the rash of mergers concerns me, what with Aldus and Adobe merging, Electronic Arts and Broderbund merging, and Symantec buying any utility developer that moves (rumors in MacWEEK put Central Point Software next on Symantec’s acquisition list, which isn’t surprising since Symantec bought Norton and combined the best of Norton and Symantec Utilities for Macintosh, so why not add in the best of MacTools as well?). I don’t like the feel of these mega-mergers. Perhaps that’s my bias toward the small developer who can come up with something that would never see the light of day at a large company because it doesn’t fit into a strategic direction. Or perhaps I like to see competition, and it’s hard to have much competition when game has only a few players. Or, maybe the computer industry is starting to feel like major league baseball, in which millionaire players and millionaire owners whine about how they’re not making enough money and get no sympathy from anyone. There just aren’t as many companies to root for as there used to be.