MattMaroon.com

I’ve been thinking about the Microsoft/Yahoo deal for awhile. At first I thought it was a great idea from Microsoft’s perspective (and I’d definitely be pushing for it if I were a Yahoo shareholder). But now I’m not so sure. Upon more thought I’ve come to the conclusion that Microsoft should acquire Adobe instead.

The whole point of the Yahoo acquisition was that Microsoft wants to become more relevant on the web. They want to do it through search, but I’m not sure that buying Yahoo really accomplishes this. Google’s already massive market share is constantly increasing, and I’m just not sure that a combined Microsoft/Yahoo will have a much bigger slice of the pie in 5 years than either one will alone. Not to mention the fact that Google’s revenue per user is higher too.

Right now behind Google, Adobe is probably the most relevant company on the web, due to Flash. Flash is, without a doubt, the content delivery medium of the future. (Clearly Microsoft realizes this, which is why they built Silverlight to compete with it.) It’s powered the vast majority of the video on the web revolution of the last couple years. It’s powering the casual gaming revolution that’s picking up speed. It’s even the medium of choice for many of the web-based MS Office clones that seem to spring up daily.

Even though most of the buzz around Silverlight has been surprisingly positive for a Microsoft product, it still has little shot of achieving even a small sliver of the relevancy that Flash has. They have made it easy to install, and since they control 90+% of the desktop market, it will be built into everyone’s main browser. But it’s just a few years too late, and will end up just another also-ran, like FrontPage (or Expression Studio or whatever the hell it is now).

Adobe is the market leader (or a strong competitor) in a number of fields in which Microsoft has little or no presence. It gives them some nifty tools they could integrate with Windows (Photoshop and Premier Elements for example).

And there’s tons of synergy. Word documents could be saved to PDF without needing to use any goofy pseudo-printers or plugins. Emails could have Flash videos in them in Hotmail or Outlook. Edited photos could easily be dragged from Photoshop Elements to Word documents. Flash games could run on the Xbox360, or even on the Zune with ease. Being able to play games from Kongregate or listen to Pandora on an 80gb Zune might just be the boost it needs to get significant market share. And I suppose none of that necessitates an acquisition, but it all makes a lot more sense afterward.

Also, Adobe walks the fine line between proprietary and open source (and open standards) better than anyone. They understand the strengths and weaknesses of both, and how to best capitalize. Recent grumblings make me think that Microsoft is beginning to realize what open source can do for them , but still has little clue how to proceed from where they are.

Adobe would be far cheaper than Yahoo, and far more relevant to the web 5 years from now. And Flash is the one thing that neither Google nor Apple can avoid. Google tried with their Video effort, but failed miserably and ended up purchasing the Flash-based YouTube. And one of the most frequent gripes with the iPhone (perhaps second only to shoddy call quality) is the lack of a Flash player.

And while I’m still not sold on web-based versions of desktop stalwarts like Word (or any other program that requires offline functionality) if it does happen, Adobe AIR might very well be the platform it occurs on. It will certainly be in the mix.

I fear Microsoft’s future should Adobe fall into the hands of Google or Apple. Picking up Adobe is a great way for them to get back in the game.

**Update: Apparently Microsoft just abandoned the Yahoo effort.**