Should Microsoft Buy Adobe?

Would it make sense for Microsoft to buy Adobe? Certainly yes and Microsoft, which has the financial clout to close a deal, would get its mitts on some of the most prized assets in the world of technology.

The company is currently valued at $19.26 billion, very close to its 52-week high, and more than twice what it was worth back in March 2009 at the worst of the US Recession. Even with a 33 percent price premium (which would bring it to $27 billion), it would still be a tasty proposition.

Since the purchase in 2005 of its archrival Macromedia for $3.4 billion, Adobe Systems has controlled two solutions that are key to Microsoft's future online; the Portable Document Format and Flash.

The first one is the universal document format by excellence and threatens Microsoft's own file formats. Its importance is so great that Microsoft has converted more than 130,000 documents into the competing solution to serve a greater audience.

More than 500 million copies of its free Adobe Acrobat Reader had been distributed over the 11 years to November 2004 and with the wider availability of this functionality on most smartphones, one can assume that this number has since long surpassed one billion.

Google reports around 500 million PDF files online with only around 77 million Microsoft DOC and DOCx files which provides with a useful, albeit non-scientific, benchmark.

Microsoft does have a competitor, Silverlight, for Adobe's other technology Flash but it doesn't enjoy the same penetration levels. According to Adobe, 99 percent of the PC that use internet worldwide can view Flash Player content 7 and higher worldwide with around one billion installed Flash players.

And Adobe's AIR is expected to be a roaring success as well; the Rich Internet Application platform reached 200 million installations in June 2009, six months after reaching the 100 million installs within 10 months of its release.

In one swoop, Microsoft would also manage to get a raft of highly capable, highly respected applications, most of which are not currently sold by Microsoft; these would more than double the number of products offered by the company and provide with a more complete one software stop shop.

The software giant has four graphics design applications under the Expression banner but they don't enjoy the same success of their Adobe counterparts. Microsoft shouldn't have a problem buying Adobe since it doesn't reinforce the creative powerhouse's current position.

The US FTC and the Department of Justice shouldn't in theory have a case to limit or invalidate the acquisition of Adobe by Microsoft (but they would if it was an Apple initiative). Above all though, Microsoft buying Adobe would secure its future as a dominating online web giant, in control of its own destiny.

The world of technology is experiencing a paradigm shift with cloud computing and web-based applications becoming more prevalent and widespread while mobile platforms are quietly taking over desktop-based ones.