Why Microsoft Could Potentially Buy Out Adobe?

By:  Anuj Dhawan


Microsoft has been steadily transforming its business from that of a walled garden to a more open playground.

Each of Microsoft’s moves has been aimed at growing its cloud offering, which continues to grow.

While the speculation of Microsoft buying out Adobe is not new, the company’s current closeness by way of cloud and ecosystem focus makes the possibility greater than ever before.

Despite potential competitive interests, Adobe’s Azure integration makes MSFT the strongest candidate for a buyout.

Over the next 12-18 months, Microsoft (MSFT) could potentially buy out Adobe (ADBE). The acquisition could happen at a much higher price than ADBE’s current price of $240. In addition to ADBE’s intrinsic strength, the strong possibility of an acquisition makes for an even more compelling case to have ADBE in one’s portfolio.


The way forward is opensource

While coding was considered to be a rare skill in the heyday of DOS, coding has become commoditized in today’s context. Cloud, crowd-sourced code development and patent expiries are making it infeasible to earn through licensed content for mass use products. In fact, commodity software has started following the razor and blade model – the core software (razor) has been moving towards becoming free with service (blade) bringing in the real dollars.

The shift in trend has been materializing across sectors with companies ranging from Tesla (NASDAQ:TSLA) to Facebook (NASDAQ:FB) opening up their doors to establish an ecosystem that supports their growth. Charging rent for the product is passé; charging for an actual service is the fad.

The cloud brigade (led by Amazon (NASDAQ:AMZN)) offering ‘database services’ for a subscription fee has given a fillip to the movement towards free. A developer now only needs to use a service, rather than focus on managing a database. The