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Adobe Completes Macromedia Acquisition

Flash 8 will play a prominent role in Adobe’s strategy, as each bundle contains Macromedia Flash Professional 8. The press release hints at Adobe’s strategy, noting that he completion of the acquisition "accelerates Adobe's strategic initiative to advance a powerful software platform, based on PDF and Macromedia Flash technologies, that scales from mobile devices to high-end servers."

This scalability puts Adobe in a position to compete directly with other all-in-one solutions in the digital media and content space. Flash Professional 8 not only contains a robust interactive programming language but also an emerging high-quality video alternative to Real, Windows Media, MPEG-2, and MPEG-4. The Flash Professional 8 video codec was licensed from On2 and is known in On2 branding as VP6.

"The explosion of digital content, combined with the accelerating proliferation of mobile phones, wireless devices and the growth of broadband are transforming the way the world engages with information," said Bruce Chizen, chief executive officer of Adobe. "Adobe and Macromedia are at the center of this trend, and together we will build on our combined heritage to redefine the way people and businesses communicate."

Adobe has shifted its focus toward winning the corporate market, while Macromedia’s focus has remained on the creative professional. This had raised previous questions about the potential flight of Macromedia’s engineering team and the potential cultural rifts between the two companies. To that end, Adobe has structured its new management team to address some of these issues. Macromedia’s Stephen Elop has joined Adobe as president of worldwide field operations while Macromedia's chairman, Rob Burgess, has joined the Adobe Board.

Finally, Adobe’s "love / hate" relationship with Apple, especially in recent days under Chizen, as well as the company’s move toward a Windows-centric approach on several flagship products, fuel speculation that the Macromedia acquisition may be a pre-emptive strike against Apple’s heavy push into several of Adobe’s categories. Apple’s recent release of Aperture paves the way for Apple to field a Photoshop-like product to stand alongside Motion, which has some of the same features as Adobe’s AfterEffects. Final Cut Pro, formerly a Macromedia product, has also been a runaway success for Apple.

The company will hold a conference call on December 15, 2005 at 2 p.m. Pacific Time to discuss the cost of the acquisition and its impact on Adobe’s financial targets for 2006.

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