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Friday, December 27, 2002

Who else would buy Macromedia?
While the ComputerWire story that Microsoft intends to buy Macromedia is almost certainly a piece of idle Yuletide speculation, it still leaves a question mark hanging in the air. Macromedia's revenues have been flat since the dot-com boom peaked, and although it has won critical acclaim for its MX product family, released earlier this year, it will take a while to translate that initial welcome into mainstream sales momentum. The company's cash might not last that long, so it might be a sensible strategy to court acquisition by a predator with the resources to support a sustained sales and marketing campaign.

Looked at in that light (especially from the point of view of a Macromedia shareholder), acquisition by Microsoft is not such an awful prospect. Nor would it necessarily be such a bad thing for the rest of us. I don't really hold with ComputerWire's assertion that Microsoft would neutralize MX support for non-Microsoft platforms, especially J2EE. Microsoft needs more of a bridgehead into the J2EE world, and ColdFusion would help plug the gap I identified earlier this year in Microsoft's market reach at the low end of the hosted server market.

It would not be very good for any of Microsoft's competitors, though. Therefore it might be worth thinking who else apart from Microsoft might be tempted to offer the $1 billion or so that it would take to acquire Macromedia (as of last night, the company's stock price gave it a market cap of just under $700 million). After all, if owning Macromedia would be a good move for Microsoft, it ought to be an even better move for any company that wants to take market share away from Microsoft.

Here, then, is my shortlist of companies that would benefit from keeping Macromedia out of Microsoft's hands. I'm sure it's not a comprehensive list, but it covers the main protagonists:

  • IBM is in an acquisitive mood at the moment, so clearly it's a contender. But I think it unlikely that Big Blue would want to get so closely involved in client-side software. Its interests lie deeper inside the infrastructure. So while I don't rule out IBM, it's not my favorite choice.

  • Sun might consider stepping in, but it already has enough problems with its existing software product portfolio without taking on yet another challenge. I don't favor this outcome — I don't think it would be good either for Sun or for Macromedia — but companies often embark on acquisitions as a way of avoiding confronting their existing problems, and that might well prove to be the trigger in this case.

  • Novell is my favorite choice. It has the resources to make the purchase, and Macromedia's product line would be a good fit with its own. But Novell has been saying that it's completed its big acquisitions and has just started a high-profile marketing campaign to promote its rearranged line-up. So Novell may not be in an acquisitive mood any more.

I've elected not to include BEA on my list, as I don't believe the company has the financial resources to take on Macromedia right now. Nor do I think it makes sense to include HP, whose current strategy is to stay out of the server and client platforms business.

The other possibility, of course, is that Macromedia will remain independent. This is by far the most likely outcome, and once everyone has got back from their holiday time off I'm sure we'll quickly forget that we ever considered any other possibility. But in the meantime, ComputerWire has certainly given us something to think about — and you never do know what the future might bring ...
posted by Phil Wainewright 1:35 AM (GMT) | comments | link

Monday, December 23, 2002

Software, Jim, but not as we know it
As we boldy explore the new universe of service-oriented architectures, we should not be surprised if software begins to assume unfamiliar, alien forms. Here are some of the unusual phenomena to look out for when plotting a course for your enterprise:

  • New applications suddenly sprout up overnight. Commercial software developers in particular will find this very disorientating. Consider, for example, how the developers of library cataloguing software must be feeling in the wake of Jon Udell's LibraryLookup service, which I discussed in my previous posting. Perhaps some of them had a similar offering in their own roadmap, which they expected would generate significant extra revenues once they had invested in the two-year development program they imagined it would require. Any hope of making money out of that idea has flown out of the window, now that some crazy tech journalist and his weblog pals have cobbled together a free-of-charge alternative in the space of a weekend.

  • Content mutates into software. Adding XML formatting to web pages and other web-based data sources turns content into structured information. And, as Jon Udell wrote in response to a question from Dave Winer, that blurs the boundaries between content and software: "Web pages are both documents and programs. Websites are both publications and applications. URLs are both phrases and function calls. Text is code, code is data, data is text." Office 11's support for XML will have a similar effect on spreadsheets, documents and PowerPoint presentations. There will be no clear demarcation between content and code.

  • Development reiterates endlessly. Instead of being designed for pre-planned deployment to a known environment, applications are in a constant state of change and reinvention. Old methodologies no longer stand up to this on-demand ethos. Revolutionary approaches such as the Manifesto for Agile Software Development must take their place.

  • Usability carries more weight than features
  • When users can assemble functionality of their own choosing by building web pages or Excel spreadsheets, there is no longer any premium in offering them software with extensive pre-built feature sets. They will put much more value on software that puts them effortlessly in control of their own application needs. In this alien new environment, software that is rich in usability will be preferred over software that is feature-rich, and successful software providers will be those who emphasize the quality of their service delivery rather than the content of their product.

posted by Phil Wainewright 12:48 PM (GMT) | comments | link

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