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Will Macromedia Soon Become Micromedia?

By Daniel Kastner, POPstick Inc.
February 20, 2003 12:00 PM ET

Computerworld - "The rumor mill is churning, and it's producing a steady stream of speculation about Microsoft Corp. acquiring Macromedia Inc. Many experts understand why the takeover could happen, but most agree it won't. Not me.
It should go without saying that Macromedia is rife for takeover. Its top 20 institutional investors and mutual fund holders float 66% of the company. The company reaches 88% when additional institutional shareholders are factored in, leaving a minimal number of significant insider stakeholders. So the question is no longer if Macromedia will be acquired, but rather when and by whom.
I believe Microsoft should and will buy Macromedia because Flash stands to gain the most from Microsoft and Microsoft stands to gain the most from Flash. Combined with Microsoft's widespread distribution and commitment to R&D, Flash could quickly become the standard for rich visual applications.
Other companies rumored to be pursuing Macromedia include IBM and Adobe Systems Inc. If you are expecting one of these to steal Microsoft's thunder, you may instead hear a little more than whispers.
IBM isn't really a software company; it's a service company focused entirely on selling solutions. IBM bought Lotus and has steadily consolidated Lotus' products into solutions. As the Lotus VP for Solutions, Scott Cooper, put it, "Since our inception we have been a company that sells products to people who know how to apply them to projects ... [but since the acquisition] customers look to us to provide them with solutions -- to apply combinations of our products and services to their specific pains."

Daniel Kastner
Daniel Kastner, founder and CEO of POPstick Inc., began developing FutureSplash applications in 1996. Kastner is an award-winning composer and previously conducted research with the Music, Mind and Machine Group at the MIT Media Lab and was on the faculty at Boston University.
Given IBM's solutions model, it is at best unlikely that it would attempt to acquire a product-oriented company such as Macromedia. It would also contradict the free-spirited and product-oriented innovation that Macromedia and its loyal developers value.
Casting further doubt on the prospects of IBM acquiring Macromedia are the raw numbers. In the software sector, IBM's growth is just 2% over the past six years, and that figure isn't adjusted for inflation. Alternatively, Microsoft has increased by 390% over the same time frame. Flash is a product, and Microsoft is a product company. Microsoft Research is clearly innovating visionary technologies, such as SPOT and OneNote, that will drive change in the industry, and Flash will help fuel their advancement.
Although many experts consider Adobe to be in the


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