February 2, 2023

Adobe's $20 Billion Move: The Future of Design Technology and Beyond

Via Indie.am: https://indie.am/james/3bd02597e2c22341116a448759a69d22

Adobe's recent acquisition of Figma for $20 billion has been making headlines. This purchase has increased Adobe's valuation by 50 times and their annual revenue is now estimated to be $400 million. As someone who works at Adobe, I have no insight into the company's decision to purchase Figma, but as a designer who does not use Adobe XD on a daily basis, I would like to share my thoughts.

Adobe has been building native software across platforms for many years and dominates almost every vertical in the design industry. However, their suite of native software has never been ideal for UX designers. Adobe acquired Macromedia, which brought fireworks, a tool that US designers loved, but Adobe ultimately killed it off. This sent designers back to using Photoshop or Illustrator. These tools have the power to create highly detailed interface designs, but they are not optimized for UX designs. Over the years, there has been a desire for a faster and more nimble tool for UX design. This desire led to the revival of Fireworks, followed by Figma, which became a cross-platform, more collaborative version of that tool. Adobe has not been able to capture this segment of the market, which Figma now dominates.

Although $20 billion may seem like an overpayment for Figma, it is important to consider why Adobe may have overpaid. If Figma becomes a generic startup acquisition in a couple of years, it may be bought by Microsoft or Google, which would make it a generic tool. Adobe has the opportunity to reinvent itself and rebrand away from its negative image developed through its predatory subscription model. The overpriced acquisition of Figma provides Adobe with a more exciting path to take.

Adobe can shift from multi-platform desktop software to web-based collaborative software by hiring the team that built the most successful cross-platform web-based design tool and integrating them into the company's culture. This would reinvigorate the company and bring new life to their web-based versions of Photoshop, Illustrator, and Adobe Xpress. While I do not know if this is the intention of Adobe's management team, it is an exciting possibility.