The New York Times reports that the two executives met for an hour, and that:
one of the main thrusts of the discussion was Apple and its control of the mobile phone market and how the two companies could partner in the battle against Apple. A possible acquisition of Adobe by Microsoft were among the options.
Here are three reasons such an acquisition makes no sense.
It won't help fight Apple
Buying Adobe for around $15 billion or more won't help Microsoft take on Apple in the mobile phone business. Adobe does not have expertise that Microsoft lacks in phone apps or phone technology; after all as the Times notes, Steve Jobs has essentially blockaded Flash from the iPhone. And I'm sure that Microsoft would like Adobe to make sure that Flash runs on Windows Phone 7 (it won't at launch). But is that really worth $15 billion? After all, Flash runs on Android 2.2 phones, and Google didn't have to buy Adobe in order to make that happen.
It won't help fight Google
Buying Adobe also won't help Microsoft with its other main rival, Google, either. Adobe has no special expertise in search, Web applications, or online ad delivery. Microsoft needs to be worried that Google Docs may eventually cut into Microsoft Office market share, but Adobe is no help there, either. So buying Adobe won't help Microsoft eat into Google market share in search, or protect Microsoft Office from Google Apps.
It will be a major distraction
Buying Adobe would be a major distraction for Microsoft at a time when it needs a laser-like focus to compete against Apple and Google. Combining two large companies with different cultures takes a major effort, and typically takes at least a year or more. Big acquisitions consume a great deal of the time of top executives. Right now, Microsoft executives need to focus on competing against Google and Apple, not figuring out how to fold Adobe into Microsoft.
So my advice to Microsoft would be to certainly figure out a way to leverage Adobe expertise in its fight against Apple. But don't buy the company --- you'll spend around $15 billion or more and not get much help against your main rivals.