Adobe is one of the last surviving desktop software companies. So is Microsoft. Consolidation happens when an industry matures and excess capacity and excess overhead can be squeezed out of the value chain, giving a temporary burst of earnings growth.
So, in this way of thinking, recognizing that the sun is setting on desktop software, a merger of old schools of thought may make sense. Rather like Sun and Oracle or HP and Compaq.
But then a lot of other things make more sense. Like both companies trying to expand into new growth areas. Like Microsoft talking to RIM or Adobe developing tools for HTML5. Adobe’s cash cow products are not going anywhere without a deep reset. Same is true for Microsoft. They will both face these challenges whether standing alone or together.
There would be nothing strange about a Microsoft Adobe merger, but there would be nothing great about it either.