E Apple: Buy Adobe, Not Tesla

I appreciate Mark Hibben's analysis of Apple's (NASDAQ:AAPL) opportunity in electric vehicles. However, I strongly disagree with the call of a Business Insider writer's call for Apple to buy Tesla (NASDAQ:TSLA). I opine that paying $26 billion just to avail of Elon Musk's future-thinking vision and Tesla cars' premium branding might not be the best option for expansion.

Musk's decision to give away all of Tesla's patents made the electric vehicle business a more crowded space. Apple is thermonuclear-selfish when it comes to protecting its patents. Musk's generous approach to intellectual property allows anybody to create a high-end clone of a Tesla car at one-half the price tag.

Unlike the walled-off iOS ecosystem, the electric vehicle after-sales monetization would not be under the exclusive control of Apple. Due to the open-source nature of Tesla's patents, any company would have the right to market their products to future Apple's electric car owners without prior consent of Apple.

Toyota (NYSE:TM) has also decided to give away its thousands of patents on fuel cells. Tesla's gigafactory of lithium-ion batteries now faces a tough competitor with an open-source hydrogen fuel cell EV platform. Toyota is a proven winner when it comes to making luxury and consumer cars.

Honda (NYSE:HMC) and Hyundai (OTC:HYMTF), both global car leaders, are also advocates for hydrogen fuel cell-powered electric vehicles. Musk mocks the hydrogen fuel cell concept. However, John Voelcker wrote a very compelling article highlighting the advantages of hydrogen fuel cell batteries.

My point is that Tesla is a risky move against well-entrenched leaders of the automobile industry. I opine that Adobe (NASDAQ:ADBE) is a better option for Cook's diversification strategy.

Adobe, Like Apple, Loves Protecting Its Intellectual Property

Adobe has an almost-monopoly grip on graphic design software - which made the stock market value this software vendor at P/E ratio of 148.98. Adobe, like Apple, became successful because of its adamantly protective approach to its products. Before buying rival graphics & design software vendor Macromedia in 2005, Adobe won a patent suit against Macromedia in 2002.

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Disclosure: The author is long AAPL

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Brian Roxborough 4 years ago Member's comment

Apple will certainly not find it easy to prosper with Tesla and the Lithium battery against Hydrogen power and Toyota and other established global automotive giants. In fact, Apples'' rivals must be rubbing their hands in delight, at the prospect of the Giant being 'brought down'' by any rash decision to buy Tesla.

Levent Taskan 5 years ago Member's comment

As unlikely and nonsensical as it is, Apple buys Adobe I'm switching to Corel.

Nico Isaias Rivera 4 years ago Member's comment

Go! No one is preventing you to go. We're happy to see you switch to Corel.

Alexis Renault 5 years ago Member's comment

And support Windows? No way :)

Michele Grant 5 years ago Member's comment

I never see this happening. Adobe sells to the pro market and that's not where Apple positions itself.

Duke Peters 5 years ago Member's comment

Just an observation, but why doesn't $AAPL buy $DIS, $BBRY, $CALL and/or private company's Soundhound and Soundcloud? This way they have content, enterprise, and social/mobile with money to spare!

Moon Kil Woong 5 years ago Contributor's comment

Please Apple will not buy Adobe. First Apple waged war against Adobe, thus there is bad blood. If they did they would be investigated by the government for monopolistic practices. Then Adobe would find half it's customers switch to another solution rather than giving money to their enemy. Last Adobe is already a very overpriced stock right now.

Tesla is equally bad. Although Tesla is a early adopter of electric cars it is by far not proven to be a long term winner. Likewise, it rebuffed Apple's dances to become a rolling iTunes box as did most other car companies for good reason. And Tesla is also ridiculously expensive given they only make a profit off of government subsidies. If anything taxpayers, especially California taxpayers should buy it out to save money by cutting the numbers of cars made, not the reverse.

Rebecca Duncan 5 years ago Member's comment

Just to play devil's advocate... bad blood doesn't preclude an acquisition. By definition, isn't that what a hostile takeover is?

Moon Kil Woong 5 years ago Contributor's comment

True, however, Apple for good reason doesn't acquire companies that don't like to be taken over. I have yet to recall any instance of it. For one thing it would be terribly expensive given their market cap. For another, technology wise they would tend to lose all the people they probably want. Also, usually they create bad blood for a good reason and acquiring them would be an admission of defeat. And last, in Adobe's case they would not just lose their existing business but get swatted with anti-trust investigations which would preclude from buying them even if they wanted to.