Adobe to acquire word processor maker Buzzword

By Eric Auchard

SAN FRANCISCO (Reuters) - Adobe Systems Inc (ADBE.O) plans to acquire Virtual Ubiquity, makers of Buzzword, an innovative word processor, in a surprise move that competes with Microsoft Corp (MSFT.O) and Google Inc (GOOG.O).

Adobe, a major supplier of business publishing software and design tools, is looking to a team of former Lotus application developers to enable the hundreds of millions of users of Adobe Acrobat software to work together publishing shared documents.

The terms of the deal were not disclosed.

Buzzword, one of a new class of rich Internet applications (RIA), was built by an 11-member team in Waltham, Massachusetts, who helped create the 1980s-era Manuscript, Lotus's second program created after its ground-breaking 1-2-3 spreadsheet.

"We were looking for a technology to create a modern word processor," Erik Larson, Adobe's director of marketing and product management. "The problem of collaborating on documents is not solved and we think we can solve it."

Melissa Webster, an analyst with market research firm IDC, said many people's initial reaction to design tools maker Adobe entering the word processing market will be: "What? Adobe?"

"The industry knows Adobe for its creative tools. We don't think of Adobe in the category of enterprise software vendors that might be going after Microsoft Office," Webster said.

The software marks a radical break with document-centric publishing by letting users collaborate on shared documents and allowing individual users to save data or format changes online.

It is an early example of Adobe's AIR software that works both online and offline on computer desktops. Buzzword features high-quality typography, advanced graphic capabilities and page-layout controls that text editors on the Web all lack.

Adobe executives said Buzzword could help raise consumer expectations about what is possible using word-processors, a category of software that has changed little in 20 years.

Word, a main component of Microsoft's Office suite of business productivity applications, has long dominated the market for word processors. Full of features, Word is aimed at desktop computer users. Microsoft is considering making an online word processor available via its Microsoft Works line.

Last year, Google introduced Google Docs, an online word processor that allows people to write and edit shared documents. But so far, the application focuses on basic tasks for small groups of individuals.

ThinkFree, a unit of South Korea's Haansoft Inc (030520.KQ), offers a word processor as part of a suite of tools that works online and offline. Zimbra, which Yahoo Inc (YHOO.O) recently acquired, also competes here. IBM (IBM.N) recently introduced an online word processor as part of its Lotus Symphony suite of business productivity applications.

"Buzzword looks the same whether it is running in a Web browser or as a desktop application," IDC's Webster said of how Buzzword can work whether or not a user is online or offline, in their office, or disconnected while traveling on an airplane.

"Google doesn't solve this problem. Microsoft doesn't solve this problem. IBM doesn't solve it."